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Issues Involved:
1. Legality of the removal order under Section 36AA(2) of the Banking Regulation Act, 1947. 2. Compliance with principles of natural justice, specifically the rule "the one who decides must hear." 3. Validity of the appellate order under Section 36AA(3) of the Banking Regulation Act, 1947. Detailed Analysis: 1. Legality of the Removal Order under Section 36AA(2) of the Banking Regulation Act, 1947: The respondent was removed from the office of the chairman and chief executive officer of the Bank of Cochin Limited by the Reserve Bank of India (RBI) through an order dated April 2, 1983. This removal was based on multiple charges, including sanctioning credit facilities without adequate securities, delaying branch inspection reports, and defaulting in maintaining statutory liquidity and cash reserve ratios. The respondent's appeal against this removal was rejected by the Union of India without a personal hearing, which led to the filing of a writ petition. 2. Compliance with Principles of Natural Justice: The core issue was whether the principles of natural justice were observed, particularly the requirement that "the one who decides must hear." The High Court emphasized that the officer who passes the order must personally hear the aggrieved party to ensure a fair judgment. This principle was not adhered to in this case, as the final order was passed by an officer who did not personally hear the respondent. The court cited several precedents, including Gullapalli Nageswara Rao v. A.P.S.R.T. Corporation, which established that personal hearing by the deciding officer is essential to prevent miscarriage of justice. 3. Validity of the Appellate Order under Section 36AA(3) of the Banking Regulation Act, 1947: The appellate order under Section 36AA(3) was quashed by the learned single judge due to non-compliance with the principles of natural justice. The High Court reaffirmed that the appellate authority must provide a meaningful and full-blooded consideration of the case on its merits. The court found that the Union of India failed to comply with the direction to afford a personal hearing, rendering the appellate order invalid. The judgment highlighted that the decision-making process must be transparent and the authority deciding the appeal must be known to the aggrieved party. Conclusion: The High Court dismissed the appeal, upholding the decision of the learned single judge to quash the appellate order. The court reiterated the importance of adhering to the principles of natural justice, particularly the rule that the authority who hears the case must also decide it. The failure to grant a personal hearing by the officer who passed the final order was deemed a significant violation, causing serious prejudice to the respondent. The appeal was dismissed with no order as to costs.
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