nature and extent of criminal liability that may be imposed on a lawyer who
issues a legal opinion that is found to be erroneous. In what might be a matter
of some relief to the legal fraternity, the court has set very high standards
to be satisfied by the prosecution to charge a lawyer for the crime of
conspiracy in defrauding a bank.
advocate representing a bank, delivered a series of legal opinions relating to
the title to several properties. The bank lent monies on the strength of the
legal opinions, which were found to be erroneous. The lending transaction was
found to be part of a larger scheme by several persons to defraud the bank by
inducing it to lend monies that caused wrongful loss to the bank. The Central
Bureau of Investigation (CBI), after investigation, filed charges against the lawyer.
These charges were quashed by the Andhra Pradesh High Court, against which the
CBI appealed to the Supreme Court.
the legal position on two counts. First, it determined whether the High Court
has the requisite powers to quash charges under section 482 of the Criminal
Procedure Code, a matter that falls squarely within the domain of criminal law
and procedure. Second, the court also considered the role of a lawyer issuing a
title opinion on behalf of the bank, and the responsibility of such lawyer,
particularly under criminal law. It is with the second aspect that we are
customary title opinion after considering all the documents provided by the parties.
The opinion provided conclusions on whether the owner possessed the necessary
title to the property to be able to convey the same to the purchaser. It was specifically
found that a substantial part of the opinion was based on photocopies of
documents, and few originals were provided. After considering the available
evidence, the court concluded that there was insufficient material to conclude that
the lawyer was acting as a conspirator so as to be charged for the offence to
defraud the bank.
standards of lawyers in such circumstances:
rendering of legal opinion for granting of loans has become an important
component of an advocate’s work. In the law of negligence, professionals such
as lawyers, doctors, architects and others are included in the category of
persons professing some special skills.
professional can give or can be given by implication is that he is possessed of
the requisite skill in that branch of professional which he is practising and
while undertaking the performance of the task entrusted to him, he would be
exercising his skill with reasonable competence. This is what the person
approaching the professional can expect. Judged by this standard, a
professional may be held liable for negligence on one of the two findings,
viz., either he was not possessed of the requisite skill which he professed to
have possessed, or, he did not exercise, with reasonable competence in the given
case, the skill which he did possess.
moral delinquency on the part of a legal practitioner in the exercise of his
profession does not amount to professional misconduct.
opining advocate arises only when the lawyer was an active participant in a
plan to defraud the Bank. In the given case, there is no evidence to prove that
[the lawyer] was abetting or aiding the original conspirators.
owes an “unremitting loyalty” to the interests of the client and it is the
lawyer’s responsibility to act in a manner that would best advance the interest
of the client. Merely because his opinion may not be acceptable, he cannot be
mulcted with the criminal prosecution, particularly, in the absence of tangible
evidence that he associated with other conspirators. At the most, he may be liable for gross negligence or
professional misconduct if it is established by acceptable evidence …
criminal liability for erroneous opinions, the ruling must be read in its
specific context. What was in question in that case was the charge of criminal
conspiracy, which now seems to be difficult to establish against erring
lawyers. To that extent, it may stated that the risk to lawyers is somewhat contained.
However, this decision does not deal with the specific issue of liability for
gross negligence or professional misconduct, on which the court has left the
door open. Moreover, this decision is specifically in the context of criminal liability
for conspiracy to defraud, and does not touch upon the issues if civil
liability for professional negligence or misconduct, which might continue to
operate if circumstances so justify.
Although not directly addressed by the court, the context of this
decision also underscores the difficulties in the real estate sector in India
where the determination of title to property with any level of certainty is a daunting