Holding

The Supreme Court upheld the Disciplinary Committee’s finding of professional misconduct and the removal of the advocate from the roll, finding that the evidence supported the inference of his active participation in the fraud.

Summary

The appellant, an advocate practising in Bombay, was alleged to have participated in a fraudulent loan scheme by misrepresenting himself as a financier and inducing the complainant to pay large sums for legal and other expenses, after which the loan was never disbursed. The State Bar Council of Maharashtra, and subsequently the Bar Council of India’s Disciplinary Committee, found that the advocate was an active member of the racket, had received Rs.10,000 from the complainant, and committed professional misconduct under Section 35 of the Advocates Act. The appellant contended that he merely prepared mortgage documents for his client, the financier, and that the Committee’s findings were based on surmise, conjecture, and inadmissible witness testimony. The Supreme Court examined whether the evidence, including testimonies of other loan seekers, justified the inference of the advocate’s participation in the fraud and whether the disciplinary punishment was proper. The Court held that the Committee had properly scrutinised the evidence, drew reasonable inferences, and was not acting with bias; consequently, the finding of misconduct and removal from the roll were upheld. The appeal was dismissed with costs.

Issues considered

Whether the Disciplinary Committee correctly established the advocate's participation in the fraudulent loan racket on the basis of the evidence.
Whether the removal of the advocate's name from the State Bar Council roll under Sections 35, 36, and 36‑B of the Advocates Act, 1961, is a proportionate punishment.
Whether the Committee erred by relying on surmise, conjecture, or inadmissible witness statements.
Whether the standard of proof required for professional misconduct was satisfied.

Legislation cited

Advocates Act, 1961s. 35, s. 36, s. 36-B, s. 38, s. 43

Subjects

professional misconductadvocate disciplineloan fraudremoval from rollreasonable inferenceevidentiary standardsBar Council disciplinary proceedings

Judgment

DEVENDRA BHAI SHANKAR MEHTA A
v.
RAMESHCHANDRA VITHALDAS SHETH AND ANR.

APRIL 22, 1992

[N. M. KASLIWAL AND G. N. RAY, JJ.] B

Advocates Act, 1961:

Sections 35, 36, 36-B, 38-Advocate-f'rofessional misconduct-Al-
legations of defrauding and cheating aspirant loanees-Proceedings before C

- State Bar Council and Bar Council of India-Findings of Disciplinary Com-
mittee that concerned advocate and financier being parties to racket defrauded
aspirant /oanee in receiving large sum of money on pretext of legal expenses
and other incidental costs for advancing proposed loan-f>unish-
ment-R.emoval of name of advocate from Roll of State Bar Council-
Validity of. D
Bar Council of India-Disciplinary Committee-Proceeding against ad-
vocate-+'indings based on facts-Standard of proof required to establish.

The appellant was an Advocate practising in Bombay. Respondent
No.I (the complainant) made a complaint to the Bar Council of E
Maharashtra alleging professional misconduct against the appellant. His
case was that he was a proprietor of a firm engaged in a business of
manufacturing. He was in need of financial accommodation and a finan-
cier impressed upon him that on examination of his papers by a solicitors'
firm run by the appellant, he would be given loan. He was also told that F
the appellant was also one of the investors. The complainant on such
representation agreed to get loan through the financier. On inspection of
properties of the complainant the financier told him that a loan upto Rs.7
lakh would be advanced to him provided he would pay at the rate of 5-1/2%
on the advance of amount of loan towards legal and other expenses. In a
meeting held at the residence of the appellant in connection with the G
proposed loan the appellant told the complainant that he was an advocate
of a certain firm and he worked only for the genuine financiers and would
look to the interests of the loan seekers. He also told that he was himself
a member of the internal group of the financiers. The appellant induced
the complainant to part with certain· money for legal expenses ~nd in- H
687
688 SUPREME COURT REPORTS (1992) 2 S.C.R ..

A formed him that out of 5-1/2% of the amount of loan required to be paid )--
by him by way of legal expenses. the appellant would keep 3-1/2% for the
stamp duty payable to the Government. He also told that the disbursement
could be expedited only ifthe complainant paid cash to the financier before
certain date. On the stipulated date the complainant paid Rs.25,000 to the
financier. He also paid the balance of Rs.13,500 to the appellant. There·
B after the appellant made all attempts to delay the disbursement and asked
the complainant to pay Rs.10,000 more which the latter paid. However, the
proposed loan was not disbursed and instead of it, the financier m"ade a
complaint· against the complainant in the Social Security Branch.

c The complainant made a complaint to the CID Branch of Bombay
Police against the financier and the appellant. The financier was charge-
sheeted. On the advice of the police the complainant made an application
to the Maharashtra Bar Council. He also alleged that the appellant had
indulged in fraudulent activities in respect of other persons and attached
D a list of witnesses to the complaint. The appellant challenged the proceed·
ings before the High Court, but the Writ Petition was dismissed and the
proceedings before the State Bar Council continued.

The complaint before the State Bar Council could not be disposed
E of within the statutory period and the case stood transferred to the
Disciplinary Committee of the Bar Council of India. Meanwhile the finan·
cier died. The Disciplinary Committee analysing the evidences dispas-
sionately and considering the affidavits filed on behalf of both the parties
as also the affidavits filed by some witnesses alleging that they had also
F become the victim of fraudulent action and cheating by the financier and
the appellant, held that there was a racket for defrauding and/or cheating
to aspirant loanees, and the financier and the appellant-advocate. were.
parties to such racket; that the appellant in connivance with the financier
defrauded the complainant in r:e~eiving large sum of money on the pretext
G of legal expenses and other incidental. costs for advancing the proposed
loan to the complainant, but such loan was never advanced to him; that
the appellant had received Rs.10,000 from the complainant; that a case of
professional misconduct under section 35 of the Advocates Act had been
established against the appellant. The Committee, therefore, ordered the
name of the appellant to be removed from the State Roll of the Bar Council ~
l

H of Maharashtra.
D. B. S. MEHTA. v. R.V. SHETH 689

In the appeal to this Court, it was contended on behalf of the A
appellant that he had no role in the matter of alleged fraudulent activities
of cheating by the financier and/or some other persons as he was engaged
by the financier for preparing the document of mortgage after inspection
of records of the complainant for advancing the proposed loan and he had
only rendered the professional service as an advocate in a fair and proper
manner; that the appeallant had only received hie professional fees from
B
the financier and did not receive any amount from the complainant; that
the finding of the Disciplinary Committee that the appellant had been a
member of the racket and had taken part in defrauding and cheating the
complainant was based on surmises and conjectures; and that the Discipli-
nary Committee committed a grave error in law in considering the evidence C
,,,..- of witnesses who were total strangers to the case of alleged fraud and
cheating.

Dismissing the appeal, this court,
D
HELD: 1.1. The appellant advocate has not only misused the trust
reposed in him but has played an active part in defrauding or cheating the
complainant who on the basis of the false representation of the appellant
had to part with substantial amount to his serious loss and prejudice.
[p.704 E-G] E

1.2. A perusal of the entire evidence placed on record leads to the
irresistible conclusion that the appellant was not only having full
knowledge about the racket but was also an active member of such racket
and was getting substantial financial advantage. The appellant was not a F
silent spectator merely giving his legal advice, but was an important link
in the modus operandi of running a racket by the financier. [p. 704 C-D]

1.3. The evidence of many other applicants seeking loan showing that
they were also duped and met the same fate as the complainant,· speaks G
volumes against the conduct of the appellant. [p. 704 BJ

1.4. An advocate indulging in such nefarious activities is not entitled
to continue as a member of legal profession which is based on the implicit
faith and confidence in the mind of the client. [p. 704 B-C] H
690 SUPREME COURT REPORTS [1992) 2 S.C.R.

A 1.5. It is not the case of a lapse to take appropriate steps by an
advocate and/or a case of negligence in discharging the duties so that any
lenient view may be taken against the concerned advocate. [p. 704 F]

1.6. An advocate enrolled under the Advocates Act, 1961, having a
licence to represent the case of litigants is expected to maintain a high
B standard of morality and unimj>eachable sense of legal and ethical
propriety. [ p.704 E]

2. The complainant specifically alleged that there was a racket to
which the appellant and the financier were parties. He indicated the modus
operandi by which he became victim of the fraudulent activities of the said
c members of the racket. To bring home the case of racket, the depositions
of other persons who had also approached the financier for advancement
of loan and had been dealt with by him and the appellant in similar
manner and though they had to part with substantial amount towards
legal and other expenses for getting the proposed loan, such loan had not
D been ultimately sanctioned to them, became relevant and necessary to be
looked into. [p. 701 8-D]

3.1. It is always permissible to draw reasonable inference from the
facts established in a proceeding and such reasonable inference cannot be
termed as finding based on surmises and conjectures. There is no manner
E of doubt that in any proceeding, judicial or quasi judicial, there is require-
ment of proof and such requirement cannot be substituted by surmise and
conjecture. But proof may be established directly on the basis of the
evidence adduced in the proceeding or the allegation of fact may be
established by drawing reasonable inferences from other facts established
F by evidence. [p. 703 8-D]

3.2. In the instant case, the Committee, has referred to the admitted
facts and also the facts established in evidence and on a proper analysis
of the facts so established and/or admitted, it has drawn reasonable
inference. The Committee was alive to variou_s aspects of the case and has
G taken care in meticulously scrutinising and analysing the evidence on
record and the materials, and the Committee has based its finding by
giving cogent reasons and the inferences drawn from the established facts
also appear quite reasonable. The Disciplinary Committee deserves com-
mendation in disposing of the complainant's case fairly and dispassionate-
H ly. In the matter of imposition of punishment, the Disciplinary Committee
D. B. S. MEHTA . v. R.V. SHETH [RAY, !-] 691
•
has ~rerred to the relevant decisions or this Court and has imposed the A
penalty by recording good reasons for the same. [p. 703 A; D-EJ

Re: Pan Advocate AIR 1963 SC 1313 and M. Veerbhadra Rao v. Tak
Chand, AIR 1985 SC 28, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4437 of B
1990.

From the Order dated 30.6.1990 of the Diciplinary Committee of the
Bar Council of India in B.C.I. TR Case No. 127 of 1988.

Satish Chandra, V.B. Joshi and Umesh Bhagwa( for the Appellant. C
Respondent-in-person (NP)

The Judgment of the Court was delivered by

G; N. RAY, J. This Civil Appeal is directed against the order dated D
June 30, 1990 passed by the Disclipinary Committee of the Bar Council of
India under Section 368 of the Advocates Act, 1961 in BCI Tr. Case No.
127 of 1988 arising out of the complaint made before the Bar Council of
Maharashtra in D.C. No.22 of 1987. Shri Ramesh Chandra Vithaldas Sheth
made a complaint on February 9, 1987 to the D.C. No.21 of Bar Council
of Maharashtra against the respondent Devendra Bhaishankar Mehta, an E
Advocate practising in Bombay imer alia alleging professional misconduct
against the said advocate. It was alleged by the respondent complainant,
that he carries on business of manufacturing at Jhalod and he owns a

-- proprietary firm named as M/s Ravi Dyechem Manufacturing Industries
and M/s Vithaldas Dye Stuff Manufacturing Company. The complainant
was in need of financial accommodation and was in search of a reliable
financier and one Mr. Balu Bhai Modi impressed the complainant that they
F

would give financial accommodation on being satisfied about the docu-
'y ments of sec·urity. It was represented to the complainant that a firm of
Solicitors run by the said Shfi Devendra Bhaishankar Mehta would ex-
- amine the papers for the purpose of financing and the said Shri Devendra
Bhai Mehta was also an investor. The complainant on such representation
G

agreed to get financial loan through the said Balu Bhai Modi. The com-
plainant alleged that an inspection of factory and other premises at Jhalod
was made by Shfrllalu Bhai and he was informed that the said properties
were in excellant condition and the estimated value was Rs.12 lakhs. He H
692 SUPREME COURT REPORTS [1992] 2 S.C.R.

A was also assured that since the properties were valuable and in excellant
condition a lower rate of interest would be considered and he was also told
that a loan up to Rs.7 lakhs would be advanced to him provided the
complainant would be advanced to him provided the complainant would
pay a draft or cash at the rate of 5 and 1/2% on the advance of the amount
of loan towards legal and other expenses. He was also informed that a
B meeting of the financiers would be held including Mr. Devendra Bhai
Mehta who was one of such financiers. Thereafter a meeting was arranged
at the residence of the said Shri Devendra Bhaishankar Mehta and in such
meeting Shri Devendra Bhaishankar Mehta falsely represented to the
complaint that he was an advocate of the firm of solicitors M/s Dayalji and
c Deepchand and he worked only for the genuine financiers and he would
look to the interests of the loan seekers. Shri Devendra Bhaishankar Mehta
also represented to the complainant that he was himself a ~ember of the
internal group of the financiers who would advance the loan and hence he
was not only preparing the mortgage deed for the proposed loan but also
D scrutinising it for his own satisfaction. He also assured the complainant that
once the mortgage deed was drafted by him the complainant would get
loan within ten days because thereafter only the formalities were required
to be gone into. The said Shri Mehta induced the complainant to part with
money for legal expenses and informed the complainant, that out of 5, and
1/2% of the amount of loan required to be paid by the complainant by way
E of legal expenses, Shri Devendra Bhaisnanknar Mehta would keep 3 and
1/2% for the stamp duty payable to the Government and he also repre-
sented that the disbursement could be expedited only if the complainant
would pay cash to Balubhai Modi on April 10, 1986. Shri Devendra Mehta
also promised that he would see that the loan proposal was passed in the
F internal group of meeting of the financiers of which he himself was one of
the financiers and he· would ensure that Shri Balu Bhai Modi would
sanction the loan as early as possible. Thereafter Shri Devendra Mehta had
inspected the documents and returned most of the original documents and
assured the complainant that he would get loan in a few days. On April 10,
1986 the complainant went to the office of Shri Balu B. Modi and handed
,.,-
G over to him a sum of Rs.25,000 for the loan of Rs.7 lakhs @ 14%. Shri Balu
B. Modi told the typist to prepare the stamp receipt and also informed the
complainant to arrange for the payment of balance of Rs.13,500. The
complainant informed him that he would pay the balance to Shri Devendra
Mehta at the time of disbursement of loan. Shri Balu Bhai Modi told the
H
D. B. S. MEHTA. v. R.V. SHETH [RAY, J.) 693

complainant to pay to Shri Devendra Mehta within a week and he in- A
structed the typist to'put the date as April 17, 1986 by which date the
complainant would pay the balance sum of Rs.13,500.

The complainant alleged that thereafter he had contacted Shri
Devendra Bhaishankar Mehta who represented to the complainant that if
B
the complainant could not pay the balance of Rs.13,500 in a week, how
internal group of financiers would believe that the complainant would
repay the loan of Rs.7 lakhs. He, therefore, advised the complainant that
he should pay a balance of Rs.13,500 and the complainant accordingly paid
the spid balance sum. Shri Devendra Bhaishankar Mehta, thereafter, made
all attemps to delay the advancement of loans by unending demands and c
the complainant had to forward about 200 documents to Shri Devendra
Bhaishankar Mrhta, but Shri Mehta ultimately conveyed to the com-
plainant thrqugh Shri Balu Bhai M.odi that as the clearance certificate
under Section 230 A(i) of the Income Tax Act had not reached the Office
of the concerned authorities and as the said advancement of loan was very D
heavy, he would neither advance his share of finance nor he would agree
to the disbursement until a sum of Rs.10,000 would be handed to Shri
Devendra Bhaishankar Mehta. The complainant caused an enquiry and
came to know that the Certificate under Section 230 A(i) had reached the
office on June 5, 1986. He, however, paid Rs.10,000 in July, 1986 to Shri
Dcvendra Bhaishankar Mehta in the presence of Shri Balu Bhai Modi, E
--+-
/
when Shri Dcvendra Bhaishankar Mehta told the complainant that he
would issue the receipt at the time of the disbursement of the loan and he
should be trusted. The complainant further alleged that despite such
payment and other st{!ps taken by the complainant, instead of disbursing
the proposed loan, Shri ·Batu Bhai Modi lodged a false complaint against F
. the complainant in Social Security Branch of Bombay Police on September
5, 1986. The complainant thereafter made an application to the C.I.D.
Branch of Bombay Police on September 8, 1986. The complainant alleged
that because of the friendly relationship by the racketeers including the
said Shri Balubhai Modi and Shri Devendra Bhaishankar Mehta with the
police, nothing was heard about his complaint but ultimately on the per- G
sonal intervention by the Commissioner of Police, Bombay, his application
was duly registered and Shri Balubhai Modi was chargesheeted in Criminal
Case No. 1110/86. The complainant was advised by the Police to make an
application to the Bar Council against Shri Devendra Bhai Mehta. The
complainant also alleged in his petition of complaint to the State Bar H
694 SUPREME COURT REPORTS [1992) 2 S.C.R.

A Council that Shri Devendra Bhai Mehta had indulged in fraudulent ac-
tivities in respect of other persons and a list of Witnesses was attached to
the said letter of complaint. As the complainant case before the State Bar
Council, could not be disposed of Within the statutory period, the complaint
stood · transferred to the Disciplinary Committee of the Bar Council of
B India and numbered as B.C.I. Tr. Case No.127/88. As aforesaid, the
judgment dated June 30, 1990 in the B.C.I. Tr. Case No.127 of 1988 is the
subject matter of Civil appeal No. 4437 of 1990.

When· the complaint case was pending before the Disciplinary Com-
mittee of the State Bar Council of Maharashtra, the said Disciplinary
c Committee called upon the appellant to file an affidavit. Pursuant to the
direction of the State Bar Council of Maharashtra, the appellant filed an
affidavit dated November 26, 1987 indicating therein the particulars of the
documents drafted by the appellant at the instance of the said Shri Balub-
hai Modi for advancing loans to different persons intending to get Joan
·D accommodation. The complainant-respondent also deposed before the
Disciplinary Committee of the State Bar Council and had applied for
issuing summons to the Witnesses namely to the deponents of the affidavits
affirmed by Shri Munjibhai M. Shah and Shri Devendra Shashikant
Dyanmhotre, who had stated in their affidavits that they had also become
victim of fraudulent action and cheating by the said Shri Balubhai Modi in
E connivance With the appellant Devendra Mehta. The appellant oppos<::d
examination of such persons as Witnesses in the proceedings inter a/ia on
the ground that the .said affidavits had disclosed independent grievances of

-
the deponents and the said deponents had not complained before the Bar
Council. It, however, appears that the State Bar Coucil of Maharashtra
F overruled such objections of the appellant. The appellant in an attempt to
stall the proceeding before the State Bar. Council moved a Writ Petition
under Articles 226 and 227 of the Constituti:on of India being Writ Petition
No. 1897 of 1988 in the High Court of Bombay inter alia challenging the
legality and validity of the said complaint proceeding before the State Bar
G Council. Such Writ Petition, however, was rejected by the Bombay High
Court on April 27, 1988 and the matter thereafter proceeded before tlie
State Bar Council and then stood transferred to the Disciplinary Commit-
tee of Bar Council of India. The Disciplinary Committee of Bat Council
of India examined and recorded evidenCO'S of Prafulchandra Shah (CW 2),
Munjibhai M. Shah (CW 3), Shashikant D. Dyanmhotre (CW 5), Bhawanji
H Bharot (CW 6) and Mahesh Ramanlal Shah (CW 4). It may be noted here
D. B. S. MEHTA. v. R.V. SHETH [RAY, J.] 695

that Mahesh R. Shah (CW 4) an advocate had acted for Prafulchandra A
Shah in Criminal Case. The appellant and complainant had also deposed
in the said disciplinary proceeding before the:!. Bar Council of India and
their respective statements were also recorded.

The Disciplinary Committee of the Bar Council of India scrutinised B
> and analysed the evidences and materials on record and by giving elaborate
reasoning, the Disciplinary Committee inter alia came to the finding that it
was established beyond reasonable doubt that there was a racket for
defrauding and/or cheating to aspirant loanees and ·Shri Balubhai Modi
and the appellant advocate were parties to such racket. The Disciplinary
Committee had also come to the finding that it was established that the
appellant had received Rs. 10,000 from the complainant-respondent on July
11, 1986. The Disciplinary Committee also .came to the finding that the
appellant in connivance with the complainant defrauded the complainant
in receiving large sum of money on the.pretext of legal expenses and ot~er
incidental costs for advancing the proposed loan to the complainant but D
such loan was never advanced to the complainant and instead of disbursing
the loan, Shri Balubhai Modi got a false complaint lodged ·against the
complainant in Social Security Branch on September 5, 1986. The Discipli-
nary Committee also came to the finding that a case of professional
misconduct under Section 35 of the Advocates Act, 1961 had been estab-
lished against the appellant. On the question of punishment to be imposed E
on the appellant, the Disciplinary Committee of the Bar Council of India
inter alia came to the finding that in the facts and circumstances of the
case, the offence of misconduct committed by the concerned Advocate was
of a very serious nature. The Advocate had no feeling of regret and remorse.
There was no extraneous circumstances on the basis of which the members F
of the Committee could persuade themselves to take a lenient and liberal
view about the punishment and a lenient view would not be justified in the
facts of the case. The Committee felt that the name of the said Advocate
-'· y should be removed from roll of the Advocates. The Disciplinary Committee
has noted that the Committee has taken into consideration the guidelines
given by the decisions of this court in several cases namely in Re: P an G
Advocate (AIR 1963 SC 1313] and in M. Veerbhadra Rao v. Tek Chand AIR
1985 SC 28 for imposing the punishment on the concerned Advocate. The
Disciplinary Committee therefore passed the following order in exercise of
power under Section 35(3)(d) read with Section 36 and 36 B under Section
• 43 of Advocates' Act, 1961. H
696 SUPREME COURT REPORTS [1992] 2 S.C.R.

A ORDER:

"The name ofrespondent-Advocate Mr. Devendra Bhaishankar
Mehta, Advocate on the State Roll of the Bar Council of
Maharashtra be removed from its Roll. He shall pay Rs.2,000
B
as costs of these proceedings to complainant Mr. Ramesh-
chandra Vithaldas Sheth."

At the beaming of this appeal, it has been very strongly contended
-
before us by the learned counsel for the appellant that the Disciplinary
Committee of the Bar Council of India had proceeded with a closed mind
C presumably being influenced by the serious nature of complaint made by
the complainant-respondent without appreciating properly that the appel-
lant had no role in the matter of alleged fraudulent activities and of
cheating by Shri Balubhai Modi and/or some other persons. The appellant
had only ·rendered the professional service as an Advocate in a fair and
D prop.er manner. It has been contended by the learned counsel for the
appellant that the appellant is a practising counsel and he was engaged by
the said Shri Balubhai Modi for preparing the documents of mortgage, on
inspection of the records of the complainant for advancing the proposed
loan for Rs. Seven lakhs. The appellant in his professional capacity had to
give his advice. Accordingly, he had looked into the documents placed
E before him by Shri Balubhai Modi and the complainant and prepared the
draft deed for mortgage and he had also advised his client Shri Balubhai
Modi for compliance of the conditions mentioned in the draft deed_ before
advancement of loan so that his client Shri Modi was properly secured.
The learned counsel has also contended that such action on the part of the
F appellant was only fair and proper and any responsible Advocate when
engaged by a client was expected to do in the manner in which he had
acted. The learned counsel has further contended that it is not a case of
--
the complainant or anybody that the appellant had given any advertisement
for advancing loan to any person and it is also nobody's case that he on
his own had induced persons to seek such loan and/or he had referred the
G complainant or any other person to Shri Balubhai Modi or to any' other ·
person for getting such loan. It has _been contended by the learned counsel
that it is the positive case of the complainant-respondent that pursuant to
the advertis~ment given by Shri Balubhai Modi he had approached Shri
Balubhai Modi for a loan for running his business and Shri Balubhai Modi
H had clearly slated lo the complainant that such loan could be advanced if
D. B. S. MEHTA. v. R.V. SHETH [RAY, J.] 697

on inspection of the properties of the complainG.Dt the financiers· would A
decide that such loan could be advanced to the complainant and such loan
would be advanced on the basis of advice to be taken from the lawyer of
the financiers and on execution of proper mortgage deed, on scrutiny of
the relevant papers and documents. The appellant did not come into the
picture at all when the complainant pursuant to the advertisement had
contacted Shri Balubhai Modi. It has also been submitted by the l~arned
B
counsel that· admittedly the complainant was referred to the appellil~t in
his capacity as a legal practitioner engaged by the said Shri Balubhai, Modi
and/or the financiers. The learned counsel has contended that only in the
capacity of an Advocate engaged by a client, the appellant had drafted the
deed of mortgage and he had also clearly indicated to the complainant and c
also to the said Shri Balubhai Modi when the Conference was held in his•
place that for advancement of loan, the mortgage deed as drafted by him
should be executed and the complainant should fulfil the terms and con-
ditions indicated by the appellant in the draft deed. Since the complainant
failed to satisfy the terms and conditions as drafted by the appellant, he D
had advised Shri Balubhai Modi that he could not approve the advance-
ment of loan. The learned counsel has further submitted that i~ is an
admitted case that thereafter the complainant got another docurient
prepared by somebody else and the appellant refused to approve such
document because the same was not drafted by him and he did not want
to take any responsibility in the matter on the basis of a document not E
drafted by him. The learned counsel has con.tended that such action on the
part of the appellant clearly indicates that the appellant was a responsible
;
lawyer who wanted to 'safeguard the interest of his client and despite
request he did not agree to approve any document not drafted by him. It
has been submitted by the learned counsel for the appellant that if the F
appellant had real intention to defraud the complainant and to be a party
to the alleged racket, he would not have dealt in a straightcut manner, and
woµld not have washed his hands in the matter of execution of the docu-
ment of mortgage. The learned counsel for the appellant has further
submitted that the case of payment of any money directly by the ~om
plainant to the appellant as sought to be made was not true and should not G
be accepted. The appellant had received his professional fees only from
his client namely, Shri Balubhai Modi. He had further submitted that' the
complainant-respondent falsely stated before the Bar Council that the
appellant had extorted Rs.10,000 from him and such payment of Rs.10;000
H
698 .SUPREME COURT REPORTS [1992) 2 S.C.R .

A was made by the complainant directly to the appellant. He has submitted
ilia't such case was not made out by the complainant in his complaints
before the Police. The complainant made embellishment to his case by
falsely alleging that the appellant had asked the complainant to pay a sum
of Rs.10,000 on the assurance that on such payment mortgage deed would
be executed without any delay so that the complainant would get the loan,
of Rs. Seven lakhs and the appellant had actually received Rs.10,000 from
him. The learned counsel has contended that such uncorroborated tes-
timony of the complainant about payment of Rs.10,000 by him to the
appellant is not at all convincing and should not be accepted more so when
such case had riot been made out in the beginning and a false case of
c payment of Rs.10,000 was sought to be introduced at a later stage. The
learned counsel has contended that if the judgment/order under appeal is
scrutinised in the proper perspettive, it will clearly reveal a closed mind
and a biased approach of the members of the Disciplinary Committee. The
Committee unfortunately presumed various facts against the appellant on
D mere surmise and conjecture for the purpose of coming to the finding that
the. appellant had been a member of the racket and he had taken part in
defrauding and cheating the complainant a large sum of money by a.Ssuring
him that a loan of Rs. Seven lakhs would be advanced to him. The learned
counsel has also contended that the Disciplinary Committee has committed
a grave error in law in considering the1evidences of four witnesses who were
E total strangers to the case of alleged fraud and cheating of the complainant.
Such witnesses had no knowledge whatsoever about the alleged deal relat-
ing to the case of the· complainant and they claimed to be aspirants of
getting loans individually in different transactions. ':!'he learned counsel has
also submitted that the ·Disciplinary Committee has committed a grave
F error in law in considering the evidences of CW 2 Prafulchandra Shah, CW
3 Munjibhai M. Shah, CW 5 Shashikant D Dyanmohtre and CW 6 Bhawan-
ji Bharot because the alleged case of complicity of the appellant in being
a member of the. racket to cheat the said aspiring Ioanees had not been put
to the appellant when he was under cross examination.

G The learned counsel had further submitted that the appellant is a
practising advocate and he 'has a status and respect in the Society. In
discharge of his prOfessional duties, he has acted as a responsible member
of the legal profession when he was engaged by Shri Balubhai Modi.· It is
neither possible nor desirable for an Advocate to cause enquiries about the
H real intention of the client in the proposed transaction between the client
D. B. S. MEHTA. v. R.V. SHETH [RAY, J.] 699

and a third party. Even if it is accepted that Shri Balubhai Modi gave A
advertisements to dupe the intending loanees for the purpose of cheating
them on false assurance of loans, the Disciplinary Committee should have
adverted to the real question in issue as to whether or not the appellant
himself made any false representation to the complainant and had taken
part in defrauding or cheating the· complainant. The mere fact that he was
B
engaged by a dishonest person cannot be any ground to hold that the
appellant himself was guilty of misconduct only becau~e he had acted as
an advocate of a party who may be quilty of the offence of fraud or
cheating. The part played by the appellant as an advocate was required to
be analysed with an open mind and with reference to the documents and
evidences on record but unfortunately the Disciplinary Committee c
miserably failed and neglected to discharge the responsibilities and the
duties and functions entrusted to the Committee. The Committee has
,,lo..
accepted inadmissible evidences and uncorroborated testimony of the com-
plainant, which in the facts and circumstances of the case were requried
to be discarded. It has been submitted by the learned counsel for the D
appellant that it is only unfortunate that instead of holding that the com-
plainant. unjustly tried to implicate the appellant by falsely alleging against
him that he was guilty of misconduct, the Disciplinary Committee, on mere
suspicion has drawn adverse inferences against the appellant and based its
finding which really lay in the realm of surmise and conjecture. The learned
counsel has submitted that this being a statutory appeal, this Court should · E
intrinsically consider the facts and circumstances of the case and should
make proper evaluation of the evidences on record and in doing so should
discard the improper and unjust finding made by the Disciplinary Commit-

- tee. The learned counsel for the appellant has contended that the Court
may have a concern to ensure that the professional morality and standard F
are maintained by the members of the profession but at the same time the
Court should not loose sight of the fact that any finding based on surmise
and conjecture against the appellant will not only do a great harm to his
avocation in life and professional career but will also cause immense harm
in the matter of his standing and repute in the society and to his friends
and relatives and such harms cannot be compensated in any manner. In G
the facts and circumstances of the case, the learned counsel for the
appellant has contended, that the complainant has misreably failed to
establish the complaint made to the Disciplinary Committee and the dis-
ciplinary proceeding was liable to be dismissed with exemplary cost. This
H
700 SUPREME COURT REPORTS [1992) 2 S.C.R.

A Court should therefore allow the appeal and dismiss. the complaint with
cost.

After giving careful consideration to the facts and circumstances of
the case and materials on record and arguments advanced at the hearing
B of this appeal, we, however, do not subscribe to the view that the Discipli-
nary Committee of the Bar Council has proceeded with a closed mind and
v.ith a definite bias presumably being influenced by the serious nature of
allegation as sought to be contended by the learned counsel for the
appellant. The Judgment and Order under appeal clearly reveal that the
Disciplinary Committee has taken pains in scrutinising and analysing the
c facts of the case as dispassionately as practicable. It also appears to us that
the weaknesses in the case of the complainant was not lost sight of and has
been specifically adverted to by the Disciplinary Committee even when
such infirmity was not pointed out by the appellant at the hearing. It was
contended that Rs.10,000 was not advanced by the complainant and the
D case of such advancement of Rs.10,000 to the appellant-advocate by the
complainant himself was false and after thought. The Disciplinary Commit-
tee has not only considered the case of the appellant as argued but has
also taken into consideration the other possible argument in favour of the
appellant though not argued. It was on consideration of all aspects of the
matter, the Disciplinary Committee has come to the finding by giying
E cogent reasons therefor. To illustrate this aspect, reference may be made
to paragraph 18 of the judgment under appeal:-

"If really A was not merely an advocate, but also a financier,
F would D utter the words: "I will pay Rs.10,000 fees to A only
after the registration of the documents", and even if he so utters
these words, would C not feel suspect about the same? In
fairness to A. We have addresed this question to ourselves
though A did not address us on this. But in the predicament
in which C was placed, in the situation in which he was made
G to drive himself from pillar to post and particularly having gone
out of pocket to the tune of Rs.40,000 after complying with the
necessary formalities so far and keen as he was to get the loan
of Rs.7,00,000 as early as possible, it is quite possible that his
conduct might not be that of a person who would be one of
1
H the accurate calculation and assessment." ·
D. B. S. MEHTA. v. R.V. SHETH [RAY, J.] 701

It has been strongly contended by the learned ~ounsel for the appel- A
Iant before us that the other aspirant loanees who had also approached
Shri Balubhai Modi and were referred to Shri Devendra Mehta for taking
legal steps to enable' the said aspirant loanees to get the proposed loan
should not have been examined in the case of Shri Devendra Mehta
because they. were not witnesses to the case of fraud and cheating of the
complainant and they had no personal knowledge of the. case and they had
B
also not made any complaint to the Bar Council in respect of their cases.
Such contention, in our view, is devoid of any merit and should be dis-
carded. The complainant specifically alleged that there was a racket to
which the concerned advocate and Shri Balubhai Modi were parties. The
complainant 'has indicated the modus operandi by which he became victim c
of the fraudulent activities of the said members of the racket. To bring
_ _,;
,.>--
home the case of racket, the depositions of other persons who had also
approached Shri Balubhai Modi for advancement of loan and had been
dealt with by Shri Modi and Shri Devendra Mehta in similar manner and
though they had to part with substantial amount towards legal and other D
expenses for getting the proposed loan, such loan had not been ultimately
sanctioned to them, became relevant and necessary to be looked into. As
a matter of fact, before the Bombay High Court the appellant also chal-
lenged the propriety and correctness of the Disciplinary Committee of the
State Bar Council to examine other loanees dealt with by Shri Balubhai
Modi and Shri Devendra Mehta but the High Court of Bombay did not E
accept such contention by holding inter alia that, read in proper context, it
cannot be said that the allegation of racket was totally absent. It may be
noted here that the Disciplinary Committee was anxious to independently
assess the facts and circumstances of the case in a dispassionate manner
----- witJ:iout being influenced by any observation of the Bombay High Court in
disposing of the Writ Petition of Shri Devendra Mehta. Such anxiety is
F
clearly demonstrated by the observation of the Disciplinary Committee in
paragraph 2 (c) of the Judgment/order under appeal which may be quoted
hereunder:

"2 (c) The High Court also went through C's evidence before G
the State D.C. and opined that read in proper context it cannot
be said that the allegation of a "a racket'' was totally absent
therein. All said and done, when the State D.C. properly
exercised its discretion, the High Court thought it improper to
entertain the Writ Petition under Art. 227 of the Constitution. H
702 SUPREME COURT REPORTS [1992) 2 S.C.R.

A We must say at this stage that at the time of assessing the whole
evidence at the end of full dress inquiry we have taken sufficient
care and caution to see that the findings of the State D.C. on
the preliminary issue and the High Court's dismissal in limine
of A's writ petition declining to interfere with the said findings
do not weigh with us for the said assessment. Suffice it to say,
B we have briefly narrated the details for keeping the record
straight."

It has also been contended by the learned counsel for the appellant
that the Disciplinary Committee could not appreciate the facts and cir-
c cumstances of the case in their proper perspective in view of the fact that
the Committee proceeded \vith a preconceived notion. It was precisely on
account of such a pre conceived view and bias, the Disciplinary Committee . ....t,_
failed to appreciate that the appellant had only acted in responsible
manner expected of an advocate engaged by a client. The learned counsel
D has contended that it was nobody's case that the appellant had floated a
proposal to advance loan and he had given any advertisement in response
to which the complainant had come in contact of Shri Balubhai Modi. It
is an admitted case that in response to an advertisement by Shri Balubhai
Modi, the complainant had approached Shri Balubhai Modi for loan and
only then he was referred to the appellant by Shri Modi because the
E appellant was engaged by Shri Modi as a counsel. Although the appellant
had always dealt with the complainant only in his capacity as an advocate
engaged by Shri Modi, a false complaint was lodged by the complainant
that the appellant had assured him and represented him that he hiraself
was a financier and he should pay the amount in question to Shri Balubhai
F Modi and also to the appellant towards legal expenses and other expenses
so that loan for Rs.7 lakhs would be advanced to him without delay. Such
case, according to the learned counsel, could not be established by any
corroborative evidence but has been accepted by the Disciplinary Commit-
tee on mere surmise and conjecture. We are, however, unable to accept
the said contention of the learned counsel. We have carefully considered
G the materials on record and the reasonings of the Disciplinary Committee
in the impugned judgment and we are unable to hold that the findings of
the Disciplinary Committee are outcome of any closed mind or bias on the
part of the Committee and/or findings of the Committee really lay in the
realm of surmise and conjecture. We have already ind~.~te~ 1t_he anxiety of
H the Disciplinary Committee to dispassionately assess the facts of the case
D. B. S. MEHTA. v. R.V. SHETH (RAY, J.] 703

without being influenced· by any observation of the High Court of Bombay. A
The Committee was alive to various aspects of the case and has taken care
in meticulously scrutinising and analysing the evidence on record and the
materials and the Committee has based its finding by giving cogent reasons
and the inferences drawn from the established facts also appear to us quite
reasonable. It may be indicated at this stage that Shri Balubhai Modi had
B
died during the pendency of the proceedings before the Disciplinary
Committee of the Bar Council of India and there was no occasion to
proceed further with the criminal proceeding initiated against him and/or
to examine him in the instant case. It is always permissible to draw
reasonable inference from the facts established in a proceeding and such
reasonable inference cannot be termed as finding based on surmises and c
conjectures. There is no manner of doubt that in any proceeding, judicial
or quasi judicial, there is requirement of proof and such requirement
cannot be subsituted by surmise and conjecture. But proof may be estab-
lished directly on the basis of the evidence adduced in the proceeding or
the allegation of fact may be established by drawing reasonable inferences
D
from other facts established by evidence. In the instant case, the Com-
mittee, in our view, has referred to the admitted facts and also the facts
established in evidence and on a proper analysis of the facts so established
and/or admitted, it has drawn reasonable inference. The Disciplinary
Committee deserves commendation i~ disposing of the complainant's
case fairly and dispassionately. In the matter of imposition of punish- E
ment, the Disciplinary Committee has referred to the relevant decisions
of this Court and has imposed the penalty by recording good reasons for
the same.

We are not oblivious of the fact that a member of legal profession F
should not be permitted to be exposed to the hazards of false and malicious
allegations against such member and extreme care and caution is required
to be taken in dealing with the case of allegation of unfair and improper
conduct on the part of a member of legal profession. There is no manner
of doubt that the impugned decision of the Disciplinary Committee has a
very serious implication on the reputation and standing of the appellant in G
the society and to the members of his family, friends and relatives. The
impugned decision has also a serious bearing on the professional career of
the appellant and avocation of life in future. But giving out anxious thought
and consideration in the matter, we have not been able to come to the
finding that the impugned order was improper and unjust and the findings H
704 SUPREME COURT REPORTS (1992] 2 S.C.R.

A are not tenable in law and/or the decision has resulted in a failure of justice
to the appellant. During the course of arguments before us, we had
pointedly asked the learned counsel for the appellant to show us any
material on record that in any other case on the advice tendered by the
appellant any loan was in fact given by Mr. Balu Bhai Modi in order to
dispel the inference that the appellant was not a member of the racket and
B
was only discharging his professional duty. The learned couHsel for the
appellant was unable to show any evidence worth the name to prove the
innocence of the appellant. The evidence of many other applicants seeking
loan shows that they were also duped and met the same fate as the
complainant speaks volumes against the conduct of the appellant. An
c advocate indulging in such nefarious activities is not entitled to continue as
a member of legal profession which is based on the implicit faith and
confidence in the mind of the Client. From a perusal of the entire evidence
placed on record and read before us, leads us to the irresistible conclusion
that the appellant was not only having full knowledge about the racket but
D was also an active member in the complicity of such racket and was getting
substantial financial advantage. The appellant was not a silent spectator
merely giving his legal advice, but was an important link in the modus
operandi of running a racket by Balu Bhai Modi. It is really unfortunat~t
that a member of a legal profession has indulged in fraudulent activities i~
a calculated manner for financial gain at the cost of an innocent person.
E To say the least, an Advocate enrolled under the Advocates Act, 1961,
having a licence to represent the case of litigants is expected to maintain
a high standard of morality a~d un-impeachable sense of legal and ethical ·-y-.
proprie~y. It is not the case of a lapse to take appropriate steps by an
Advocate and/or a case of negligence in discharging the duties so that any
F lenient view may be taken against the concerned advocate. The concerened
advocate has not only misused the trust reposed in him but has played an
active part in defrauding or cheating the complainant who on the basis of
the false representation of the concerned advocate had to part with sub-
stantial amount to his serious loss and prejudice. In such facts and cir-
cumstances of the case, we do not find any reason to reduce the
G punishment imposed on the appellant. This appeal, therefore, fails and is I
I

dismissed with costs.

R.P .. Appeal dismissed.
. l.

r .. , , .. , _,•
'"