Advocate not criminally liable for mere negligence in tendering legal advice, Chhattisgarh HC

The Chattisgarh High Court recently reiterated that an advocate cannot be held criminally liable for tendering negligent or improper advice, if there is no proof that s/he had actively participated in a crime otherwise. As observed in the order passed by Justice Sanjay K Agrawal,.“Just like in any other profession, the only assurance which can be given and may even be implied from an advocate so acting in his professional capacity is that he possesses the requisite skills in his field of practice and while undertaking the performance of task entrusted to him, he would exercise his skills with reasonable competence. The only liability that may be imputed on an advocate while so acting in his professional capacity is that of negligence in application of legal skills or due exercise of such skills….”.The Court was dealing with a petition to quash an FIR against an advocate who had been empaneled with the Pulgaon ChowkBranch of the Dena Bank. In 2015, the petitioner advocate had issued non-encumbrance certificates on requisition by the Bank, in respect of certain credit facilities to be extended to certain farmers. After there was a default in loan repayment, it was found that some of the certificates given to the Bank by the borrowers were false. This prompted the Bank to register a criminal complaint against the allegedly fraudulent farmers/borrowers..When a final report in the case was filed, however, the empaneled advocate who issued their non-encumbrance certificate was also accused of various criminal offences including cheating and conspiracy. The advocate challenged the same, with her counsel Advocate Ashish Shrivastava contending that she could not be held criminally liable for tendering professional advice, especially since none of the ingredients of the criminal offences alleged stood proved against her..Opposing the plea, Deputy Advocate General S Ahluwalia argued that the petitioner could not be exempted altogether from criminal liability since she had given false non-encumbrance certificates to the Bank..After appreciating submissions made for both sides, the High Court first took note that an advocate involved in the banking sector is expected to act to advance the interest of the client. However, such legal opinions cannot be expected to be flawless, Justice Agrawal pointed out. As observed in the order,.“It is well-settled law that extending of a legal opinion for granting loan has become an integral component of an advocate’s work in the banking sector. A lawyer, on his part, has a responsibility to act to the best of his knowledge and skills and to exhibit an unending loyalty to the interest of his clients. He has to exercise his knowledge in a manner that would advance the interest of his clients. However, while acting so the advocate does not assure to his client that the opinion so rendered by him is flawless and must in all possibility act to his gains.”.This practical aspect apart, the High Court proceeded to rely on the Supreme Court’s judgment in the Central Bureau of Investigation, Hyderabad v K Narayana Rao, wherein the Court had directly dealt with the question of whether a legal professional can be rendered criminally liable for negligence or improper legal advice. The High Court recounted,.“Their Lordships of the Supreme Court held that the liability against an opining advocate arises only when the lawyer was an active participant in a plan to defraud the Bank.”.This ruling was later approved by the Supreme Court in Surendra Nath Pandey and others v State of Bihar and others, and followed in various High Courts, including the Gujarat, Rajasthan and Allahabad High Courts. In this backdrop, the Chhattisgarh High Court proceeded to hold,.“it is quite vivid that an advocate while performing his professional duties cannot be held liable for offence in regard to which no direct evidence has been adduced against him and as held in K. Narayana Rao’s case (supra), liability in criminal law against an opining advocate arises only when an advocate is active participant in a plan to defraud the Bank, merely because his opinion may not be acceptable, he cannot be criminally prosecuted, particularly, in the absence of direct evidence against him.“.The Court, therefore, allowed the petition and quashed the criminal case filed against the advocate, observing that there was nothing to show that she was an active participant in the alleged fraud committed on the Bank..“It is true that the petitioner could have exhibited more and greater professional care and competence, yet in failure to exercise the same, she could not have been held criminally liable. The Supreme Court in K. Narayana Rao’s case (supra) and Surendra Nath Pandey (supra), has clearly held that mere negligence or want of greater professional care and competence on the part of an advocate would not make him liable for a criminal offence in an absence of tangible evidence. Even there is no allegation of criminal conspiracy against the petitioner and it is nowhere apparent that only acting upon the nonencumbrance certificate issued by her, loans were granted to the said borrowers.“.[Read the Order]