Rajiv Sahai Endlaw, J.

1. The Reserve Bank of India (RBI), from time to time, issued a number of Circulars to Banks and Financial Institutions (FIs), containing instructions on matters relating to wilful defaulters. To enable the Banks/FIs to have all the existing instructions on the subject at one place, a Master Circular dated 1st July, 2013, incorporating all the instructions/guidelines issued on cases of wilful default, was issued. The purpose thereof was defined as, to put in place a system to disseminate credit information pertaining to wilful defaulters for cautioning Banks/FIs so as to ensure that further bank finance is not made available to them. The said Circular inter alia provides for submission by Banks/Financial Institutions of data of wilful defaulters to RBI on a quarterly basis and preparation of a list of wilful defaulters by the RBI and communication thereof to the Securities Exchange Board of India (SEBI) and to Credit Information Bureau (India) Ltd. (CIBIL). The said Circular requires all the Scheduled Commercial Banks and All India Notified Financial Institutions to identify cases of wilful default and to constitute a committee of higher functionaries headed by the Executive Director and consisting of two General Managers/Deputy General Managers as decided by the Board of the concerned Bank/FI, to decide on the classification of the borrower as a wilful defaulter. The Circular also requires the Banks/FIs to i) advise the borrower about the proposal to classify him as wilful defaulter along with the reasons therefor; ii) give the borrower time of fifteen days for making representation against proposed decision; iii) constitute a Grievance Redressal Committee (GRC) headed by the Chairman and Managing Director and two other senior officials of the Bank/FI, to hear the person sought to be classified as a wilful defaulter, if he so desires; and, iv) thereafter take a decision in that regard.

2. The question for adjudication before us is, whether a person who is proposed to be classified as a wilful defaulter by a Bank/FI and who, in accordance with the RBI’s Circular aforesaid, has availed of opportunity to be heard by the GRC of the said Bank/FI to oppose such a proposal, has a right to be represented by an Advocate in the said hearing.

3. The appellant Punjab National Bank (PNB) in LPA No.589/2014 proposed to so classify the respondents No.1 to 3 i.e. Kingfisher Airlines Limited, United Breweries (Holdings) Ltd. and Dr. Vijay Mallya as wilful defaulters and gave an opportunity to the said respondents to represent thereagainst; the respondents, besides representing, sought a hearing. The GRC of the appellant PNB though gave a hearing, as mandated by the Circular aforesaid of the RBI, but during the said hearing objected to the said respondents being represented by a Senior Advocate.

4. This led to the filing by the respondents of W.P.(C) No.5532/2014 from which the LPA No.589/2014 arises. The said writ petition came up before the learned Single Judge of this Court on 28th August, 2014 when the counsel for the appellant PNB appeared on advance notice and contended that the GRC of the appellant PNB, which was to give a hearing, comprised of the Executive Director, Chairman-cum-Managing Director and a General Manager of the appellant PNB and none of the said members were Law Graduates and therefore the respondents were not entitled to be represented by an Advocate. It was further submitted that similar notices had been issued to a large number of other borrowers for declaring them also as wilful defaulters and that if the defaulting borrowers are permitted to be represented by an Advocate, the GRC would be severely impeded in disposing of those cases.

5. The learned Single Judge disposed of the writ petition vide order dated 28th August, 2014, finding/observing/holding:-

(i) that it is settled law that in a case where a person is pitted against legally trained mind, denial of representation through a legal