BCI to Audit Disciplinary Mechanism, Institutionalise Continuing Legal Education: Supreme Court

In a significant judgment delivered on Tuesday, the Supreme Court directed the Bar Council of India (BCI) to undertake a comprehensive performance audit of its disciplinary mechanism for advocates and constitute a committee to objectively assess the effectiveness of its self-regulatory framework.

A Bench of Justices P S Narasimha and Alok Aradhe also asked the BCI to institutionalise Continuing Legal Education (CLE) and form a team to examine the establishment of a National Legal Academy for lawyers, saying the legal profession's right of self-regulation must be matched by transparency, accountability and institutional effectiveness.

Court issued the directions while allowing an appeal filed by advocate Ajay Vijh, who had challenged his inclusion in the Indian Banks' Association's (IBA) Caution List after Canara Bank accused him of giving a negligent legal opinion in a property title verification.

Court held that allegations relating to an advocate's professional negligence or misconduct fall exclusively within the disciplinary jurisdiction of the Bar Councils under the Advocates Act, 1961, and cannot be adjudicated by banks or banking associations through a caution list.

Court said that the banks cannot assume the role of regulator of the legal profession.

"Banks have the choice of disengaging a legal professional and also to remove his/her name from the panel if the services are not up to the mark, but an action in the nature of public declaration to all other banks about the conduct, competency or incompetency of an advocate is clearly beyond their power and jurisdiction and clearly illegal," the Bench said.

Case Background

Appellant Ajay Vijh was engaged as a panel lawyer in Canara Bank. A communication was issued on July 27, 2018, by the regional manager of the bank alleging that a legal opinion furnished by him on August 08, 2015 regarding certain immovable property offered as security for a credit facility was erroneous. After considering the explanation furnished by the appellant, the respondent bank, by communication on January 31, 2019, proceeded to remove him from its panel on the ground of negligence in verification of title.

The bank proceeded to forward appellant’s name to IBA for inclusion in the Caution List, pursuant to which, with effect from February 05, 2020, appellant’s name came to be incorporated in the said Caution List titled “Third Party Entities Involved in Fraud”.

The Caution list as per the guidelines issued by the RBI Circular of March 16, 2009, is a mechanism devised for the purpose of alerting banks and financial institutions about third-party entities, including advocates, valuers, chartered accountants and other professionals, whose acts of omission or commission are perceived to have exposed banks to fraud or financial risk.

The appellant contended the development had a cascading effect on his professional engagements, resulting in termination of his empanelment with other banking institutions, seriously denting his honour and reputation.

The Allahabad High Court dismissed his writ petition, holding that it was not maintainable, as the IBA is neither a statutory body nor the “State” within the meaning of Article 12 of the Constitution.

Supreme Court on IBA Caution List

The Supreme Court noted that the Caution List maintained by the IBA is intended to operate only in cases involving fraud, dishonesty, criminality, or other serious misconduct affecting the banking system. It was never designed to address cases resting merely on alleged negligence or errors of professional judgment. 

Court found that the allegation against the appellant was limited to negligence and did not involve fraud, collusion or deliberate wrongdoing.

"The impugned action directly impacts the appellant’s right to practise his profession, thereby affecting the guarantee under Article 19(1)(g) of the Constitution. Further, the Caution List has a statutory basis," the Bench noted.

Examining RBI circulars governing the Caution List, Court noted, "In our considered opinion, the circulars issued by the RBI in exercise of power under Section 35A of the Banking Regulation Act to alert member banks against fraudulent transactions, as also fraudulent professionals, cannot be interpreted to authorise banks or the IBA to include cases of alleged negligence or professional (in)competence of an advocate in the said list".

Court noted while the RBI may issue directions to ensure integrity in banking transactions, such power does not include declaring an advocate professionally negligent by including his name on a Caution List, which is meant to identify fraudulent entities. 

Court emphasised that the consistent judicial approach has been to recognise that the action of IBA in maintaining and operating such a Caution List possesses sufficient public law character to render it amenable to judicial review.

An erroneous legal opinion or an omission in the course of due diligence, absent any allegation of dishonest intent or deliberate facilitation of illegality, cannot be elevated to the level of fraud, Court said.

"The contrary view adopted by the high court in the present case, solely on the basis that IBA may not strictly answer the description of 'State' under Article 12, cannot therefore be sustained," the apex court held.

Professional misconduct of advocates falls within Bar Council's exclusive jurisdiction

Court emphasised that the legal profession occupies a unique constitutional position and that the independence of lawyers is protected through the principle of self-regulation under the Advocates Act.

It held that while banks are free to de-empanel an advocate if dissatisfied with the quality of professional services, they cannot effectively blacklist an advocate by circulating remarks questioning his competence across the banking sector.

If a bank believes an advocate has committed professional misconduct, the appropriate course is to place the material before the competent State Bar Council, the Court said.

Permitting banks to bypass the disciplinary process under the Advocates Act and portray an advocate as professionally incompetent through a caution list would undermine the statutory framework governing the legal profession and interfere with the Bar's independence.

Setting aside the Allahabad High Court's decision dismissing the writ petition as not maintainable, the Supreme Court also held that the advocate's challenge under Article 226 was maintainable because inclusion in the Caution List directly affected his fundamental right to practise his profession under Article 19(1)(g) of the Constitution.

Case Title: Ajay Vijh Vs Indian Banks Association & Ors 

Bench: Justices P S Narasimha and Alok Aradhe

Date of Judgment: July 7, 2026