MUNIREDDI AND MARWADI MOTIRAM Vs. KVENKATA RAO

JUDGEMENT

(1.) In this case two charges were preferred against the 1st grade pleader, first that he trafficked jointly with one Marwadi Vannajee in an actionable clai|m put into Court obtained by Yadalla Pichayya and Papayya against the minor heirs of one Virabhadrappa in a suit in which he was plaintiff s vakil; secondly, that he had been and was engaged in trade under the name of K.V.S. Ramchander and Co. The District Judge Mr. B.C. Smith in his report to this Court has found both the charges proved. After full consideration of the evidence on record I concur in the findings arrived at by the District Judge. It is not necessary to do more than to refer very briefly to the evidence in support of the charges.

(2.) 1st charge. On the 7th September 1909 an agreement was entered into between Pichayya and Papayya the plaintiffs in O.S. No. 3 of 10 on the file of the Subordinate Judge s Court of Bellary on the one hand and Vannajee on the other hand for the transfer of the claim of the former in O.S. No. 3 of 1910 which was then pending for a sum of Rs. 4,750. The amount claimed was about Rs. 10,000. The evidence in the suit had been recorded but judgment had not been delivered. The transferee Vannajee was to take all risk of loss in case the suit was dismissed. The 1st grade pleader represented the plaintiffs in the suit. According to the evidence of Papayya one of the transferors, his fee for the suit had been paid prior to the transfer. The case of the petitioner who made the complaint against the 1st grade pleader is that the transfer was wholly or partially for the benefit of the pleader himself. The most important fact proved against the pleader is that half of the profit which Vannajee made out of the bargain was paid to him. Vannajee sold his claim to one Veerabhadrappa, the 2nd witness for the petitioner, for Rs. 6,392-8-0. The profit made by Vannajee according to himself was Rs. 1571-4-0 and of this amount, exactly one half i.e. Rs. 785-10-0 was received by the pleader. A sum of Rs. 70-12-0 was deducted out of the total amount of Rs. 6,392-8-0 as the interest on the loan contracted by Vannajee at 6 % per annum for the consideration paid by him for the transfer. The amount was borrowed from the firm of a banker S. Donga Chand. It is not denied that the pleader became responsible to the banker for the payment of the amount. The pleader s case is that he merely became surety to the banker for the loan which Vannajee took from him. Vannajee was the Gumastah of one Kannajee. The pleader gave a letter or chit to Vannajee addressed to the banker. This letter was dated 9th September 1909. It is stated on behalf of the pleader that the money had been paid by the banker to Vannajee on the 7th before he gave the letter. 1st witness for the petitioner, Sivaraj, a partner of the banker, states that the banker s account contains an entry dated 7th September 1909 debiting Kannaji through Vannajee with Rs. 4,000. On the 9th September the debit was transferred to the pleader, Kannajee being credited with the amount on that date. This might go to show that the pleader s connection with the loan commenced only after it was actually advanced by the banker but the inference doss not necessarily follow. The reason for the alteration of the entry was that Vannajee objected to the entry in the name of Kannajee as he claimed the benefit of the transfer of the claim himself. It is quite clear that on the 9th it was agreed I that the pleader should be regarded as the person mainly responsible to the banker for the payment of the loan. Now why did the pleader agree to make himself responsible for the amount? The answer suggested by the payment of half the profits to him undoubtedly is that it was understood that he and Vannajee should go shares in the bargain. The pleader in his written statement does not give any explanation of his receipt of Rs. 785-10-0. He merely denies the allegation that he was interested in the purchase of the claim and states that there was nothing against law, rules or public policy even if he was interested in it. After the witnesses in the present proceedings were examined the pleader made another short statement (not on oath) and offered himself for cross-examination. He gave no explanation of the receipt of Rs. 785-10-0 in this statement either. In cross-examination he admitted his receipt of the amount (the payment being made directly to his father-in-law). He also stated "this Rs. 785-10-0 might have been partly remuneration for spending my time in negotiating the transaction and preparing the necessary documents. I have no account to show the sum due for each piece of work done." This affords no satisfactory explanation. He does not say that the whole amount was paid for his services in bringing about the transfer. He admits that the amount was hot entered in his accounts as fees and gives an extraordinary explanation that only remuneration for work done in court is entered as fees in his accounts. He entered the amount under family earnings. Papayya the transferor of the claim says that he. had paid to the pleader the fee due to him for the conduct of the suit. This is likely as the case was almost ripe for judgment when the transfer was made. If the amount was not paid as fees due for professional work then the payment must have been on account of a half share possessed by the pleader in the claim by virtue of the transfer. Van-najee who tries to support the pleader as much as he can is equally unable to show how the amount of Rs. 785-10-0 was made up. He tries to make out that he promised to pay the pleader his fee and a present but he could not give any explanation as to how the fee would amount to Rs. 785-10-0. He admits that that amount was paid to the pleader. He says that the interest payable on the loan was 1 annas and not 6% so as to throw doubt on the amount available for division between him and the pleader. But he admits that the profit made out of the transaction was Rs. 1,571-4-0 and he also admits that he charged the pleader 8 annas per Rs. 100 interest on his whole account including this sum of Rs. 4,000. There is absolutely nothing to support his statement that T annas and not be was the interest payable on the loan. In the absence of any explanation forthcoming from the pleader I have no doubt that the Judge was justified in coming to the conclusion that it was agreed between him and Vannajee that he should receive half the profits arising from the transfer of the claim. It is immaterial ts consider whether he became interested in the transfer on the 7th September, or only on the 9th. The Judge s conclusion is strongly supported by the evidence of the petitioner s 2nd witness who purchased the claim from Vannajee. He states that he negotiated the purchase with the pleader without any reference to Vannajee and that the payment of the consideration was made to the latter at the instance of the former. Papayya who does not admit that the pleader had a share in the claim admits that the negotiations for the transfer to Vannajee took place at the pleader s house.

(3.) The next question is whether the pleader s act in purchasing the claim amounts to grossly unprofessional miscondcut within the meaning of Section 13 of the Legal Practitioners Act. The claim was then the subject matter of a suit in which the pleader appeared for the plaintiff. The defendants in the suit possessed large properties bat were in involved circumstances. Papayya says that it was broadly rumoured that his suit would fail and the pleader admits that his client told him that the defendants were giving out that the suit would be dismissed. There can be no doubt that the plaintiffs were apprehensive of failure. The pleader, on the other hand, was in a far better position than his client to judge of the chances of success-There can be no doubt that the transfer was a highly speculative one. There is no force whatever in the contention that the claim ceased to be actionable because a suit had been instituted for its enforcement. That fact is absolutely immaterial according to the definition of actionable claim in Section 3 of the Transfer of Property Act. The old definition contained in Section 130 of Act IV 1882 and Clause (d) of Section 135 as it originally stood put this beyond a doubt. Mr. Rangachariar on behalf of the pleader contends that a purchase of an actionable claim is not necessarily unprofessional conduct. Mr. K. Srinivasa Aiyangar, who appears on behalf of the Vakils Association, supports this argument. I am quite unable to accept this contention. Section 136 enacts as follows "No Judge, legal practitioner or officer connected with any Court of justice shall buy or traffic in or stipulate for, or agree to receive, any share of, or interest in, any actionable claim and no Court of justice shall enforce at his intance or at the instance of any person claiming by or through him any actionable claim, so dealt with by him as aforesaid." It does not merely make purchases of actionable claims by the classes of persons named in it unenforceable in law. It expressly prohibits them from being interested in any transfer of an actionable claim-The prohibition is based on the ground of the offices held by them. I cannot doubt that the doing of an act which a legal practitioner is forbidden to do on the ground that he is a legal practitioner is a violation of the conduct that he should pursue as a practitioner and therefore unprofessional conduct. It is urged that the legislature could not have intended to make the purchase of an actionable claim by a pleader under all circumstances unprofessional conduct, that in other countries there is no such absolute prohibition, that the New York Civil Procedure Code forbids purchases of actionable claims and negotiable instruments only where it is made "with the intention and for the purposes of bringing a suit thereon," and that in the French Civil Code the prohibition is confined to claims falling within the jurisdiction of the Court where the pleader is practising. The language of Section 136 of Act IV of 1882 is in my opinion absolutely clear. It is quite immaterial that the Indian Legislature considered it expedient to enact the rule in wider terms than the legislatures of some other countries have done. It being clear that the pleader s act amounted to professional misconduct, was it grossly unprofessional? I have no doubt that it was. I have already referred to the circumstances under which the transfer was made. The Court of First Instance r.s a matter of fact passed a decree for about Rs. 11,000 though the amount was reduced to Rs. 6,000 and odd in appeal. The purchase amounted in this case to trafficking in litigation. It is unnecessary to decide the question whether the purchase of an actionable claim though unprofessional must amount to grossly unprofessional misconduct in every case. Undoubtedly the onus would be on the pleader who purchases an actionable -claim to show that in the circumstancss of any particular case it does not amount to gross misconduct. I think that it would not be improper to hold that pleaders should not be permitted to do acts that are liable to subject them to severe temptation. I am of opinion that this charge has been proved against the pleader. I agree with the learned Chief Justice as to the punishment that should be imposed.