The main legal point established in the judgment is the requirement that the person who decides must hear, and the need for a fair hearing in quasi-judicial proceedings. The judgment emphasizes the principles of natural justice and the serious prejudice caused by the failure to grant a fair hearing.

Mohammed, J.

The appellants are respondents in the writ petition. The appeal is filed against the judgment of the learned single judge in O. P. No. 7316 of 1991 quashing Ext. P8 order of the Union of India, the first appellant in this appeal. The Second appellant is the Reserve Bank of India. Respondent is the writ petitioner, who challenged Ext. P8 order rejecting an appeal filed under Sec. 36 AA(3) of the Banking Regulation Act, 1947 (for short the Act').

2. The respondent was appointed as the Chairman, Bank of Cochin Ltd (now merged with the State Bank of India) on f 8.6.1979, initially for a period of 2 years. Later the appointment was extended from time to time, which was approved by the Reserve Bank of India. However, on 18.11.1982, the Reserve Bank of India issued a notice (Ext. P1) to the petitioner under Sec. 36AA (2) of the Act to show cause why he should not be removed from the office of the Chairman of the Bank, within a period of 3 weeks. The annuxure to show cause notice contained thirteen items of charges against the respondent. The substance of charge Nos.1 to 11 is that the respondent sanctioned credit facilities to certain persons and enhanced certain existing facilities in the case of others without obtaining adequate securities. The twelfth charge was that he intentionally delayed the placing of the branch inspection reports to the Board of Directors and the thirteenth charge was that the Bank defaulted in maintaining the statutory liquidity ratio and cash reserve ratio as required under the Act. According to the respondent, the above said charges were absolutely baseless and unreal and he had filed a detailed reply on 3.12.1982, that is to say, within the time allowed. However, the second appellant passed an order on 2.4.1983 removing the respondent from the office of the Chairman and Chief Executive Officer with effect from 2.4.1983. As against the said order, the respondent filed an appeal dated 1.5.1983 before the First appellant under Sec. 36 AA (3) of the Act. Though the respondent requested for personal hearing the First appellant without granting the same rejected the appeal as per the order dated 19.10.1984. Aggrieved by the said order, the respondent filed writ petition O. P. No.9763 of 1984, before this court. This court by judgment in the above 0. P. (Ext. P2) quashed the order dismissing the appeal on the ground that there was denial of opportunity of persona! hearing. By the aforesaid judgment this court further directed the Union of India to take back the appeal on file, afford an opportunity to the petitioner to be heard in person and dispose of the matter within 6 months from the date of judgment. However, the first appellant did not comply with the direction contained in Ext. P2 judgment'with in the time allowed. However, the respondent received a letter dated 28.4. 1989 (Ext. P3) asking him to appear before the First appellant on 12.5.1989 for hearing. Since Ext. P3 was received by the respondent just 2 days prior to the date fixed for his appearance in Delhi, hearing of the case was adjourned to 19.7.1989 at the request of the respondent. The respondent appeared in person before Sri. V. P. Sawhney, Additional Secretary on 19.7.1989 and presented his case. He also presented a detailed argument note (Ext. P4) to the First appellant. Even though the matter was heard in detail, no order was passed by the First appellant. After a lapse of nearly three months the First appellant again called the respondent for a personal hearing as per Ext. P5 letter dated 13.3.1990. By the said letter, the respondent was asked to appear before the 1 st appellant on 4.4.1990 at the office of the First appellant. However, the hearing was again adjourned to 25.6.1990 as per communication sent to the respondent by telegram. The respondent, pursuant to the said communication, appeared before the First appellant on 25.6.1990 and argued the entire case once again before Sri. D.R. Mehta, Additional Secretar