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IN THE HIGH COURT OF KERALA AT ERNAKULAM
VIJU ABRAHAM
Southern Gold Private Limited – Appellant
Versus
Federal Bank Ltd. – Respondent
| Table of Content |
|---|
| 1. challenge to the rbi circular related to fraud. (Para 1) |
| 2. petitioner's business and apprehensions regarding forensic audit. (Para 2) |
| 3. court's mandate for adherence to natural justice. (Para 3) |
| 4. final directions for banks to follow due process. (Para 4) |
JUDGMENT :
VIJU ABRAHAM, J.
Petitioner has approached this Court essentially challenging Ext.P7 master directions on “frauds - classification and reporting by commercial banks and select FIs., 2016” issued by the Reserve Bank of India.
2. Petitioner is a company engaged in the business of gold, which includes the purchase of imported gold and export of gold ornaments manufactured by the petitioner from and out of the said imported gold so purchased by them. For the conduct of the said business financial facility was arranged by respondents 1 and 2. Petitioner would contend that respondent banks had decided to conduct forensic audit of the accounts of the petitioner since the account of the petitioner had become NPA. Pursuant to the same Ext.P4 notice was issued by the Forensic Auditor. Petitioner submitted Ext.P5 reply to the same. Petitioner submits that the Forensic Auditor has completed his report and the petitio
The court established that borrowers must be given an opportunity to present their case before their accounts are classified as fraudulent as part of adhering to natural justice principles.
The principle of Audi Alteram Partem must be applied before classifying an account as fraud under RBI guidelines, ensuring borrowers are given a fair opportunity to be heard.
The principle of audi alteram partem, requiring lender banks to provide an opportunity for borrowers to submit a representation before classifying their accounts as fraud, in line with the principles....
The principle of audi alteram partem, requiring the lender banks to provide an opportunity of hearing to the borrowers before classifying their accounts as fraud, was central to the court's decision.
Adherence to the principles of natural justice requires personal hearings for borrowers before classifying bank accounts as fraudulent.
Natural justice principles demand notice and opportunity for personal hearing before classifying bank accounts as fraud, ensuring that parties have the chance to defend their rights against severe pe....
The Supreme Court ruled that classification of borrower accounts as 'fraud' requires adherence to natural justice, including notice, opportunity to respond, and access to forensic reports but does no....
The court established that the principles of natural justice require that a borrower be given notice and an opportunity to respond before their account is classified as fraud.
The classification of borrowers as fraud must adhere to principles of natural justice, requiring a fair hearing and proper procedural compliance as mandated by law.
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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