Bank Panel Lawyer Moves Karnataka High Court Against IBA Blacklisting, Court Questions Maintainability Of Writ

A practising advocate empanelled by the South Indian Bank to look into its legal affairs has approached the Karnataka High Court challenging his inclusion in the Indian Bankers Association's (IBA) Third Party Entity (TPE) Caution List.

For context, TPE Caution list includes professionals relied upon by the banks, such as advocates, agents or property valuers who are involved in loan/ mortgage-related fraud for future risk assessment.

Counsel appearing for the Petitioner argued that his client has spent a better part of his career in practising banking laws and once blacklisted by IBA, he can't work for any of the other banks. "Only fraud cases can be informed to the IBA…My client has not been given oral hearing either”, the counsel submitted.

However, Justice Sachin Shankar Magadum presiding over the case opined that the Petitioner may have committed a 'procedural error' by directly approaching the writ court, without challenging the blacklisting order.

“…You are seeking a mandamus directing them (Indian Bankers Association) to remove you from TPE Caution List. Your lawyer friend has committed a mistake…” it said.

Responding to this, the counsel averred that the Petitioner never received the blacklisting order. "The Bank has only sent him a letter stating that his name has been included in the TPE list of professionals involved in 'fraud'," he said.

The counsel appearing for the South Indian Bank (Christ University Branch) on the other hand submitted that banks are bound by RBI to report grave deficiencies in the services of professionals like lawyers or valuers. He added that Petitioner's name was sent to TPE Caution List on account of wrong legal report prior to the disbursement of loan to a borrower.

“…He is a practising lawyer...When we see that he has not referred to vital documents in the report, and the title of the property has already been transferred from the person seeking the loan, what does it reflect..It has gone away from my hands, milord. I asked my client whether they are pulling back; they said no”, the counsel added.

Petitioner however claimed that alleged default in his legal scrutiny report was due to wrong encumbrance detail given to him by the Sub Registrar office (Registration Department).

The Court has now posted the matter for further consideration on June 08.

Case Title: Sri Vittal S Rai v. State of Karnataka

Case No: WP 29963/2024