9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 1053 - HC - Indian LawsPrinciples of natural justice - rule of audi alteram partem - whether the principle of audi alteram partem which has been read to have not been excluded by the Hon ble Supreme Court in Rajesh Agarwal 2023 (3) TMI 1205 - SUPREME COURT in respect of the proceedings drawn under the RBI Directions would mean providing right of personal hearing as well or it would only mean permitting the borrower to file reply to the show cause notice and making representation in writing without any personal hearing thereupon? - HELD THAT - The nature of procedure to be adopted under the RBI Directions and the consequences of passing final order under the said Directions classifying account of a borrower as fraud as also the extent of application of principle of audi alteram partem in such proceedings have been discussed at length by the Hon ble Supreme Court in Rajesh Agarwal. Underlying the fact that classification of account of a borrower as fraud results in civil consequences against the borrower it has thus been concluded in Rajesh Agarwal that application of principle of audi alteram partem cannot be excluded under the RBI Directions on fraud and that it is reasonably practicable for lender banks to provide for an opportunity of hearing to the borrowers before classifying their accounts as fraud. The impugned direction by the learned Single Judge which is under challenge herein does not warrant any interference in this Letters Patent Appeal. Conclusion - The rule of audi alteram partem including the provision of a personal hearing applies to proceedings under the RBI Directions on fraud classification due to their civil consequences. The Letters Patent Appeal is hereby dismissed.
1. ISSUES PRESENTED and CONSIDERED
The primary legal issue considered in this judgment is whether the principle of audi alteram partem, as interpreted by the Supreme Court in the case of Rajesh Agarwal, includes the provision of a personal hearing in proceedings under the Reserve Bank of India (RBI) Directions on fraud classification. Specifically, the question is whether the direction of the learned Single Judge, allowing respondents to request a personal hearing from IDBI Bank, is lawful. 2. ISSUE-WISE DETAILED ANALYSIS - Relevant legal framework and precedents: The legal framework revolves around the RBI Directions on Frauds Classification and Reporting by Commercial Banks and Select FIs, 2016. The Supreme Court's judgment in Rajesh Agarwal serves as a key precedent, interpreting the application of the principle of audi alteram partem in administrative proceedings under these directions. - Court's interpretation and reasoning: The Court analyzed the judgment in Rajesh Agarwal, which emphasized that the rule of audi alteram partem applies to administrative actions, especially when they result in civil consequences. The Court noted that the Supreme Court had upheld the Telangana High Court's decision, which explicitly required personal hearings in such proceedings. - Key evidence and findings: The Court considered the arguments presented by both parties. The appellant argued that the Supreme Court's decision did not mandate personal hearings, whereas the respondents contended that the Telangana High Court's judgment, upheld by the Supreme Court, clearly required such hearings. - Application of law to facts: The Court applied the principles established in Rajesh Agarwal to the present case, emphasizing that the classification of a borrower's account as fraud has significant civil consequences, necessitating adherence to the principles of natural justice, including personal hearings. - Treatment of competing arguments: The Court addressed the appellant's argument that the proceedings under the RBI Directions are administrative and do not require personal hearings. It countered this by highlighting the Supreme Court's reiteration that even administrative actions must comply with the principles of natural justice when they entail civil consequences. - Conclusions: The Court concluded that the learned Single Judge's direction allowing for a personal hearing was consistent with the Supreme Court's interpretation in Rajesh Agarwal. It found no misreading of the Supreme Court's judgment by the Single Judge and dismissed the appeal. 3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "The process of forming an informed opinion under the Master Directions on Frauds is administrative in nature. This has also been acceded to by RBI and lender banks in their written submissions. It is now a settled principle of law that the rule of audi alteram partem applies to administrative actions, apart from judicial and quasi-judicial functions." - Core principles established: The core principle established is that the rule of audi alteram partem, including the provision of a personal hearing, applies to proceedings under the RBI Directions on fraud classification due to their civil consequences. - Final determinations on each issue: The Court determined that the learned Single Judge's direction to allow respondents to request a personal hearing was lawful and consistent with the Supreme Court's judgment in Rajesh Agarwal. Consequently, the appeal was dismissed, affirming the necessity of personal hearings in such administrative proceedings.
|
