The classification of a borrower's account as fraud under RBI Directions necessitates adherence to the principles of natural justice, including the right to personal hearing, while representation by legal experts is prohibited.

JUDGMENT :

M.A.ABDUL HAKHIM, J.

1. The Petitioner claims that he is the Chairman of Tip Top Furniture Group having six business units engaged in the business of manufacturing, importing, exporting, and trading of furniture. As per the averments in the Writ Petition, Tip Top Furniture Group availed loans from the Respondent No.2/Bank for a total amount of Rs.47.79 Crores against common securities. Tip Top Furniture Group has repaid more than Rs.11 Crores towards the loans. When the repayments were defaulted, the Respondent No.2 filed O.A. No.148/2022 before the Debts Recovery Tribunal (DRT), Ernakulam, for recovery of an amount of Rs.53,19,81,574/- and interest thereon. The Respondent No.2 initiated SARFAESI proceedings and Securitisation Applications are pending before the DRT, challenging the same. In SARFAESI proceedings and in liquidation proceedings initiated against one of the business units, viz., Tip Top Furniture Private Limited, the Respondent No.2 has recovered Rs.4,25,39,925/- and Rs.12,77,11,158/- respectively. The Petitioner claims that the Respondent No.2 has received a total amount of Rs.28,28,06,798/- towards the loans availed by the Tip Top Furniture Group. Respondent No.2 issued Ext.P5 Show Cause Notice dated 30.05.2024 to Tip Top Furniture Industries, represented by the Petitioner and its other partners, asking them to show cause why they should not be classified as fraud to take action in terms of the Reserve Bank of India Master Directions on Frauds - Classification and Reporting by Commercial Banks and Select FI dated 01.07.2016. The Respondent No.3/Fraud Examination Committee of the Respondent No.2 passed Ext.P6 Order dated 04.01.2025, classifying Tip Top Furniture Industries and its partners, including the Petitioner, as fraud in terms of Ext.P7 Master Directions on Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions, 2024. Tip Top Furniture Industries and its partners, including the Petitioner, filed W.P.(C) No.3676/2025 challenging Ext.P6 Order and this Court disposed of the said Writ Petition as per Ext. P8 judgment dated 18.03.2025 setting aside Ext.P6 Order, directing the Respondent No.2 to furnish a copy of the Audit Report of the Competent Authority and finalise the proceedings as per the procedure laid down in Chapter II of Ext.P7 RBI Master Directions and in State Bank of India and Others v. Rajesh Agarwal and Others [(2023) 6 SCC 1] . Thereafter, the Respondent No.2 issued Ext.P9 Show Cause Notice dated 10.09.2025 and the Petitioner submitted Ext.P10 Reply dated 30.09.2025 for the Tip Top Furniture Group. Respondent No.2 issued Ext.P11 Notice dated 12.11.2025 requesting the Petitioner to confirm whether he wishes to avail the facility of a personal hearing and further stating that he has to appear for the hearing in person and he will not be permitted to be assisted by any third party, viz., Lawyers/ Chartered Accountants/ Consultants, Etc. The Petitioner submitted Ext.P12 dated 14.11.2025 to the Respondent Nos.2 and 3 requesting to permit him to attend the hearing along with his authorised representatives. Respondent No.2 issued Ext.P13 dated 15.11.2025 directing the Petitioner to appear for a personal hearing without any authorised expert representative. The Petitioner submitted Ext.P14 dated 26.11.2025 to the Respondent Nos.2 and 3 requesting to furnish the Board Ap