R.D. Saxena v. Balram Prasad Sharma (2000)

Module 3 opens with a definition — goods means every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. Students learn the words and then find that examiners test them on things at the edge: electricity, a lottery ticket, a right to sue, a bundle of papers.

R.D. Saxena is the case that supplies the working test for the edge, and it does so in a context that is memorable: whether an advocate may keep his client's case file until his fees are paid. The Court held he may not, and the reason is a reason about the meaning of goods.

It is also the case that ties Module 3 to Module 4, because the claim was made under the general lien of attorneys of a High Court in s. 171 of the Contract Act, which is squarely part of the bailment syllabus.

The appellant had practised as an advocate mostly in the courts at Bhopal, after enrolling with the State Bar Council of Madhya Pradesh. According to him he was appointed legal adviser to the Madhya Pradesh State Cooperative Bank Ltd in 1990, and continued in that capacity in the succeeding years; he was also engaged to conduct cases in which the Bank was a party.

The retainership did not last. On 17 July 1993 the Bank terminated the retainership and asked him to return all the case files relating to the Bank.

Instead of returning the files, the appellant forwarded a consolidated bill showing Rs 97,100 as the balance payable by the Bank towards his legal remuneration, and informed the Bank that the files would be returned only after his dues were settled.

Disciplinary proceedings followed, and the matter reached the Supreme Court.

Has an advocate a lien for his fees on the litigation papers entrusted to him by his client?

No. The appellant had no lien on the case files, and his retention of them was professional misconduct.

The claim under section 171 fails on two grounds

The appellant based his claim on s. 171 of the Contract Act, under which bankers, factors, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account any goods bailed to them.

First, the files were not goods bailed. Bailment is defined in s. 148 as the delivery of goods by one person to another for some purpose, upon a contract that they shall be returned or otherwise disposed of according to the directions of the person delivering them when the purpose is accomplished. In the case of litigation papers in the hands of the advocate there is neither delivery of goods nor any contract that they shall be returned or otherwise disposed of. An advocate keeping the files does not amount to goods bailed.

Second, the files were not goods at all. The word goods in s. 171 is to be understood in the sense in which it is defined in the Sale of Goods Act. The Court gave the reason of legislative history: Chapter VII of the Contract Act, comprising ss. 76 to 123, had been wholly replaced by the Sale of Goods Act 1930, and goods is defined in s. 2(7) of that Act.

The marketability test

So understood, the Court laid down the test that makes this case worth learning: goods, to fall within the purview of s. 171, should have marketability, and the person to whom they are bailed should be in a position to dispose of them in consideration of money. In other words, the goods referred to in s. 171 are saleable goods.

Applied to a case file, the answer is immediate: there is no scope for converting the case files into money, nor can they be sold to any third party. The reliance on s. 171 therefore had no merit.

The second judgment reinforced the point from the general law. Earlier decisions of the Court had held that to become goods an article must be something which can ordinarily come to the market to be bought and sold, and that goods are understood to mean identifiable articles known in the market as goods and marketed and marketable in the market as such. Where an Act does not define goods, the legislature is presumed to have used the word in its ordinary dictionary meaning, which carries the same requirement. The reference to goods in s. 171 cannot by any imagination be stretched to mean the case papers.

The English position, and why it does not help

At common law a solicitor had two rights termed liens: a retaining lien, a right to retain property already in his possession until he is paid the costs due to him in his professional capacity; and a lien on property recovered or preserved, a right to ask the court to direct that personal property recovered under a judgment obtained by his exertions stand as security for his costs of recovery. The retaining lien springs from possession and is governed by the same rules as other possessory liens; as it has been described, it is merely passive and possessory — the solicitor has no right of actively enforcing his demand — and it is wholly derived from, and therefore co-extensive with, the right of the client to the documents.

But even in England the right of retention has been much diluted by exceptions created by decisions, chiefly by courts of equity, on the basis of what is just and equitable between parties with conflicting interests; and the Court held that even under the common law no lien can be claimed in respect of the case file and documents necessary for the further progress of the litigation.

The reasons of policy

The Court gave three, and they are worth a line each in an answer.

The client's right to change counsel. In criminal cases every person accused of an offence has the right to consult and be defended by a legal practitioner of his choice, a fundamental right under Article 22(1) of the Constitution. The words of his choice indicate that the accused's right to change an advocate cannot be whittled down by that advocate withholding the case bundle on the ground that his fees are unpaid.

The practical consequence. If a party terminates the engagement before the proceedings end, that party must have the entire file to engage another advocate. If the advocate changed midway refuses to return the file until his fees are paid, the situation may turn to dangerous proportions: the party may have no resources to pay the amount claimed, or may say he has already paid the legitimate fee. In either case it is impermissible for the erstwhile counsel to retain the case bundle.

The professional rules already provide a remedy. The Bar Council of India Rules allow an advocate, after the termination of the proceeding, to appropriate towards his settled fee any sum remaining unexpended out of money paid to him for expenses or come into his hands in that proceeding, and, where the fee is unsettled, to deduct the fee payable out of the client's money remaining in his hands. No lien on litigation files is provided. The Court added that in Indian conditions, with many illiterate litigants, such a lien would be susceptible to great abuse and exploitation.

Even without a lien the advocate has remedies. He is competent to settle the terms of his engagement and his fee by private agreement, and like any other citizen he may recover his fee by legal proceedings, subject to such restrictions as the law and the rules impose. What he may not do is retain the papers.

The Court altered the punishment to a reprimand, making clear that the leniency was not to be treated as a precedent.

Goods, both in s. 2(7) of the Sale of Goods Act and in s. 171 of the Contract Act, means movable property that is marketable — something which can ordinarily come to the market to be bought and sold and which the holder could dispose of for money. A client's litigation papers are not goods and are not goods bailed, so an advocate has no general lien on them for his fees.

The definition in s. 2(7) has three parts: an inclusive core, every kind of movable property; two exclusions, actionable claims and money; and an extension covering stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.

R.D. Saxena adds the working gloss on the core: movable property is not enough by itself, because the thing must be capable of being bought and sold. Use that gloss when the exam puts an unusual subject matter in front of you, and pair it with the two decided cases at the other end of the range — electricity, held to be goods because it is movable property capable of being transmitted and delivered though not necessarily in a tangible or physical sense, and the building materials in a works contract, held not to be sold at all because property in them passes by accretion.