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April-23- 2026

CAN BANKS’ ASSOCIATIONS BLACKLIST ADVOCATES? SUPREME COURT RESERVES JUDGMENT IN AJAY VIJH CASE

Introduction

The Supreme Court of India has reserved its judgment in a significant case that could redefine the boundaries between banking regulation and professional autonomy of lawyers. In AJAY VIJH V. INDIAN BANKS ASSOCIATION, the Court is examining whether the Indian Banks’ Association (IBA) can effectively “blacklist” advocates by placing their names on caution lists circulated among banks.

At stake is not just the career of one lawyer, but the broader question: “Can financial institutions indirectly regulate legal professionals, or does that authority rest exclusively with statutory bodies like the Bar Council?”

Background of the Case

The controversy originates from actions taken by Syndicate Bank (now part of Canara Bank), which accused advocate Ajay Vijh one of its empanelled lawyers of negligence while preparing a title search report.

Allegations Against the Advocate

  • The petitioner allegedly failed to disclose that a portion of the mortgaged property had already been sold.
  • Based on this report, the bank sanctioned a loan, later discovering irregularities.
  • The omission allegedly exposed the bank to financial loss and fraud risk.

Following this, the advocate’s name was added to the IBA Caution List (dated February 5, 2020) at serial number 781.

What is the IBA Caution List?

The IBA maintains a Caution List to alert banks about:

  • Borrowers involved in fraud,
  • Third parties such as valuers, advocates, and chartered accountants suspected of facilitating fraud.

The list is circulated among member banks, often leading to:

  • Removal from panels,
  • Denial of future empanelment,
  • Reputational damage.

However, the legal validity of including advocates in such lists without due process has now come under scrutiny.

Petitioner’s Arguments

Advocate Ajay Vijh challenged the caution list on several constitutional and procedural grounds:

  1. Violation of Natural Justice
  • No prior notice was issued.
  • No opportunity to be heard was given.
  • No proper investigation preceded inclusion.
  1. Non-compliance with RBI Guidelines

The petitioner argued that the list violated the July 2009 RBI procedural guidelines for reporting third parties involved in fraud.

  1. Impact on Fundamental Rights
  • Loss of livelihood and professional opportunities.
  • Damage to reputation and goodwill.
  • Violation of Article 19(1)(g) – right to practice any profession.
  1. Lack of Jurisdiction
  • Only the Bar Council of India has authority to discipline advocates under the Advocates Act, 1961.
  • IBA has no statutory backing to take such actions.

High Court Proceedings

The petitioner initially approached the Allahabad High Court, which refused to entertain the writ petition, primarily on the ground that the IBA is not “State” under Article 12 of the Constitution.

This led to the appeal before the Supreme Court through a Special Leave Petition (SLP).

Arguments Before the Supreme Court

Amicus Curiae’s Position –

Senior Advocate Maninder Singh, appointed as Amicus Curiae, strongly opposed the caution list mechanism:

  • It effectively restricts advocates from practicing their profession.
  • It amounts to blacklisting without authority of law.

Support from BCI and Union –

  • Advocate Radhika Gautam (for BCI)
  • Additional Solicitor General Archana Pathak Dave (for Union Law Ministry)

Both supported the view that:

  • Disciplinary control over advocates lies exclusively with Bar Councils.
  • External bodies like IBA cannot usurp this function.

Judicial Observations

Justice PS Narasimha raised an important concern:

  • Whether existing disciplinary mechanisms under Bar Councils are effective enough in addressing professional misconduct.

This observation reflects a broader institutional tension:

  • Regulatory gaps vs. overreach by non-statutory bodies.

Key Legal Issues Before the Court

  1. Is IBA “State” Under Article 12?
  • Determines whether writ petitions can be maintained against it.
  1. Can Banks Indirectly Blacklist Advocates?
  • Even if IBA lacks statutory power, its lists have real-world consequences.
  1. Violation of Natural Justice
  • Whether inclusion without notice or hearing is unconstitutional.
  1. Overlap of Regulatory Jurisdiction
  • Conflict between financial risk management and legal profession regulation.

Broader Implications of the Case

This case has far-reaching implications for multiple stakeholders:

For Advocates –

  • Could safeguard lawyers from arbitrary blacklisting.
  • Reinforces autonomy of the legal profession.

For Banks and Financial Institutions –

  • May require stricter due process before issuing caution lists.
  • Could limit internal mechanisms to flag professionals.

For Regulatory Framework –

  • May trigger reforms in coordination between:
    • Reserve Bank of India,
    • India Banks Association,
    • Bar Council.

Critical Analysis

While banks must protect themselves against fraud, the method adopted raises serious concerns:

  • Absence of due process undermines fairness.
  • Reputational penalties without adjudication resemble punishment without trial.
  • However, the Court must also consider:
    • Increasing fraud risks in lending,
    • Need for accountability among professionals involved in financial transactions.

The challenge lies in balancing financial prudence with constitutional protections.

Conclusion

The Supreme Court’s forthcoming judgment in AJAY VIJH V. INDIAN BANKS ASSOCIATION is poised to become a landmark ruling. It will clarify:

  • Whether non-statutory bodies can exercise quasi-disciplinary powers,
  • The extent of procedural safeguards required before damaging professional reputations,
  • The role of Bar Councils in an evolving financial ecosystem.

Until then, the legal and banking communities await clarity on a question that strikes at the heart of professional independence and institutional authority.