1. The respondent-Company appointed the revision petitioner as its advocate for conducting its cases in the different courts in Alleppey. It has instituted the present suit against its former advocate for recovery of amounts that may be found due to it on rendition of accounts by him of all sums paid by it to him, as also of all sums realised by him on its behalf and of the amounts spent by him on its behalf. He resides and carries on his profession in Alleppey. The respondent-Company instituted this suit in the Munsiff's Court, Palghat within the jurisdiction of which Court it has a branch office. The revision petitioner questioned that Court's jurisdiction to try the suit. That Court held that it has no jurisdiction. On appeal by the respondent-Company the learned District Judge held that the suit was properly instituted and that the Munsiff's Court, Palghat has jurisdiction to entertain the same. The defendant has coma up in revision.
2. According to the lower appellate court the defendant's 'accountability to the Palghat branch of the Company is apparent from the correspondence between the parties', and therefore 'part of the cause of action at least had arisen within the limits of the Palghat Munsiff's Court'. The learned District Judge then proceeds to say that 'if any cause of action has arisen at Palghat, by virtue of Explanation II to Section 20 of the Code of Civil Procedure, 1908 the Company shall be deemed to carry on business at Palghat' and that therefore 'the Palghat Munsiff's Court has jurisdiction to try the instant suit.'
3. First of all, it has to be pointed out that Explanation II to Section 20 of the Civil P. C., 1908 has no relevance to Clause (c) of that section, whereunder, a suit can be instituted in the court within the local limits of which the cause of action, wholly or in part arises, and it (the Explanation) only enlarges the meaning of the words 'carries on business' occurring in Clauses (a) and (b) of Section 20 where the defendant (not the plaintiff) is a Company. Therefore, the only question, that falls for consideration is as to whether the cause of action for the suit has arisen, wholly or in part, within the local limits of the Munsiff's Court, Palghat.
4. Under Sections 29 and 33 of the Advocates Act, 1961 only advocates are entitled to 'practice the profession of law' in any court. Rule 4 (1) of Order III of the Civil P. C., 1908 requires that a pleader, (who as per Section 2(15) of the Code means any person entitled to appear and plead for another in court, and includes an advocate) shall be appointed by a document in writing, signed by the client and says that otherwise the pleader cannot 'act' for the client in any court. The Act does not define 'what is practising the profession of law in court' nor the Code, what is 'acting for the client in court'. However Section 32 of the Act enables the court to permit a person not an advocate 'to appear before it in any particular case' and Rule 1 in Order III of the Code says that recognised agents as defined in Rule 2 may make or do any appearance, application or act in or to any court on behalf of a party.
Recognised agents are holders of special power-of-attorney in that behalf, and persons carrying on trade or business for and in the names of parties to litigation residing outside the territorial jurisdiction of courts in matters connected with such trade or business. It follows that an advocate 'acting in court' for his client by 'practising the profession of law' there, is not a mere agent or a power-of-attorney-holder. When it is remembered that, in the words of Lord Denning M. R. in Rondel v. Worsely (1967-1 QB 443, 502, (as quoted in Chengan Souri Nayakam v. A. N. Menon, 1968 Ker LT 1 at p. 5: AIR 1968 Ker 213 at p. 216) (FB):--
'A barrister cannot pick or choose his clients. He is bound to accept a brief for any man who comes before the courts. No matter how great a rascal the man may be. No matter how given to complaining. No matter how undeserving or unpopular his cause. The barrister must defend him to the end. Provided only that he is paid a proper fee, or in the case of a dock brief, a nominal fee. He must accept the brief and do all he honourably can on behalf of his client. I say 'all he honourably can' because his duty is not only to his client.'
It will be clear that an advocate cannot refuse to accept a brief except on the ground of a proper fee, and to that extent (which is almost to the full extent) his freedom of contract is curtailed. Nor is it -- acceptance of brief -- a matter of his going out into the market place and canvassing for it, but entirely a matter of choice resting with the client. Therefore, the legal capacity of an advocate to practise the profession of law in court and his competency to act in court for his client are not derived from any contract but from his legally recognised status as an advocate. On account of this, his status, his duties are threefold -- to the client, to the court and to the public. The Full Bench in Souri Naya-kam's case emphasised this in the following passage (at p. 216 of AIR):--
'Counsel has a tripartite relationship; one with the public, another with the court, and the third with his client. That is a unique feature. Other professions or callings may include one or two of these relationships but no other has the triple duty. Counsel's duty to the public is unique in that he has to accept all work from all clients in courts in which he holds himself out as practising, however unattractive the case of the client.'
5. This case concerns one of the obligations of the Advocate to his client, perhaps, the most important, from the client's point of view. The client pays an advocate moneys for meeting the expenses of litigation. The advocate may also realise amounts as fruits of litigation on behalf of the client. What is the nature of his liability to the client as regards these moneys. It appears that formerly it was thought that an advocate is a debtor so far as payments received by him for expenses are concerned, and a bailee, in respect of sums realised by him on behalf of the client as fruits of litigation. In re a High Court Vakil, (1910) 20 Mad LJ 494 P. R. Sundara Aiyar (later Justice) representing the Vakils' Association said as follows:
'A Vakil who is asked to sell land and who receives the purchase money ought to treat that money distinct from other money and from outfees as it stands in a different position. Outfees are considered as debts. Misappropriation of such purchase money even temporarily, whether the Vakil acted as Vakil or not, is not justified.'
Referring to this decision Sri K. V. Krishnaswami Aiyer in his lectures --'Professional Conduct and Advocacy' 2nd Edn. 1945 at p. 163 says as follows:
'As regards amounts received by counsel on behalf of the client, the decision in the case above quoted, which ruled that the advocate was not entitled to use the money even temporarily, shows that he was not a debtor but only a bailee. 1 do not think, therefore, that it need still be considered as a matter of doubt. It cannot be that the advocate is a bailee for one purpose and a debtor for another.
Regarding moneys received for out-fees, I do not see why any difference should exist in respect of the legal relation between counsel and client. If anything, the fact that the moneys are handed to counsel for a specific purpose ought to decide in favour of his character as a bailee. If he were merely a debtor he ought to be entitled to make use of the money which would only result in his having a civil liability for it. The obligation, to keep the client's money available at any time for use on behalf of the client can only be consistent with his being a bailee thereof. Further, the advice that is generally given -- to keep the client's out-fees money in a separate account --can only be understood as meaning that the advocate is not entitled to use it, which means again that he is a bailea and not a debtor.'
6. Both kinds of moneys come to the advocate's hands in his capacity as advocate, first kind, for spending, if necessary, while acting for the client and on his behalf; and the other, by way of realisation, again, while acting for the client and on his behalf. Clearly he is not a debtor as regards either, for in one case, he receives the amount from the client for spending it on hia behalf, and in the other, he receives it from one who is obliged to pay it to the client, on the letter's behalf and for transmission to him. In both cases the client is the owner even while the amounts are in the hands of the advocate. The borrowed debt in the hands of the borrower is his, and not the creditor's. Nor is he a bailee as regards either of these kinds of amounts. He can spend the amount received from the client for expenses to meet which it has been paid, and where he has spent, and to that extent, he is under no liability to pay back the amount.
But he is under a liability to satisfy the client that the withheld portion has been spent on behalf of the client, or in other words, he is liable to render an account to the client and to hand over the balance, if any, to him. He cannot be characterised as a bailee, at any rate, as a mere bailee, even as regards amounts realised toy him on behalf of his client. It should be remembered that a bailment involves two elements, a proprietary aspect and a contractual aspect, and that the latter is missing here in that the advocate realises the amount not under a contract either with the payer or with the ultimate payee, his client, but by and while acting for his client. Here again his liability is to account.
'An attorney-at-law who collects money for a client is bound to pay it over to his client at the earliest opportunity; and in the meantime he must not mix it with his own money. A bill for an account will therefore lie against him.' (C. C. Langdell -- A Brief Survey of Equity Jurisdiction --Harvard Law Review, Vol. II, 1888-89, P. 241 at 266).
He receives both kinds of amounts in his capacity as his client's advocate, and that jural relationship ought to determine the nature and character of his liability to his client as regards the latter's amounts in the hands of the former. This jural relationship is not founded, so much on a contract, as already seen, but arises from the status and the choice of the particular advocate by the client. Therefore, his liability to account to his client is not founded on any contract, and the principles governing institution of suits arising from and in respect of contractual obligations including those related to agency are of no assistance in the matter of deciding the question as to where the cause of action or part thereof arose; nor is the principle that debtor should seek out his creditor and repay the debt, of any help to contend that the cause of action or part thereof arises where the client resides. And, 1 suppose, it will be a bad day for the profession, if it were that an advocate can be made to defend himself by hia former clients in different courts for acting on their behalf not jn these courts, but somewhere else.
7. Having found that an advocate's liability to his client as regards the client's money in the advocate's hands is a liability to account, and that liability arises not out of any contract between them, it falls to be decided as to when and where that liability arises, for it is only then that a cause of action accrues to the client to ask the advocate to account, and it is only there where it arises, can he seek the aid of the court to compel the advocate to account to him. The foundation of the liability to account that arises in law, and not out of a contract, is that the person sought to be made liable to account, receives and/or comes by property of some kind including moneys and is thus in possession and control of it, (not mere custody) but, mark, only possession and not ownership, which is in the person seeking to make the other liable to account to . him, and the former's possession of it is not as a mere bailee, and, further, there is some sort of privity, in the sense, fiduciary relation, between the two.
Therefore, the essential factor that determines the cause of action is possession of the property by the person liable to account without ownership thereof which is in the person seeking the aid of the court to make the former to account to him. That the latter can compel the former to account only if the latter has ownership of the property, and only if there is privity between the two, is a matter affecting his competency to sue for account, as also, that the former's possession of the property is not merely that of a bailee. If the last mentioned factors are established, the former is liable to account and this liability arises as and from the time former is in possession of the property and that liability arises where the former comes by possession of it.
An advocate receives moneys from his client in his chambers and realises moneys on his behalf as fruits of litigation in the court where he acts for the client, or shortly put, he receives both kinds of moneys at the place where he carries on his profession, that is, where he practises the profession of law. This, in my view, determines the place where the cause of action in such suits arises and consequently, the territorial jurisdiction of the forum for institution of a suit against him by his client to account the moneys paid by the client to him and realised by him on behalf of his client.
8. The result is the learned Munsiff is right in holding that his court has no jurisdiction to entertain the suit, and the learned District Judge, worng in holding otherwise and reversing the finding entered on issue No. 1 in the case. I set aside the judgment of the appellate court in C. M. A. No. 28 of 1978 on its file hich is under revision, and restore that of the Munsiff's Court in O. S. No. 250 of 1976 on its file. This Civil Revision Petition is allowed as indicated above. The revision petitioner is entitled to his costs in the C. M. A. and this Civil Revision Petition.