Sk Systems PVT. LTD. And Anr vs. Ravi Kant Chandhok

Facts

The Appellants, SK Systems Pvt. Ltd. and another, appealed a Commercial Court judgment that decreed their liability to pay the Respondent, Ravi Kant Chandhok, ₹13,50,000/- plus interest. The Respondent, an advocate, provided legal services to Appellant No. 1, a company, starting in 2016, initially for taxation and later for recovery actions under the Insolvency and Bankruptcy Code, 2016. The Appellants claimed that invoices were raised promptly and settled within seven days, with no prior disputes. In 2019, the Respondent assisted in recovery actions, for which the Appellants claim an oral agreement for ₹50,000/- was made and paid in cash. However, in November 2020, the Respondent raised an invoice for ₹13,50,000/-. The Appellants denied this liability, stating the demand was exorbitant and contrary to past dealings. The Respondent filed a recovery suit, which the Commercial Court decreed.

Held

The High Court held that the Commercial Court erred in decreeing the entire claim of ₹13,50,000/-. The Court found that the Respondent failed to discharge the evidentiary burden to prove the quantification of his claim, particularly in the absence of a written agreement or mandate regarding fees. The Court noted that the Respondent's testimony admitting the lack of a written agreement was sufficient to question the claim. It found the claimed amount disproportionate to the work done, citing the documentary evidence and past fee payments for similar services. The Court reasoned that the inflated demand lacked contemporaneous acceptance by the Appellants. Therefore, the Court modified the decree, quantifying the fee based on the benchmark of previously charged fees for identical services. The total assessed fee was ₹2,82,500/-, with simple interest at 6% per annum from the invoice date until realization.

Key Issues

1. Whether the Commercial Court erred in accepting the Respondent's version of professional fees without a written agreement or mandate, and without cogent reasoning for the decreed amount? (Section 96, CPC, principles of contract law). The Appellants argued that the decree was passed without substantiation and solely on the Respondent's assertions. They contended that the services for which the ₹13,50,000/- invoice was raised had already been paid for by a ₹50,000/- cash payment, agreed orally. They further argued that the invoice was belated, exorbitant, and inconsistent with past dealings where similar services were billed at significantly lower rates (approx. ₹12,500/- per notice). The Respondent argued that the Appellants approached him for recovery actions against several entities under the IBC, provided data, and sought opinions on tax laws. The judgment does not explicitly record the Respondent's arguments regarding the absence of a written agreement or the justification for the fee amount, beyond stating that the Respondent initiated recovery actions.