Banks Association Cannot Blacklist Lawyers By Putting Their Name In Caution List : Supreme Court
Here's a Supreme Court ruling with a nice constitutional angle. The Court held that the Indian Banks' Association can't blacklist a panel lawyer by putting his name on a caution list circulated to banks just because he faced negligence allegations. A bench of Justice PS Narasimha and Justice Alok Aradhe said such blacklisting hits a lawyer's livelihood without due process. What this really means is, even bank associations must act fairly, think Article 19(1)(g), the right to practise a profession, and Article 21. The Court also asked the Bar Council of India to set up a National Legal Academy for advocates. Bottom line, no blacklisting without a fair hearing.
The Supreme Court today held that the Indian Banks' Association cannot blacklist a panel lawyer by putting their name in a 'caution list' circulated to banks, on the ground that he was facing allegations of enabling fraud by a borrower by committing negligence.
A bench of Justice PS Narasimha and Justice Alok Aradhe pronounced the judgment in the lawyer's SLP against the Allahabad High Court judgment refusing to entertain his writ petition to quash the caution list.
The Court also directed the Bar Council of India to establish a National Legal Academy for Advocates, in the lines of the National Judicial Academy, to institutionalise the discipline and culture of continuing legal education.
Syndicate Bank (now Canara Bank) alleged that the petitioner, who was a panel advocate for the bank, helped a borrower defraud the bank while preparing a search and title report for an immovable property to be given as and security for a loan. It is alleged that he issued a wrong legal opinion by failing to mention in the report that part of the property had been sold by the borrower, thereby exposing the bank to financial risk.
The lawyer had sought the quashing of the caution list dated February 05, 2020, in which the petitioner's name appeared at serial number 781. He also sought a direction restraining the Indian Banks' Association from circulating the caution list to banks and financial institutions where the petitioner was empanelled as a panel advocate, and from advising such institutions to blacklist the petitioner.
IBA contended that the writ petition was not maintainable, as it does not fall within the scope of Article 12 of the Constitution.The High Court declined to entertain the petition and dismissed. Thus, he approached the Supreme Court.
The petitioner has contended that his name was placed in the Caution List hosted on the IBA website without following the Procedural Guidelines for Reporting Names of Third Parties involved in Frauds to IBA for inclusion in the Caution List, July 2009 of the RBI, without any prior notice, without affording a fair opportunity of hearing and without detailed examination and investigation into the alleged fraud.
He has further contended that other banks and financial institutions have terminated his service as panel advocate causing him not only a huge loss financial loss, but also loss of good will and reputation, and has affected his fundamental right.
During the hearing, Amicus Curiae Senior Advocate Maninder Singh opposed the plea, submitting that the list violates the petitioner's right to conduct his profession. He also submitted that the Bar Council of India has the exclusive jurisdiction to take disciplinary action against advocates for any professional misconduct as per the Advocates Act.
Advocate Radhika Gautam for BCI and Additional Solicitor General Archana Pathak Dave for Union Law Ministry supported Singh's stance regarding the BCI's jurisdiction.
During the hearing, Justice Narasimha expressed concerns regarding the effectiveness of existing mechanisms for addressing professional misconduct by BCI and State Bar Councils.
Case Title – Ajay Vijh v. Indian Banks Association