The Supreme Court has ruled that banks and the Indian Banks’ Association cannot list advocates in the “Caution List” based solely on allegations of professional negligence. This action is deemed as an impermissible assessment of a lawyer’s competence, falling under the Bar Councils’ jurisdiction. The court directed the immediate removal of an advocate’s name from the list, emphasizing that banks can terminate services but cannot circulate adverse remarks through this mechanism.
The apex court clarified that the Caution List is not for cases of negligence but for fraud-related matters, as per RBI’s circulars. It stated that allegations of professional misconduct against advocates should be addressed by disciplinary authorities under the Advocates Act. The court emphasized that banks cannot bypass the disciplinary framework and unilaterally portray advocates as incompetent.
In a specific case, Canara Bank removed an advocate from its panel and recommended inclusion in the Caution List over an alleged erroneous legal opinion. The court highlighted that while banks can end associations based on contracts, publicly declaring negligence through such a mechanism is not permissible. It also addressed the issue of fundamental rights of advocates to practice their profession.
Apart from providing relief to the appellant, the Supreme Court issued broader directions to enhance the legal profession’s regulatory framework. It emphasized the need for accountability alongside the independence of the Bar and directed the Bar Council of India to evaluate the efficiency of disciplinary mechanisms. The court also suggested the establishment of Continuing Legal Education for advocates and a National Legal Academy for structured professional training.
