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IN THE HIGH COURT AT CALCUTTA
OM NARAYAN RAI
Hemant Kanoria – Appellant
Versus
UCO Bank – Respondent
JUDGMENT :
OM NARAYAN RAI, J.
1. This writ petition mounts challenge to the action of the respondent Bank in declaring the accounts of SREI Infrastructure Finance Limited and SREI Equipment Finance Limited (hereafter collectively referred to as “SREI Entities”) maintained with the said Bank, as “fraud” on April 7, 2022 as also to the notices dated December 26, 2024 issued to the petitioners thereby calling upon the petitioners to show cause as to why the aforesaid accounts standing in the name of the SREI Entities would not be declared as fraud.
2. It is the petitioners’ case that the impugned show cause notices themselves would reveal, that the aforesaid accounts had been declared as “fraud” on April 7, 2022 meaning thereby that the said show-cause notices were issued ex post facto i.e. subsequent to the declaration of the aforesaid accounts as fraud and that being so the declaration that preceded the show cause notices is bad in law.
3. Mr. Chowdhury, learned senior advocate appearing for the petitioners submits that declaration of an amount as fraud leads to evil and civil consequences and such action cannot be undertaken by the bank without first affording an opportunity of hearing
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.
The classification of an account as fraud must adhere to principles of natural justice, including providing a reasoned order and opportunity to be heard.
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