Litigant can't disown lawyer's arguments to wriggle out of orders: Delhi High Court

A litigant cannot back out of orders passed on the strength of submissions made by its own counsel by later claiming that the lawyer lacked instructions or authority, the Delhi High Court has held [Equitas Small Finance Bank Ltd vs Nirmala Bai Shanthilal & Ors.]

Justice Saurabh Banerjee made the observation while dismissing a writ petition filed by Equitas Small Finance Bank seeking to set aside a September 2024 Lok Adalat award.

By the said award, the Lok Adalat had permitted the settlement of a cheque bounce case filed against a borrower. In its writ petition, Equitas claimed that its lawyer had earlier wrongly submitted before the Lok Adalat that the dispute was settled. The bank alleged that the said submission was made under immense confusion and without authority. It, therefore, sought the recall of the Lok Adalat award.

The High Court, however, refused to grant any such relief. It observed that permitting the bank to disown its lawyer’s earlier arguments could create chaos.

"No litigant like the petitioner herein can be permitted to resile from order(s) passed on the strength of counsel’s submissions. If the same is permitted to be allowed, the same will create a chaotic situation. Alas! under such circumstances, the petitioner cannot be allowed to have a second bite at the cherry," it held.

The Court added that the sanctity of the lawyer's role would also be undermined if the petitioner were to be granted relief.

"Thus, the petitioner's attempt to resile from the statement made by its counsel on the plea of 'lack of instructions/ authority/ ratification', in the considered opinion of this Court, is unsustainable in the eyes of law as the same strikes at the very foundation of the Advocate-Client Relationship and undermines the sanctity of the role played by a counsel in assisting the Court in adjudicatory process," the Court held.

The case concerned a ₹14.5 lakh loan given by the bank to certain borrowers in 2021. Following defaults, the account became a Non-Performing Asset (NPA).

A cheque was eventually issued by the borrowers towards dues, but it was dishonoured, prompting the bank to initiate proceedings under Section 138 of the Negotiable Instruments Act.

During the proceedings, the bank's counsel informed the trial court that the dispute had been settled upon full receipt of payment.

The matter was referred to the National Lok Adalat, where the counsel reiterated the settlement, leading to the case being compounded and the accused borrowers being acquitted on September 14, 2024.

Over a year later, the bank sought a revival of the case, contending that its counsel's earlier submissions regarding a settlement were made without authority.

Rejecting the plea, the High Court observed that the counsel held a valid vakalatnama and was an officer of the court, not a mechanical agent.

It also noted that the bank had maintained silence for 13 months, took no action against the counsel, and even engaged the same lawyer in other proceedings.

"If at all, the petitioner had a genuine/ legitimate grievance against the same nominated counsel ... it is highly unlikely that the petitioner would have maintained a stoic silence for such a long period...the learned JMFC, as well as the Lok Adalat, both proceeded on the basis of the statement(s) made by the own nominated counsel of the petitioner, which, admittedly has not been disputed by the petitioner. The petitioner thus cannot wriggle out of what transpired therein," the Court ruled.

Consequently, the court dismissed the petition.

Advocates K S Mahadeva, Swati Bansal, and R Rangarajan appeared for Equitas Small Finance Bank.

[Read Judgment]