Supreme Court: The instant appeal challenged the dismissal of a writ petition by the Allahabad High Court (impugned order), wherein the appellant, an advocate, had challenged Canara Bank’s decision to remove him from its panel and, more significantly, to have his name entered in the “Caution List” maintained by the Indian Banks’ Association (IBA). While asserting that the controversy was not confined to a private contractual dispute between a bank and its panel advocate but involved the advocate’s right to practise law, the public-law character of the Caution List, and the statutory framework governing professional discipline of advocates, the Division Bench of P.S. Narasimha and Justice Alok Aradhe, JJ., set aside the impugned order, holding that the writ petition was maintainable as the operation of the IBA Caution List had a public-law character and directly affected the appellant’s right to practise his profession.
The Court declared that the inclusion of the appellant’s name in the Caution List was impermissible and without jurisdiction. Reserve Bank of India (RBI) and IBA framework for circulation of names of third parties was intended for fraud-related cases and could not be extended to cases involving only alleged professional negligence or an erroneous legal opinion. It asserted that a bank may de-empanel an advocate if it is dissatisfied with the advocate’s services. However, it cannot use the Caution List mechanism to declare an advocate professionally negligent or incompetent before other banks. If a bank believes that an advocate has committed professional misconduct, it must approach the competent State Bar Council under the Advocates Act, 1961 (Advocates Act).
Accordingly, the Court directed the respondents to remove the appellant’s name from the Caution List with immediate effect. The Court also directed the Bar Council of India (BCI) to undertake a performance audit of its disciplinary mechanisms and to take steps towards institutionalising continuing legal education (CLE) and considering the establishment of a National Legal Academy (NLA) for the advocates.
Factual Matrix
The appellant was enrolled as an advocate in 1998. He had been empanelled with several banks and financial institutions for legal advisory work and claimed to have been on the panel of Canara Bank since September 2010. In the course of his professional engagement, he rendered a legal opinion on 8 August 2015 regarding immovable property offered as collateral security for a credit facility of ₹2 crores.
The dispute began when the Regional Manager of Canara Bank issued a communication dated 27 July 2018 alleging that the legal opinion furnished by the appellant was erroneous. The Bank alleged that the appellant had opined that the entire property offered as security belonged to M/s Pushpanjali Buildwell Private Limited, the guarantor in the loan transaction. According to the Bank, a portion of that property had already been sold through sale deeds dated 31 October 2012. The Bank contended that the appellant had failed to notice these prior transactions and that this omission exposed the Bank to financial risk.
The appellant submitted a detailed reply on 17 August 2018. He maintained that his legal opinion had been based on a search certificate issued by the office of the Sub-Registrar, Hapur, after inspection of the relevant records. He contended that the alleged sale deeds were not reflected in the records available at the relevant time and that he had acted in accordance with prevailing professional standards and the Bank’s own guidelines.
Despite this explanation, Canara Bank removed the appellant from its panel through a communication dated 31 January 2019, citing negligence in title verification. The matter did not end with de-empanelment. The Bank forwarded the appellant’s name to the IBA, which included his name in its Caution List with effect from 5 February 2020. The list was titled “Third Party Entities Involved in Fraud”. The remarks against the appellant stated: “Given Wrong Legal Opinion and Negligence in Conducting Search and Bank was Exposed to Loss and Financial Risk.”
The appellant asserted that he had not been given prior notice of the proposed inclusion in the Caution List and had not been afforded an opportunity of hearing. He also stated that he became aware of the entry only later and that it had serious consequences for his professional reputation. According to him, the entry led to termination or disruption of his empanelment with other banks and financial institutions and caused grave damage to his standing as an advocate.
The appellant thereafter approached the Allahabad High Court under Article 226 of the Constitution, wherein the High Court dismissed his petition without examining the merits, holding that the IBA was not amenable to writ jurisdiction because it was not “State” under Article 12. The appellant challenged that order before the Supreme Court.
Issues for Consideration
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Whether a writ petition under Article 226 challenging the inclusion of the appellant’s name in the IBA Caution List was maintainable?
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Whether inclusion in the Caution List was merely an administrative measure arising from the contractual relationship between a bank and its panel advocate, or whether it affected legal and constitutional rights?
Analysis
Maintainability of Writ Petition under Article 226
The Court opined that the High Court had adopted an unduly narrow understanding of Article 226. It observed that the appellant was not merely challenging his de-empanelment by Canara Bank, which could ordinarily be treated as a matter arising out of a contractual relationship. His principal challenge was against the inclusion of his name in an industry-wide “Caution List” carrying remarks that adversely reflected on his professional competence and integrity.
The Court emphasised that such an action had serious civil consequences as it could affect the appellant’s professional standing, future engagements, and livelihood. It therefore directly implicated his fundamental right to practise the profession of law under Article 19(1)(g) of the Constitution. Once such a grievance was raised, the High Court could not refuse to examine it merely because the IBA might not satisfy the formal test of “State” under Article 12.
The Court explained that the law on writ jurisdiction has evolved from focusing solely on “who the respondent was” to examining the nature of the function performed, the source of the power exercised, and the impact of the impugned action on legally protected rights. In Kaushal Kishor v. State of U.P., (2023) 4 SCC 1, the Court held that Article 226 is wider than Article 32 and the expression “any person or authority” in Article 226 is not limited to statutory authorities or instrumentalities of the State.
The Court referred to Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, (1989) 2 SCC 691, wherein it was held that a writ may be issue against a body performing a public duty, even where that duty does not arise directly from statute. What matters is the presence of a public-law element and the existence of a positive obligation owed to the affected person. The Court also referred to Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649 and S. Shobha v. Muthoot Finance Ltd., 2025 SCC OnLine SC 177, which recognised that private bodies performing public functions may be subject to judicial review under Article 226.
The Court noted that the present matter concerned with the maintenance and dissemination of a sector-wide Caution List under RBI Guidelines, affecting the professional reputation, livelihood and future opportunities of the person named in it. The Court also noted that several High Courts had entertained writ petitions challenging inclusion of professionals in the IBA Caution List. Thus, the consistent approach had been to recognise the public-law character of such action.
Thus, the Court held that the writ petition was maintainable.
Caution List under RBI Guidelines — Scope and Object of
The Court next considered whether the Caution List was merely an internal banking measure or whether it travelled beyond contractual regulation and affected the fundamental right to practise a profession. It examined the regulatory framework under Section 35-A, Banking Regulation Act, 1949, which empowers RBI to issue directions in public interest, in the interest of banking policy, and for the proper management of banking companies.
The Court accepted that RBI, as the regulator of the banking system, has the authority to frame measures for fraud prevention, risk management, and the protection of banking institutions. However, the question was whether RBI’s fraud-related circulars could be used to make adverse declarations about an advocate’s professional competence or negligence.
The Court found that the purpose of RBI Circular dated 16 March 2009 was clearly related to fraud. The Circular contemplated reporting third parties and professionals who were involved in fraudulent banking transactions. It did not authorise the inclusion of advocates merely because an opinion was allegedly negligent or erroneous.
The Court also considered RBI’s 2016 Directions and the 2024 Master Directions on Fraud Risk Management. These directions required banks to report third parties or professionals to the IBA where they had played a role in facilitating fraud. They also required compliance with the principles of natural justice before such reporting. The Court held that these later directions continued the fraud-prevention framework and did not expand it to include ordinary allegations of professional negligence.
The Court recognised that a bank has the right to assess the quality of services rendered by a panel advocate. It may discontinue an advocate’s engagement or decline future empanelment if it is dissatisfied with the services provided. However, the Court asserted that the position changes completely when a bank and the IBA circulate an advocate’s name in a list titled “Third Party Entities Involved in Fraud,” accompanied by remarks regarding professional incompetence or negligence, thus, operating as a declaration about the advocate’s competence and character and having serious implications on his right to practice his profession.
“The circulars issued by the RBI in exercise of power under Section 35-A 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.”
Since the allegation against the appellant was limited to negligence in title verification and did not involve fraud, collusion, criminal misconduct, or deliberate wrongdoing, the Court held that the Bank and the IBA cannot include the name of the appellant in the Caution List. Consequently, the Court directed them to remove the appellant’s name from the Caution List with immediate effect.
Decision
The Court allowed the appeal and set aside the impugned judgment and order of the Allahabad High Court. The Court held that inclusion of appellant’s name in Caution List was impermissible and without jurisdiction and directed the respondents to remove appellant’s name from the Caution List with immediate effect.
The Court listed the matter on 31 August 2026 for further directions concerning CLE and the proposal for the NLA.
[Ajay Vijh v. Indian Banks Assn., 2026 SCC OnLine SC 1295, decided on 7-7-2026]
Advocates who appeared in this case:
For the Appellant: Mr. E. C. Agrawala, AOR with Mr. Pankaj Agarwal, Mr. Sunil Murarka, Ms. Neha Agrawal and Mr. Siddhant Sahay, Advs.
For the Respondents: Mr. Rajesh Kumar Gautam, AOR Mr. Anant Gautam, Adv. Mr. Vibhu Sharma, Adv. Ms. Likivi Jakhalu, Adv. Mr. Aman Gahlot, Adv. Ms. Isha Gaur, Adv. Mr. Rishi Chauhan, Adv. Ms. Azal Aekram, Adv. Ms. Radhika Gautam, AOR Ms. Radhika Gautam, Adv. Ms. Anjul Dwivedi, Adv. Mr. Gurmeet Singh Makker, AOR Mr. Maninder Singh, Sr. Adv. (Amicus Curiae) Mr. Prabhas Bajaj, AOR
