Little-known law helps firm dodge legal fees

NEW DELHI: In contrast to the general refrain that lawyers extract money from gullible clients ignorant about the legal processes, a private company successfully dodged payment of legal assistance fee to a lawyers' firm successfully by exploiting a little-known provision in Indian Partnership Act.

'The Chennai Law Firm' had filed a suit against Reyvish Associates Pvt Ltd seeking recovery of over Rs 6.5 lakh legal fees due to it for legal assistance rendered to the company. A Chennai city civil court directed the company to pay up the money with 12% interest.

The company challenged this order before the Chennai principal judge in the district court and argued that the law firm was an unregistered one and hence cannot file a recovery suit against any party. The principal judge accepted the argument, reversed the trial court decree and ordered that no suit could have been filed by the unregistered partnership firm of lawyers.

Madras HC, refused to entertain an appeal by the law firm saying as the payment arose from a contract, the lawyers' firm could not have filed a suit because of the bar under Section 69(2) of Partnership Act, which provided that - "No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the register of firms as partners".

In the appeal before Supreme Court bench of Justices Surya Kant and N Kotiswar Singh, the law firm argued that the lawyer's fee is a statutory due and hence was recoverable through a suit. The bench disagreed. Justice Kant said, "HC and the lower appellate court are right that you are an unregistered partnership firm, which does not have the right to recover dues by filing suits. What kind of lawyers are you who cannot secure your professional fees?"

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