The principles of natural justice, including the right to be heard, apply to administrative proceedings that entail significant civil consequences, such as the classification of a borrower’s account as fraud under the RBI Master Directions on Frauds.

JUDGMENT :

Harish Tandon, J.:

The instant appeal arises from an Order no. 18 dated 18.7.2022 passed by the learned Judge, Commercial Court at Alipore in Title Suit no. 9 of 2022 by which an application for temporary injunction as well as an application for vacating the ex parte ad interim order were disposed of directing the Respondent no. 1 to provide the purported audit report before the Court in a sealed cover within a specified time and the respondents were directed to give an opportunity to the plaintiff-respondent before taking any final decision on the basis of the said audit report and after considering the representation and objections and the submissions to pass a reasoned order. The appellants were further directed not to act on the basis of the forensic audit report till the disposal of the suit before this Court. By the impugned order the Court has also clarified that the said order of injunction shall not affect any recovery of possession in any forum or from taking any step in accordance with law.

2. The aforesaid two appeals have been filed by the Defendant no. 1 and the other defendants challenging the self-same impugned order but restricted to the respective portions which operate against them. In an appeal filed by the KPMG, the challenge is restricted to a portion of the order by which the audit report was directed to be submitted before the Court in a sealed cover solely on the ground that the forensic audit report being a secret report sought for by the consortium of banks cannot be made available to the plaintiff-respondent as it is an internal communication.

3. On the other hand, the consortium of banks have challenged the portion of the order by which they were directed to afford an opportunity to plaintiff-respondent to raise objection and an opportunity of hearing to be given before the appellant proceed to take any action on the basis of the said forensic audit report. The facts emanates from the record revealed that two companies namely SREI Infrastructure Finance Ltd. (SIFL) and SREI Equipment Finance Limited (SEFL) entered into a commercial transaction with the appellants of FMAT 320 of 2022. The plaintiff-respondent is a director of both the companies until 4th October, 2021 and subsequently an administrator was appointed upon supersession of the Board of the aforesaid companies due to intervention of RBI. The consortium of banks thereafter appointed the KPMG to make a forensic audit of the transactions relating to the aforesaid companies so that it may take further action thereupon in terms of the RBI Circular dated 1st July, 2016. The suit came to be filed primarily for the production and supply of the forensic audit report before the consortium of banks proceeds to take any action and further prayed for declaration that the said forensic audit report is null and void and should be delivered up and cancelled. An application for temporary injunction was taken out and by an order dated 20th May, 2022 an ex-parte ad interim order was granted.

4. Subsequently an application for vacating the interim order was taken out and both the applications have been dealt with simultaneously having intricately related with each other and disposed of by passing an order as succinctly narrated hereinabove.

5. An argument was advanced before the Trial Court at the behest of the KPMG that the RBI guidelines or the draft AFIS guidelines do not provide for handing over the report i.e., the forensic audit report to the plaintiff-respondent and since the said draft forensic audit report was prepared and submitted to the consortium of banks, in presence of the respective representatives of the aforesaid companies, it would be deemed that an opportunity of hearing was given to them.

6. The entire argument was restricted on the issue whether the said forensic audit report is required to be served upon the plaintiff-respondent before any further action is taken thereupon or in other words whether the participation at the time of