Himalayan Cooperative Group Housing Society v. Balwan Singh

This article is authored by Ayushman Verma and edited by Mr. Anoop Prakash Awasthi, AOR and Adv. Prapti Singh.

AIR 2015 SC 2867

Key Points of the Judgement

• Lawyers have fiduciary duties towards their clients, who must act in accordance with the express consent of their clients.
• They should forbid themselves from making any kind of commitments on behalf of their clients without the consent of the clients.
• They can not bind the client for the comminments made on their personal level and hence should wor on the instructions of the clients. 

Facts of the case: 

1. The respondent had enrolled with the appellant society for residential apartment allotment.
2. The respondent failed to pay the required amount for the apartment.
3. Despite multiple reminders from the appellant society, the respondent did not fulfill the payment obligation.
4. Consequently, the appellant society removed the respondent’s name from the list of society members.
5. Dissatisfied with this action, the respondent appealed to the presiding officer at the Delhi cooperative tribunal.
6. During the tribunal proceedings, the appellant society’s counsel agreed to a settlement where the society would construct and allot apartments to the respondent.
7. However, the society did not agree with this proposed settlement.
8. As a result, the appellant society appealed the case to the Supreme Court.

Contention of the Appellant: 

1. The appellant contended that the lawyer made a settlement on behalf of the client for apartment construction without client authorization.
2. The lawyer’s commitment to the court stated that the appellant society would construct and hand over the apartments to its members.
3. However, the society never consented to this commitment, rendering it void and non-binding on the client.
4. The appellant argued that the lawyer exceeded their authority by offering concessions without obtaining express consent from the society.
5. The lawyer should not have provided any directives or concessions without the explicit consent of the appellant society.

Contention of the Respondent: 

1. The respondent argued that the counsel, having agreed to the concession, could not retract from it subsequently.
2. The concession pertained to the construction of apartments by the appellant-society and their handover to the respondent.
3. Additionally, the respondent highlighted that the counsel did not challenge the concession during the review petition.
4. As a result, the appellant society was legally obligated to construct the apartments and deliver them to the respondent.
5. The respondent contended that the concession should be honored based on the counsel’s initial agreement and lack of opposition in the review petition.

Held by Supreme Court: 

The Supreme Court held that lawyers have a fiduciary duty towards their clients, acting solely on their behalf. Their actions should be guided by the express consent of the clients, and they should not exercise discretion beyond the scope of that consent. Lawyers serve as a conduit between clients and the court, authorized to act only within the boundaries defined by client consent. It is crucial for lawyers to adhere to client instructions rather than substituting their own judgment. If there is any doubt regarding the admission of facts by a lawyer, the court should exercise caution in accepting such admissions unless explicitly authorized by the client. Consequently, the appellant-society was not obligated to honor the commitment made by its counsel.

In summary, the Supreme Court emphasized that lawyers owe fiduciary duties to their clients, necessitating strict adherence to client instructions and consent. The court cautioned against accepting admissions made by lawyers without client authorization. As such, the appellant-society was not legally bound to comply with the commitment made by its counsel.