The Supreme Court of India has ruled that external agencies, including banks and the Indian Banks’ Association (IBA), cannot unilaterally declare an advocate professionally negligent or include their names in a “Caution List” for mere errors of judgment. A division bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe set aside an order of the Allahabad High Court, declaring that such unilateral blacklisting violates an advocate’s fundamental right to practice law and bypasses the statutory disciplinary framework under the Advocates Act, 1961, which vests exclusive disciplinary jurisdiction in the Bar Councils. Alongside clearing the affected advocate’s name, the Supreme Court issued far-reaching directives to the Bar Council of India (BCI) to conduct a performance audit of its disciplinary mechanisms and institutionalize Continuing Legal Education (CLE) for lawyers.
Background of the Case
The appellant, Ajay Vijh, is an advocate enrolled in 1998 who had served on the panel of Canara Bank since September 2010. The dispute began after Vijh rendered a legal opinion on August 8, 2015, regarding a parcel of land offered as collateral for a credit facility of Rs. 2.00 Crore. Vijh opined that the land was wholly owned by the guarantor, M/s Pushpanjali Buildwell Private Limited.
In July 2018, the Bank’s regional manager alleged that Vijh’s opinion was erroneous, as a portion of the land had been sold three years prior under sale deeds dated October 31, 2012. Vijh submitted a detailed explanation clarifying that his opinion was based on a search certificate issued by the Sub-Registrar’s office in Hapur, and that the prior sales were not discernible from the records available at the time. Unconvinced, Canara Bank removed him from its panel in January 2019 for “negligence in verification of title.”
The bank subsequently forwarded Vijh’s name to the IBA. In February 2020, Vijh’s name was incorporated into the IBA’s Caution List under the category “Third Party Entities Involved in Fraud.” The remark column stated: “Given Wrong Legal Opinion And Negligence in Conducting Search and Bank Was Exposed to Loss and Financial Risk.” This inclusion led to the termination of Vijh’s empanelment with other financial institutions, severely affecting his professional reputation and livelihood.
Vijh filed a writ petition before the Allahabad High Court, which was dismissed on the sole ground that the IBA is not a “State” under Article 12 of the Constitution of India, making the petition non-maintainable. Vijh subsequently appealed the decision to the Supreme Court.
Arguments of the Parties
The appellant, supported by the Bar Council of India, the Ministry of Law and Justice, and the Amicus Curiae, Mr. Maninder Singh, argued that allegations of professional negligence or misconduct against an advocate fall exclusively under the jurisdiction of the disciplinary bodies constituted under the Advocates Act, 1961. They contended that neither banks nor the IBA possess the authority to adjudicate professional conduct or virtually blacklist a lawyer.
Conversely, Canara Bank and the IBA defended the Caution List as an administrative measure issued under Reserve Bank of India (RBI) guidelines to safeguard the banking system from financial risks. They maintained that the High Court had correctly deemed the writ petition non-maintainable because the IBA is a private, non-statutory body.
The Court’s Analysis
The Supreme Court examined the dispute across three key dimensions: the maintainability of the writ petition, the scope of the RBI’s Caution List, and the exclusive disciplinary domain of the Bar Councils.
1. Maintainability of Writ Petition under Article 226
The Court rejected the High Court’s narrow focus on whether the IBA is a “State” under Article 12. Citing the precedent in Kaushal Kishor v. State of U.P., the Court observed that the focus of writ jurisdiction has shifted from the formal character of the body to the nature of the function performed.
Relying on Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, the Court emphasized that Article 226 is not confined to statutory bodies but extends to any entity performing public duties. The Court also cited Zee Telefilms Ltd. v. Union of India and S. Shobha v. Muthoot Finance Ltd. to reiterate that private bodies discharging public functions are subject to judicial review.
Because the Caution List acts as an industry-wide adverse accreditation mechanism that severely impacts an advocate’s livelihood and fundamental right to practice under Article 19(1)(g) of the Constitution, the Court ruled that the action possessed a distinct public law character, rendering the writ petition maintainable.
2. Scope and Object of the Caution List
The Court analyzed the RBI’s 2009 Circular and subsequent directions, including the 2016 Directions and the 2024 Master Directions. It observed that these guidelines are strictly designed to alert banks about fraudulent activities, not professional negligence:
“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.”
The Court noted that while banks are fully entitled to disengage an advocate if they are dissatisfied with their services, they cannot issue public warnings to other financial institutions. Doing so exceeds their authority:
“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.”
3. Independence of the Bar and Self-Regulation
The Supreme Court highlighted that the legal profession is unique. Citing Bar of Indian Lawyers v. D.K. Gandhi, the bench noted:
“the legal profession is sui generis i.e. unique in nature and cannot be compared with any other profession.”
Under the Advocates Act, 1961, the legislature entrusted the autonomy of self-regulation and professional discipline exclusively to the Bar Councils. Relying on Supreme Court Bar Association v. Union of India, the Court reiterated that the power to suspend or revoke an advocate’s license vests solely in the statutory authorities under the Act. It also referred to Bar Council of Maharashtra v. M. V. Dabholkar, confirming that the State Bar Councils possess the primary role in initiating disciplinary proceedings.
The Court strongly condemned the circumvention of this statutory mechanism by financial institutions and external agencies:
“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.”
If an external entity or bank believes an advocate is guilty of professional negligence, its proper legal remedy is to refer the matter to the competent State Bar Council, rather than declaring them negligent unilaterally.
Directives on BCI Performance Audit and Legal Education
While protecting the independence of the Bar, the Supreme Court acknowledged the legitimate concerns of financial institutions regarding the quality of legal opinions. Rather than allowing parallel regulatory structures, the Court emphasized the need to strengthen the existing framework under the Advocates Act, 1961.
To ensure accountability and transparency, the Supreme Court issued two landmark directives:
- BCI Performance Audit: Citing Yash Developers v. Harihar Krupa Co-operative Housing Society Ltd., the Court directed the Bar Council of India to conduct a comprehensive performance audit of its disciplinary mechanisms and those of the State Bar Councils. The audit will examine systemic delays, pendency, and the efficacy of disposing of complaints. BCI is required to constitute an objective committee and file an affidavit detailing proposed corrective actions.
- Continuing Legal Education (CLE) and National Legal Academy: The Court directed the BCI to institutionalize Continuing Legal Education (CLE) for enrolled advocates to maintain high professional standards. The bench also suggested establishing a full-time “National Legal Academy” (NLA) for lawyers—akin to the National Judicial Academy for judges—to foster structural post-enrolment learning.
The Decision
The Supreme Court allowed the appeal and set aside the judgment of the Allahabad High Court. It declared the inclusion of Ajay Vijh’s name in the IBA Caution List to be illegal and without jurisdiction, directing the respondents to remove his name with immediate effect.
The Court scheduled the appeal to be listed on August 31, 2026, for further directions regarding the implementation of the BCI’s performance audit and the progress of the National Legal Academy proposal.
Case Details
Case Title: Ajay Vijh v. Indian Banks Association & Ors.
Case No.: Civil Appeal arising out of SLP (C) No. @ Diary No. 10787/2024
Bench: Justice Pamidighantam Sri Narasimha, Justice Alok Aradhe
Date: July 07, 2026
