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TMI Blog2013 (6) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... the Grievance Redressal Committee of the bank had rejected the appeal carried by the petitioners against the decision of an appropriate committee of the bank to include the names of the petitioners in the list of wilful defaulters maintained by the Reserve Bank of India and by a credit information company. In course of the present proceedings, the petitioners have been furnished a single-page order of the Grievance Redressal Committee passed on December 1, 2012 that does not appear to have been previously communicated to the petitioners. Such decision was rendered on the petitioners' appeal against the bank's proposal to classify the petitioners as wilful defaulters and the discussion and decision are tersely reflected in the following lines: We furnish hereunder the decision of the Committee after deliberations with DGM of SAMB, Kolkata, and considering personal written representations of the grievances of the guarantors to the Committee along with rejoinders, views of the branch and personal hearing of the legal representatives of the ex-director and guarantor hereto. Immediately below the above decision there is the signature of the Chief Zonal Manager (SAMG) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esents 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. It is evident that a committee of higher functionaries of a bank headed by an executive director and consisting of two zonal managers or deputy general managers, as may be decided by the board of the concerned bank, has to be constituted by a bank to identify cases of wilful default and take a preliminary decision to classify a borrower as a wilful defaulter. Upon the decision taken by such committee, which is required to be documented and supported by evidence, the same should be communicated to the person sought to be declared as a wilful defaulter and the person afforded reasonable time for making a representation against the preliminary decision to a Grievance Redressal Committee of the bank headed by the Chairman and Managing Director of the bank and comprising two other senior officials. From the scheme of Clause 3 of the Reserve Bank master circular on wilful defaulters, it is evident that the decision taken by the preliminary commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be a substitute for the elaborate process envisaged by the relevant master circular and, in particular, clause 3(iv) thereof. The process of adjudication culminating in a person being labelled as a wilful defaulter - and the virtual rendition of the defaulter as a pariah in the financial and commercial world - has to be fair and transparent. The decision finding a person to be a wilful defaulter is justiciable. It is imperative, therefore, that the decision be informed by reasons for both the defaulter to be made aware of the conduct for which he stands condemned and for the forum sitting in judicial review over the decision to appreciate the application of the mind to the matter in the process of adjudication. Since the master circular expressly requires the preliminary committee to cite reasons for a person to be recommended to be branded as a wilful defaulter and since the preliminary committee is also obliged by the circular to furnish requisite evidence in support of its opinion, it would defy logic that the Grievance Redressal Committee, which is bound to consider a representation of a would-be defaulter and also give him a hearing, is seen to be invested with untrammele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recording of the rival versions without any element of adjudication or assessment made thereon. The only modicum of reasons - the words that indicate the application of the mind to the matter and the link between the issues and the opinion rendered thereon - is found in the seventh paragraph of the minutes and reflects the abject abdication of the jurisdiction - rather, obligation - of the Grievance Redressal Committee to consider the grounds urged by the petitioners against the backdrop of facts and evidence that the preliminary committee must have cited. The seventh paragraph of the minutes appears more to be the conclusion rather than the basis for the conclusion that was incumbent on the Grievance Redressal Committee to indicate before condemning the petitioners to their financial doom. Paragraph 7 of the minutes is exactly what may not pass off as reasons proffered by any quasi-judicial or administrative authority in support of a decision that could affect the rights of any person. The paragraph must be seen in its entirety: 7. The members of the Grievance Redressal Committee considered the grounds adduced by the Bank's officials justifying identification of the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge. It needs to be recorded that this matter was dealt with on June 12, 2013 and an elaborate order dictated in court on the basis that there were no reasons in support of the Grievance Redressal Committee's rejection of the petitioners' representation against the bank's opinion to brand the petitioners as wilful defaulters. In course of the order being corrected, it was discovered that paragraph 7 of the minutes of the proceedings held on November 19, 2012 could be regarded as indicating some basis for the Grievance Redressal Committee's rejection of the petitioners' representation. The order was not signed and the uncorrected version thereof is a part of the file. The matter appeared marked To be mentioned on June 14, 2013 and, upon due apologies tendered by court for not noticing that the primary issue may not have been one of no reasons being furnished but of the sufficiency of the reasons, the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... master circular. The necessity for the Grievance Redressal Committee to furnish reasons in support of its decision may also have been diluted if the submission on behalf of the petitioners was restricted to the factual basis on which the preliminary committee founded its opinion. But, as would be evident from the second page of the minutes, the petitioners had questioned the applicability of the master circular to the petitioners' case: the jurisdiction of the bank to apply the master circular was in issue before the Grievance Redressal Committee. It would then not pass muster for the Grievance Redressal Committee to base its decision on the factual aspect of the matter as apparent from the bank's submission, without revealing its application of mind to the jurisdictional issues raised by the petitioners. It is possible that the Grievance Redressal Committee felt that there was no merit to the objection; but the petitioners had a right to be informed - even by way of a short sentence - as to why it was so. The severe consequences that befall a person upon such person being found to be a wilful defaulter within the meaning of the relevant master circular would point towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision- maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in support of a rejection of the representation by a would-be wilful defaulter. In the context of the requirement to record reasons in the civil revisional jurisdiction of the High Courts and the District Courts, the judgment in Rabindranath De observed as follows: 20. A judicial decision rendered by a civil Court at the lowest level, not being a Court of Small Causes, which fulfills the character of a judgment as defined in section 2(9) of the Code, must contain all the requisites (1) to (4) supra. This is also the statutory mandate as ordained by Order 20 Rule 4(2) and Rule 5 of the Code. Insofar as exercise of appellate jurisdiction is concerned, a judgment must conform to the requirements of Order 41 Rule 31 of the Code. In exercise of revisional jurisdiction, the High Court under section 115 of the Code or the District Court under section 115A of the Code, as applicable to the State of West Bengal, is empowered to make such order in the case as it thinks fit. The requirement to record reasons in support of its order, it is noticed, is absent. Does it mean that the High Court or the District Court need not record reasons in support of its order that it makes while exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Grievance Redressal Committee in rendering its decision on the petitioners' representation. It appears from the decision as reflected in the solitary page preceding the minutes that the Grievance Redressal Committee rendered its opinion, inter alia, after deliberations with DGM of SAMB, Kolkata ... In the light of the serious exercise that a Grievance Redressal Committee undertakes in terms of the said master circular, there can be no scope for any deliberations with any officer of the bank after the Grievance Redressal Committee affords a hearing to the would-be wilful defaulter. There is a dichotomy in the function of the Grievance Redressal Committee constituted under the said master circular: the members thereof are, per force, officers of the concerned bank, but they constitute, while on the Grievance Redressal Committee, an independent body called upon to objectively assess the preliminary opinion of a bank to brand a person as a wilful defaulter and the representation of the would-be defaulter against such preliminary opinion. The members of a Grievance Redressal Committee, while discharging their duties as such, have to temporarily suspend their allegiance to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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