Banks and the Indian Banks Association cannot include an advocate's name in the Caution List merely for alleged professional negligence; such disciplinary matters fall exclusively within the jurisdiction of the Bar Councils under the Advocates Act, 1961.

Facts

The appellant, a practising advocate and panel counsel for Canara Bank, rendered a title opinion in 2015 concerning property offered as security for a loan. The Bank alleged negligence in title verification, removed him from its panel, and forwarded his name to the Indian Banks Association (IBA), which included him in its "Caution List – Third Party Entities Involved in Fraud" with remarks that he had given a wrong legal opinion and exposed the Bank to financial risk. The appellant challenged the action before the Allahabad High Court, which dismissed the writ petition as not maintainable against the IBA.

Issues Framed

(a) Whether the writ petition under Art.226 Const. of India was maintainable?

(b) Whether inclusion of an advocate's name in the IBA Caution List is merely an administrative measure or affects legal and constitutional rights?

(c) Whether allegations of professional misconduct or negligence fall exclusively within the disciplinary jurisdiction under the Advocates Act, 1961?

Court's Reasoning

(a) The Court held that the writ petition was maintainable because the impugned action affected the appellant's fundamental right to practise his profession under Art.19(1)(g) Const. of India. Article 226 extends to bodies performing public functions, irrespective of whether they are "State" under Article 12.

(b) The RBI framework issued under S.35A Banking Regulation Act, 1949 is intended to identify professionals involved in fraud. It cannot be expanded to cover mere negligence or erroneous professional judgment. While a bank may de-empanel an advocate on contractual grounds, it cannot publicly stigmatise or effectively blacklist an advocate through the Caution List for alleged negligence.

(c) The Court held that questions of professional misconduct or negligence of advocates lie exclusively before the disciplinary authorities under the Advocates Act, 1961. If a bank believes an advocate has committed professional misconduct, its remedy is to approach the competent State Bar Council rather than invoke the RBI Caution List mechanism. The Court also emphasised strengthening the Bar Council's disciplinary framework through performance audits and institutionalising Continuing Legal Education (CLE).

Held

The appeal was allowed. The High Court's judgment was set aside. The inclusion of the appellant's name in the IBA Caution List was declared without jurisdiction and impermissible. The respondents were directed to remove his name from the Caution List immediately. The Court further directed the Bar Council of India to consider institutional reforms, including performance auditing of disciplinary mechanisms, establishment of Continuing Legal Education, and examination of a National Legal Academy.

Ratio

The RBI Caution List mechanism is confined to cases involving fraud and cannot be used to determine or punish alleged professional negligence or misconduct of advocates; such matters fall exclusively within the disciplinary jurisdiction under the Advocates Act, 1961.

Relevant Para

     "36. If the Bank is of the opinion that the appellant is guilty of professional negligence or misconduct in discharge of legal duties as an advocate, the appropriate remedy is to place the relevant material before the competent State Bar Council to take necessary action under the Advocates Act, 1961. Matters concerning the professional conduct of an advocate are within the exclusive province of the disciplinary authorities contemplated under the Advocates Act. The mechanism envisaged in the Caution List under the RBI circulars cannot be invoked to determine or punish alleged professional misconduct by advocates. Permitting banks or banking associations to bypass the disciplinary process under the Advocates Act and unilaterally portray an advocate as professionally incompetent by including his name in a Caution List is illegal, unsustainable and impermissible. It would amount to circumventing the legal profession's freedom of self-regulation, which, in turn, is an inextricable feature of the independence of the judiciary."

Case Details

Citation: 2026 INSC 670
Decided on: 07 July 2026
Case Title: Ajay Vijh v. Indian Banks Association & Ors.
Court: Supreme Court of India
Bench: Pamidighantam Sri Narasimha, J.; Alok Aradhe, J.