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TMI Blog2024 (7) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent Bank being Ref No. IDBI/2024-25/NMG/EPCCIL/185 as illegal, invalid and null and void; B. Issue a Writ of Certiorari or any other appropriate writ, order or direction quashing any steps/action taken pursuant to the Impugned Notice dated 19.06.2024 issued by the Respondent Bank being Ref No. IDBI/2024-25/NMG/EPCCIL/184 and Impugned Notice dated 19.06.2024 issued by the Respondent Bank being Ref No. IDBI/2024-25/NMG/EPCCIL/185; and C. Pass any other order(s) as this Hon'ble Court may deem fitand proper in the facts and circumstances of the case." 2. Learned counsel for the respondent appeared on advance notice. 3. Mr. Sandeep Sethi, learned Senior Advocate appearing for the petitioners while alluding to the impugned SCN, has firstly pointed out that petitioner No. 1 has been addressed as an 'Ex Independent Director'; secondly, it is pointed out that the respondent-bank has alleged that certain acts of financial irregularities have been committed by the petitioner on different dates during the period from November, 2014 to 31st March 2017. 4. It was urged that the corporate borrower in question i.e. EPCCIL [EPC Constructions India Limited [formerly known as Essa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first member bank reported the account as 'fraud' on CRILC [Central Repository of Information on Large Credits] platform. It was vehemently urged that the impugned SCN issued by the respondent-bank is without jurisdiction, non est in law and must be quashed. 8. Per contra, learned counsel for the respondent-bank urged that only SCN has been issued since a reply has been filed in response thereto dated 01.07.2024 and for some reasons, the petitioners have not chosen to appear for a personal hearing and thus, the present petition is premature. Learned counsel of the respondent-bank urged that the petitioners cannot challenge the impugned SCN by filing the present writ petition, for which heavy reliance is placed on decisions in Union of India v. Kunisetty Satyanarayana (2006) SCC 28; Malladi Drugs & Pharma Ltd. v. Union of India (2020) 12 SCC 808; CCE v. Krishna Wax (P) Ltd. (2020) 12 SCC 572. 9. On the other hand, learned Senior Advocate for the petitioners distinguishing the case laws cited by the learned counsel of the respondent, relied on decisions in Shantanu Prakash v. State Bank of India 2024 SCC OnLine Del 3870 and State Bank of India v. Rajesh Agarwal 2023 SCC OnLine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted : (SCC pp. 453-54, para 10) "10. Even if a statute is silent and there are no positive words in the Act or the Rules made thereunder, there could be nothing wrong in spelling out the need to hear the parties whose rights and interest are likely to be affected by the orders that may be passed, and making it a requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into unoccupied interstices of the statute, unless there is a clear mandate to the contrary. No form or procedure should ever be permitted to exclude the presentation of a litigant's defence or stand. Even in the absence of a provision in procedural laws, power inheres in every tribunal/court of a judicial or quasi-judicial character, to adopt modalities necessary to achieve requirements of natural justice and fair play to ensure better and proper discharge of their duties. Procedure is mainly grounded on the principles of natural justice irrespective of the extent of its application by express provision in that regard in a given situation. It has always been a cherished principle. Where the statute is silent about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fall in production, which is one of the essential conditions in regard to which the Government must be satisfied before taking action under Section 18-AA(1)(a). Secondly, what the rule of natural justice required in the circumstances of this case, was not only that the Company should have been given an opportunity to explain the evidence against it, but also an opportunity to be informed of the proposed action of take over and to represent why it be not taken." 80. Audi alteram partem has several facets, including the service of a notice to any person against whom a prejudicial order may be passed and providing an opportunity to explain the evidence collected. In Tulsiram Patel [Union of India v. Tulsiram Patel, (1985) 3 SCC 398 : 1985 SCC (L&S) 672], this Court explained the wide amplitude of audi alteram partem : (SCC p. 476, para 96) "96. The rule of natural justice with which we are concerned in these appeals and writ petitions, namely, the audi alteram partem rule, in its fullest amplitude means that a person against whom an order to his prejudice may be passed should be informed of the allegations and charges against him, be given an opportunity of submitting his explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fraud. Audi alteram partem must then be read into the provisions of the Master Directions on Frauds. ............. 95. In light of the legal position noted above, we hold that the rule of audi alteram partem ought to be read in Clauses 8.9.4 and 8.9.5 of the Master Directions on Fraud. Consistent with the principles of natural justice, the lender banks should provide an opportunity to a borrower by furnishing a copy of the audit reports and allow the borrower a reasonable opportunity to submit a representation before classifying the account as fraud. A reasoned order has to be issued on the objections addressed by the borrower. On perusal of the facts, it is indubitable that the lender banks did not provide an opportunity of hearing to the borrowers before classifying their accounts as fraud. Therefore, the impugned decision to classify the borrower account as fraud is vitiated by the failure to observe the rule of audi alteram partem. In the present batch of appeals, this Court passed an ad interim order [Shree Saraiwwalaa Agrr Refineries Ltd. v. Union of India, 2022 SCC OnLine SC 1905] restraining the lender banks from taking any precipitate action against the borrowers fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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