M. Sugatha Kumar v. Assistant Registrar of Co-operative Societies (General) Office of the Assistant Registrar of Co-operative Societies (General), Mini Civil Station, Chittur, Palakkad; Kollangode Agricultural Service Co-operative Bank Ltd. No. 7561 represented by its Secretary, Kollangode (P.O), Palakkad District

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** ## **THURSDAY, THE 22ND DAY OF MARCH 2018 / 1ST CHAITHRA, 1940** ## **WP(C).No. 5352 of 2018** **--------------------------------------** ## **PETITIONER(S)** **M. SUGATHA KUMAR ADVOCATE, S/O. RADHAKRISHNAN NAIR, AGED 42 YEARS, 16/464 2[ND] FLOOR, PRASANNA APARTMENT, KOPPAM, PALAKKAD PIN - 678 001** **BY ADVS.SRI.K.RAVI (PARIYARATH) SRI.A.V.RAVI** ## **RESPONDENT(S):** **1. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL) MINI CIVIL STATION, CHITTUR, PALAKKAD PIN 679 001** **2. THE ARBITRATOR IN A.R.C NO. 2351/2016/UNIT INSPECTOR OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), MINI CIVIL STATION, CHITTUR, PALAKKAD PIN 679 001** **3. THE KOLLANGODE AGRICULTURAL SERVICE CO-OPERATIVE BANK LTD NO. 7561 REPRESENTED BY ITS SECRETARY, KOLLANGODE (P.O), PALAKKAD DISTRICT, PIN 678 506** **R3 BY ADV. SRI.V.M.KURIAN** **R3 BY ADV. SRI.MATHEW B. KURIAN** **R3 BY ADV. SRI.K.T.THOMAS** **R1 AND R2 BY SR.GOVERNMENT PLEADER SMT.C.S.SHEEJA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **NAB** **WP(C).No. 5352 of 2018 (T)** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **EXHIBIT P1 TRUE COPY OF THE PLAINT PREFERRED AT THE INSTANCE OF THE 2ND RESPONDENT BEFORE THE 1ST RESPONDENT AS A.R.C NO 2351/2016 DATED NIL EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT FILED AT THE INSTANCE OF THE PETITIONER BEFORE THE 1ST RESPONDENT IN A.R.C NO 2351/2016 DATED 07-03-2017 EXHIBIT P3 TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT ON THE PRELIMINARY ISSUES RAISED A THE INSTANCE OF THE PETITIONER AS NO. 2351/2016,DATED 28-10-2017 EXHIBIT P4 TRUE COPY OF THE ORDER PASSED BY THE HON'BLE CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM, DATED 31-01-2018** ## **RESPONDENT(S)' EXHIBIT** **EXHIBIT R3(a) TRUE COPY OF THE ARC NO.2351/2016 ALONG WITH EXHIBITS** **//TRUE COPY//** **PA TO JUDGE** **NAB** ' **C.R'** ## **ANU SIVARAMAN, J. ----------------------------------------------W.P(C).No. 5352 of 2018 ----------------------------------------------Dated this the 22[nd] day of March, 2018** ## **JUDGMENT** This writ petition is filed challenging Exhibits P3 and P4 orders issued by the Arbitrator and the Co-operative Tribunal respectively on the question of maintainability of ARC.No.2351 of 2016 before the 2[nd] respondent. It is submitted that the petitioner herein was a practicing lawyer. On the contention that the respondent Society had engaged the petitioner to file execution petitions for executing awards passed in favour of the Society and had paid an amount of Rs.12,24,500/- as professional fee and that the petitioner did not conduct the case and returned the awards to the Society without even filing execution petitions, the ARC is filed seeking return of the amounts paid as professional fees, with interest. 2. It is stated that the petitioner had filed a written statement and had raised the issue of maintainability of the ARC as a preliminary issue. He had also approached this Court and by judgment dated 27.9.2017 in W.P(C).No.30654 of 2017, this Court directed the 2[nd] respondent to pass orders on the 2 _**WP(C).5352/18**_ petitioner on the preliminary issue. Exhibit P3 order was issued by the Arbitrator pointing out that as the dispute is between the Society and it's agent, it is maintainable under Section 69 of the Kerala Co-operative Societies Act, 1969 (for short, 'the Act'). The petitioner had preferred a revision petition before the Tribunal, which was considered and disposed of as per Exhibit P4 order. The issue of maintainability and limitation was considered by the Tribunal also in Exhibit P4. The Tribunal found that the petitioner, who was an advocate and legal practitioner, had accepted payment as per Exhibits P1 to P5 for the purpose of filing execution petitions and had returned the files without filing the execution petitions. It is stated that he had not returned the amount taken by him for filing the execution petitions and therefore the dispute between the petitioner and the Society squarely comes within 'dispute' as defined in Section 2(i) of the Act. The question of limitation was also found against the petitioner and the petitioner was directed to appear before the Arbitrator for consideration of the matter on merits. 3. Learned counsel for the petitioner contends that going by the definition 'dispute' as contained in the Act as also on a reading of Section 69 of the Act, only those disputes touching _**WP(C).5352/18**_ 3 the business of the Society can be adjudicated under Section 69 of the Act. It is stated that this court in its decision in _**Vazhayil Meethal Hyrunnisa and Others v. Koothali Service Co-operative Bank Ltd., Perambra**_ [2016(3) KHC 396] has held that a dispute with regard to return of money misappropriated by a collection agent would not be a dispute touching the business of the Society and therefore a suit for realisation of damages would be maintainable. The learned counsel has also relied on a decision of the Calcutta High Court in _**Veer Probhu Marketing Limited and Others v. National Supply Corporation and Others**_ [2006 KHC 3335] to contend that an advocate is not _per se_ an agent of his client, since an advocate is not entitled to act in a professional capacity as well as a Constituted Attorney of a party in the same matter or cause. It is further contended that the proper course for the Society was to approach a civil court for recovery of amounts, if any, due from the petitioner. 4. The learned counsel appearing for the 3[rd] respondent Society contends that though an advocate is admittedly not functioning as an agent of his client in his professional capacity, the nature of the relationship is broadly in the nature of an agency with fiduciary and professional overtones. He 4 _**WP(C).5352/18**_ relies on the decision of the Apex Court in _**Himalayan Coop. Group Housing Society**_ [(2015)7 SCC 373] to contend that though law of agency may not strictly apply to the client-lawyer relationship, the broad nature of the relationship is of principal and agent. The Apex Court held as follows: “ _22. Apart from the above, in our view, lawyers are perceived to be their client's agents. The law of agency may not strictly apply to the client-lawyer's relationship as lawyers or agents, lawyers have certain authority and certain duties. Because lawyers are also fiduciaries, their duties will some times be more demanding than those imposed on other agents. The authority-agency status affords the lawyers to act for the client on the subject-matter of the retainer. One of the most basic principles of the lawyer-client relationship is that lawyers owe fiduciary duties to their clients. As part of those duties, lawyers assume all the traditional duties that agents owe to their principals and, thus, have to respect the client's autonomy to make decisions at a minimum, as to the objectives of the representation. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client's instructions rather than substitute their judgment for that of the client. The law is now well settled that a lawyer must be specifically authorised to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise/settlement. To put it_ 5 _**WP(C).5352/18**_ _alternatively that a lawyer by virtue of retention, has the authority to choose the means for achieving the client's legal goal, while the client has the right to decide on what the goal will be. If the decision in question falls within those that clearly belong to the client, the lawyer's conduct in failing to consult the client or in making the decision for the client, is more likely to constitute ineffective assistance of counsel.”_ 5 _._ The learned counsel also relies on the decision of this Court in _**K.S.R.T.C. v. Kerala State Transport Employees Co-op. Society Ltd.**_ [2005(4) KLT 662], wherein it has been held as follows: _“17. K.S.R.T.C. is a statutory corporation and hence a person, a juristic one. Any matter touching the business, is a dispute, as defined in S.2(i) of the Act. “Touching the business” is an expression of wide amplitude and takes within its ambit, any matter that relates to or concerns the business of the society (see Deccan Merchants Co-operative Bank Ltd. v. Dalichand Jugraj Jain (AIR 1969 SC 120) and Mukundan’s case (1992 (2) KLT 77). This Court has held that the claim by a society for damages against a contractor who was entrusted with the work of construction of a godown for the society is a dispute, within the scope of the definition (see Sekharan’s case - 1976 KLT 137). Though the definition clause, S.2(i) uses the word “means”, as rightly noticed in Sekharan’s case, it is an inclusive definition, going by its terms and sweep. The issue at hand can be resolved on a consideration as to_ 6 _**WP(C).5352/18**_ _whether the dispute raised by the respondent society against K.S.R.T.C. is a matter touching the business of the society. The society is involved in providing loans to its members. This is part of its business. The activity of ensuring ways and means of recovery of the loans advanced is also, obviously, part of its business. S.37(1) of the Act provides for entering into agreements, which have such statutory backing as is provided by sub-s.(2) of S.37. The liability of the employer under sub-s.(2) of S.37 is a statutory obligation arising eo-instanti, the entering into of an agreement as envisaged by sub-s.(1) of S.37. This is the effect of S.37 of the Act. That statutory responsibility is one that is intricately connected and inter-twined with the right of the society to recover the outstandings from debtor. The relationship that arises between the society and the K.S.R.T.C. on account of an agreement provided for by sub-s.(1) of S.37 is of a statutory obligation on the part of K.S.R.T.C.in favour of the society, in relation to the activity of lending and recovery, which are matters touching the business of the society. Hence, any dispute between the society and the K.S.R.T.C. touching the discharge of the obligations of the K.S.R.T.C. in relation to agreements under S.37(1) of the Act, including any claim for damages or otherwise; in any form, as interest or otherwise; on account of alleged deficiency or delay in performance in terms of S.37(2) of the Act, is a dispute touching the business of the society and hence a “dispute” as defined in S.2(i) of the Act. Having regard to the nature of the_ 7 _**WP(C).5352/18**_ _statutory obligations of the employer K.S.R.T.C. emanating out of S.37 of the Act, the relationship of the K.S.R.T.C. to the society is one of agency, though such relationship is created by the application of a statute. Hence also, the dispute is one that falls under S.2(i) of the Act.”_ 6. It is therefore contended that the petitioner, who had accepted payments from the Society for filing execution petitions in respect of arbitration awards and had not filed the petitions as entrusted, was duty bound to repay the amounts. A decision of the Apex Court in _**Rajiv Dawar v. High Court of Delhi**_ [2017 KHC 6509] is also relied on to contend that where professional services were offered by the advocate himself and the files had been returned without offering those services, then the professional was duty bound to have returned the money accepted by him as professional fees with respect to such part of the duties, which he did not perform. Referring to Rule 12 of the Rules framed by the Bar Council of India regarding Standards of Professional Conduct and Etiquette, the Apex Court found that where amounts were accepted by an advocate for professional services and such services had not been rendered by the Council, then the amount taken as fee was bound to be refunded. 7. I have considered the contentions advanced on either _**WP(C).5352/18**_ 8 side. Section 2(i) of the Act defines 'dispute'. Section 69 is with regard to the disputes to be decided by Co-operative Arbitration Court and Registrar _._ It is therefore clear that any dispute touching the business of the Society between the Society and its agent or between the Society and its creditor is liable to be considered in terms of Rule 69 of the Act. It is the contention of the petitioner that he is not an agent of the Society and even if he is found to be such an agent, the dispute does not have any relation to the business of the Society and therefore, the same cannot be adjudicated under Section 69 of the Act. The respondent-Society is a credit society. The providing of loans and recovery of such amounts was a matter well within the definition of 'business of the Society'. This Court in _**K.S.R.T.C's case (supra)**_ has specifically held that though the definition clause, S.2(i) uses the word 'means', it is an inclusive definition and since the Society is involved in providing loans to its clients, the activity of ensuring ways and means of recovery of the loans advanced is also a part of it's business. Viewed in that angle, the engagement of the petitioner as an advocate for the purpose of filing execution petitions for recovery of amounts due under the loans advanced by the Society would also be a matter which touches 9 _**WP(C).5352/18**_ upon the business of the Society. Further, even if the question whether the petitioner is an agent of the Society is not considered, the petitioner would be a creditor of the Society in the sense that Rule 12 of the Rules governing Advocates framed by the Bar Council of India regarding Standards of Professional Conduct and Etiquette specifically provides that where professional fees are accepted and services are not provided, the advocate would be bound to return such part of the fee as has not been earned. In the above view of the matter, I am of the opinion that the finding of the Arbitrator as well as the Tribunal to the effect that the dispute was maintainable is liable to be upheld. I find no perversity or patent illegality in the impugned orders. The writ petition is therefore dismissed. The petitioner shall appear before the Arbitrator and the matter shall be decided on merits considering the contentions advanced on either side. **ANU SIVARAMAN JUDGE** _vgs_