Banks Association Cannot Blacklist Lawyers By Putting Their Name In Caution List: Supreme Court

The Court emphasized that the legal profession requires a robust institutional framework for continuing education and disciplinary oversight.

"BCI shall establish a national legal academy for advocates like there is National Judicial Academy for judges," the Bench directed.

In addition to establishing the academy, the Court directed the Bar Council of India to undertake a comprehensive review of its disciplinary framework.

The Bench observed that the BCI must conduct a performance audit of the efficacy of its disciplinary powers and institutionalise a culture of discipline and continuing legal education among advocates across the country.

Banks Cannot Publicly Blacklist lawyers

The Court held that the petitioner's inclusion in the IBA's caution list solely on allegations of negligence was legally unsustainable.

While recognising that banks are free to decide whether to continue or discontinue an advocate on their panel, the Bench clarified that such decisions cannot be converted into public declarations that effectively prevent advocates from obtaining professional work elsewhere.

The Court held that although a bank may remove an advocate from its empanelled panel based on its own assessment, it cannot circulate such action through a caution list that has the effect of blacklisting the advocate across the banking sector.

Bar Council Alone can regulate Professional Misconduct

Reiterating the statutory framework under the Advocates Act, the Supreme Court ruled that questions relating to the professional conduct or misconduct of advocates fall exclusively within the jurisdiction of the Bar Council of India and the respective State Bar Councils.

The Bench made it clear that banks or financial institutions cannot assume disciplinary powers that are vested in the Bar Council by law.

Background of the Case

On April 30, the Court had reserved orders in a Special Leave Petition filed against an Allahabad High Court judgment that had declined to entertain the lawyer's writ petition seeking removal of his name from the caution list.

The petitioner challenged a caution list dated February 5, 2020, issued by the IBA, in which his name appeared at serial number 781. He sought directions restraining the IBA from circulating the list among banks and financial institutions where he was empanelled as a panel advocate and from advising such institutions to blacklist him.

The controversy stems from allegations made by Syndicate Bank, now merged with Canara Bank. The bank alleged that while preparing a search and title report for an immovable property offered as security for a loan, the advocate failed to disclose that a portion of the property had already been sold by the borrower.

According to the bank, the omission resulted in an incorrect legal opinion, exposed the bank to financial risk and facilitated fraud by the borrower.

Before the Allahabad High Court, the Indian Banks' Association questioned the maintainability of the writ petition, contending that it does not fall within the ambit of "State" under Article 12 of the Constitution. Accepting the objection, the High Court dismissed the petition, prompting the advocate to approach the Supreme Court.

Case Title: Ajay Vijh v. Indian Banks Association