Supreme Court Exempts Lawyers From Consumer Act Liability

May 16, 2024

On 14 May 2024, the Supreme Court has delivered a landmark judgment exempting lawyers from liability under the Consumer Protection Act of 1986. The decision overturned a previous ruling by the National Consumer Disputes Redressal Commission (NCDRC) from 2007, which classified legal services as fallible under the Act.

The bench, led by Justice Bela Trivedi and Justice Pankaj Mithal, stressed that legal representation, although paid, does not constitute a ‘service’ as intended under the Consumer Protection Act due to its unique professional characteristics.

Background

The debate initiated from an appeal against the NCDRC’s interpretation that lawyer services could be categorized as ‘service’ under Section 2(o) of the CPA, thereby subjecting them to potential lawsuits for any deficiencies in service.

Petitioners, including M Mathias and various lawyer associations, argued that the legal profession should not be treated like other trades or businesses. They emphasized that lawyers have unique duties towards the court and their opponents, which can often conflict with client interests.

They also highlighted the unpredictability and complexity inherent in legal proceedings, which can influence case outcomes independently of a lawyer’s skill or diligence.

Supreme Court’s Ruling

The court established a clear distinction between professions and other forms of business under the CPA. They pointed out that when the CPA was initially enacted and later revised, there was no indication that it was intended to cover professional services such as those offered by lawyers or doctors.

Justice Trivedi argued that the term ‘profession’ implies a discipline involving specialized knowledge or learning, which is distinct from a mere ‘business’ or ‘trade’ driven by commercial interests.

The ruling also suggested revisiting previous judgments which differed in view, such as the inclusion of medical services under the CPA decided in Indian Medical Association v V.P. Shantha (1995).

Impact on the Legal Profession

The Supreme Court highlighted that the legal profession is inherently service-oriented and noble, not driven by commercial gains. Lawyers are expected to uphold the rights of citizens and contribute to the maintenance of judicial independence and the rule of law.

The court also noted that the relationship between a lawyer and a client is best described as a ‘personal service contract’—a category specifically exempted under the CPA. This type of contract denotes a direct control by clients over the advocates’ actions, as lawyers fundamentally act on instructions provided by their clients.

Implications for Medical Professionals

This recent ruling prompts a reconsideration of the 1996 decision concerning medical professionals also. In the 1996 case of Indian Medical Association vs V P Shantha, the Supreme Court concluded that medical services do fall under the concept of ‘services’ as described in the Consumer Protection Act when a fee is charged. This definition holds medical practitioners accountable to the standards of consumer transactions, expecting reliable standards of care.

However, the Supreme Court signaled a potential reevaluation of this definition, hinting that the scope of ‘services’ within the Act might need reinterpretation, specifically concerning medical professionals. This issue is set to escalate, as the court has directed that it be reviewed by a larger bench, referred by Chief Justice DY Chandrachud.

Legal and Ethical Context

The ruling intervenes in a long-standing debate on whether professional services, like those provided by lawyers and doctors, should be assimilated within the ambit of consumer protection laws. It distinguished lawyers from other service providers by noting their duties involve elements that are beyond mere contractual obligations, thus necessitating exclusion from consumer court jurisdictions. However, claims of negligence and malpractice can still be pursued in ordinary courts.

« Previous Post Next Post »