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TMI Blog2014 (8) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... wilful defaulter. The appellant’s representation is that the bank has wrongly classified it as a wilful defaulter. The GRC of the bank supposed to examine the appellant’s case closely in the presence of the appellant that will be free to present its case over the course of hearing, is not, however, empowered to take down any evidence. Hence in ordinary cases absence of an advocate for the hearing purpose is not likely to defeat the purpose of the hearing. In this case we do not find any reason to say that the grounds stated by the appellant for permission to engage advocate to appear before the GRC for the hearing purpose have constituted a case that absence of the service of an advocate for the hearing purpose is likely to defeat the purpose of the hearing. We are therefore of the opinion that by refusing permission to engage advocate the bank did not commit any wrong, and that the single Judge has rightly dismissed the WP, though he has recorded a finding that the appellant is a defaulter on the loan, − not an issue in the WP, and made an assumption about the appellant’s representation ability, − an impermissible personal perception. - AST No. 320 of 2014 & CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Redressal Committee should also give a hearing to the borrower if he represents that he has been wrongly classified as wilful defaulter. (v) A final declaration as wilful defaulter should be made after a view is taken by the Committee on the representation and the borrower should be suitably advised. United Bank of India sanctioning the appellant a `398.22 crore credit limit wrote a letter dated May 28,2014 to the appellant that the committee of the bank on identification of wilful defaulters classified it as a wilful defaulter on the grounds that it was in default on the loan that it did not utilize for the specific purpose for which it had been made available, but diverted for other purposes. Stating that it proposed to forward the appellant s name to the RBI as a wilful defaulter, the bank informed the appellant as follows: 5. In case you desire to submit your representation in regard to the proposed identification as a willful defaulter by the aforesaid committee, you may submit your representation within 15 days (fifteen days) from the date of issuance of this letter for consideration by the Grievance Redressal Committee of the Bank on Identific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a similar case Corporation Bank, another partner in the appellant s lenders consortium, had permitted it to engage advocate to appear before its GRC, it again requested the bank to permit it and its directors concerned to engage their respective advocates to appear on their behalf before the GRC. The appellant wrote that advocates should be permitted for the following reasons: In this regard, it is submitted and you are well aware that being declared a willful defaulter entails serious consequences, including penal consequences. Hence, depriving KFA, Dr. Vijay Mallya and the 3 erstwhile directors of an opportunity to be represented by trained legal professionals is a miscarriage and failure of justice and a denial of a real and reasonable opportunity of defending themselves. It is submitted that the refusal of legal representation is in essence a violation of the principles of natural justice and the rights guaranteed under the Constitution of India. By a letter dated June 30,2014 the bank referring to its decision stated in its earlier letter dated June 25,2014 to the appellant informed the appellant that the RBI MC did not contain any provision for enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udes an advocate. Even if the bank had a power to decide whether advocate would be permitted, having regard to the complex nature of the case, need for interpretation of provisions of the MC, a legal document, the serious penal consequences likely to visit the appellant, and no case of prejudice to the bank, the bank ought to have permitted the appellant to engage advocate. The bank refusing permission simply citing absence of a provision in the MC did not exercise its discretion judiciously. In court it has sought to justify its decision stating other reasons. It cannot do that. On the facts, the single Judge erred in law in dismissing the WP. For the bank Mr. Mitra has submitted as follows: The appellant s several reply letters to the letters written by the bank will reveal that the appellant has not said that on May 28, 2014, when the bank wrote the first letter dated May 28, 2014, it was not in default on the loan. The only question before the GRC is whether the appellant is a wilful defaulter. In letter dated May 28, 2014 the bank specifically stated the reasons why its committee proposed to classify the appellant as a wilful defaulter. There is no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of para.3(iv) of the MC. The accusations of the bank are that the appellant is a wilful defaulter, because it is not only in default on the loan, but has also diverted the loan amount for purposes other than the purpose for which it had been sanctioned. The GRC of the bank is to hear the appellant before taking a view on the appellant s representation that the bank has wrongly classified it as a wilful defaulter. The committee does not possess any power to take down evidence. Hence there is no scope for examining and cross-examining any witness. The consequences the appellant is likely to suffer are those specified in the MC. The appellant is a company taking a ₹ 398.22 credit limit from the bank. In its letters dated June 10, 2014 and June 30, 2014 the appellant stated the reasons why it intended to engage an advocate to appear before the GRC for the hearing purpose. It is true that the bank refused permission to engage advocate on the grounds that nothing in the MC provisions entitled it qua a borrower to engage an advocate to appear on its behalf before the GRC for the hearing purpose. But, on the facts, we do not think it is a case for remand. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, empowered to take down any evidence. Hence in ordinary cases absence of an advocate for the hearing purpose is not likely to defeat the purpose of the hearing. In this case we do not find any reason to say that the grounds stated by the appellant for permission to engage advocate to appear before the GRC for the hearing purpose have constituted a case that absence of the service of an advocate for the hearing purpose is likely to defeat the purpose of the hearing. We are therefore of the opinion that by refusing permission to engage advocate the bank did not commit any wrong, and that the single Judge has rightly dismissed the WP, though he has recorded a finding that the appellant is a defaulter on the loan, not an issue in the WP, and made an assumption about the appellant s representation ability, an impermissible personal perception. For these reasons, we dismiss the AST. The CAN (for additional evidence) shall be treated as disposed of. No costs. For the appellant Mr Mitra has prayed for stay. We have dismissed the AST. We are unable to see what to stay. Mr Mitra is actually seeking an interim order restraining the bank from proceeding with the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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