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IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO
Vishambhar Saran – Appellant
Versus
Punjab National Bank – Respondent
Judgment :
Krishna Rao, J.
1. In both writ applications, the writ petitioners have challenged the show cause notice dated 25th October, 2023 wherein the petitioners have called upon to show cause as to why their accounts/names should not be categorized and reported as fraud to the Reserve Bank of India and the order dated 9th August, 2024 wherein the bank has reported the account of the petitioners as fraud to the Reserve Bank of India on 16th July, 2024 vide FMR No. PNB2403-0361.
2. The petitioner Company (presently in liquidation) had availed loan from the consortium of banks led by the Punjab National Bank for setting up a Thermal Power Project in Raigarh District in the State of Chhattisgarh. The respondent no.1 had sanctioned a loan in the name of the Company in the month of March, 2010 for the said project. Before the Company could complete the erection and installation, the coal block allotted to the company was cancelled by the Central Government pursuant to the orders passed by the Hon’ble Supreme Court in the month of September, 2014. Due to the de-allocation of Coal Block in terms of the order passed by the Hon’ble Supreme Court, the banks withheld further disbursements as
A bank must adhere to principles of natural justice by providing borrowers with necessary documents and an opportunity to be heard before classifying accounts as fraud.
Point of Law : Respondent- Bank has not complied with the principles of natural justice cannot be looked into at this stage more particularly, when the respondent-bank after considering the three aud....
The court established that the failure to provide a forensic audit report and a personal hearing before declaring wilful defaulters violates natural justice principles.
The court established that access to forensic audit reports is essential for fair proceedings in declaring individuals as wilful defaulters, ensuring adherence to natural justice.
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