Can Indian Banks' Association Blacklist Advocates Through Caution Lists? Supreme Court Reserves Judgment

The Supreme Court today reserved judgment in a plea challenging a caution list issued by the Indian Banks' Association and circulated to banks, in which a lawyer was included on allegations of enabling fraud by borrower by committing negligence.

A bench of Justice PS Narasimha and Justice Alok Aradhe reserved judgment in the lawyer's SLP against Allahabad High Court judgment refusing to entertain his writ petition to quash the caution list.

Syndicate Bank (now Canara Bank) alleged that the petitioner, who was a panel advocate for the bank, helped a borrower defraud the bank while preparing a search and title report for an immovable property to be given as and security for a loan. It is alleged that he issued a wrong legal opinion by failing to mention in the report that part of the property had been sold by the borrower, thereby exposing the bank to financial risk.

The lawyer had sought the quashing of the caution list dated February 05, 2020, in which the petitioner's name appeared at serial number 781. He also sought a direction restraining the Indian Banks' Association from circulating the caution list to banks and financial institutions where the petitioner was empanelled as a panel advocate, and from advising such institutions to blacklist the petitioner.

IBA contended that the writ petition was not maintainable, as it does not fall within the scope of Article 12 of the Constitution.The High Court declined to entertain the petition and dismissed. Thus, he approached the Supreme Court.

The petitioner has contended that his name was placed in the Caution List hosted on the IBA website without following the Procedural Guidelines for Reporting Names of Third Parties involved in Frauds to IBA for inclusion in the Caution List, July 2009 of the RBI, without any prior notice, without affording a fair opportunity of hearing and without detailed examination and investigation into the alleged fraud.

He has further contended that other banks and financial institutions have terminated his service as panel advocate causing him not only a huge loss financial loss, but also loss of good will and reputation, and has affected his fundamental right.

During the hearing today, Amicus Curiae Senior Advocate Maninder Singh opposed the plea, submitting that the list violates the petitioner's right to conduct his profession. He also submitted that the Bar Council of India has the exclusive jurisdiction to take disciplinary action against advocates for any professional misconduct as per the Advocates Act.

Advocate Radhika Gautam for BCI and Additional Solicitor General Archana Pathak Dave for Union Law Ministry supported Singh's stance regarding the BCI's jurisdiction.

During the hearing, Justice Narasimha expressed concerns regarding the effectiveness of existing mechanisms for addressing professional misconduct by BCI and State Bar Councils.

The Court today reserved orders in the SLP filed by the lawyer against the High Court's decision.

Case no. – Diary No. 10787 / 2024

Case Title – Ajay Vijh v. Indian Banks Association