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IN THE HIGH COURT AT CALCUTTA
AMRITA SINHA
Bhanu Properties Ltd. – Appellant
Versus
Reserve Bank of India – Respondent
| Table of Content |
|---|
| 1. rbi directions impact on fraudulent classifications (Para 10 , 19) |
| 2. continuity of fraud classification despite loan settlement (Para 15) |
| 3. economic offenses deemed distinct with public interest implications (Para 30 , 32) |
JUDGMENT :
AMRITA SINHA, J.
1. The petitioners are aggrieved by the act of Axis Bank in continuing to classify the petitioner no. 1 as fraud despite repayment of the due amount. According to the petitioner, a sum of Rs. 7,50,00,000/- was sanctioned as cash credit facility by the bank. The petitioners, prior to declaration of fraud, repaid a sum of Rs. 13,47,96,742/-. The bank claims Rs. 2,40,81,903.25/- over and above the amount paid by the petitioners.
2. An agreement for One Time Settlement (OTS) was entered into by and between the petitioners and the bank and in terms of the OTS, the petitioner paid Rs. 2,30,00,000/- and the said amount has been accepted by the bank. Despite receiving the amount as settled by and between the parties, the bank still continues to classify the petitioner no. 1 as fraud. The petitioners are aggrieved by the same.
3. It has been submitted that as the amount due to the bank had already been repaid by the petitioners i
A bank may classify borrowers as 'fraud' even after settlement of debts under an OTS, based on RBI Directions safeguarding public interest and financial integrity.
The central legal point established in the judgment is the requirement for banks to adhere to the principles of natural justice, including providing notice and opportunity for representation, before ....
The classification of an account as fraud must adhere to principles of natural justice, including providing a reasoned order and opportunity to be heard.
The classification of a loan account as 'fraud' based on forged documents is valid if it adheres to the existing regulatory framework and does not require a pre-decisional hearing.
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