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TMI BlogEnsuring Fair Procedure before declaring Fraud in Bank Loan: Providing Relevant Documents and Opportunity to be HeardX X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged non-compliance with the agreed terms of the loan documents and various irregularities in the loan account, leading to suspicion of fraudulent activities. Arguments Presented Petitioner's Arguments The Petitioner contended that the SCNs were issued without providing the requisite documents, which formed the basis of the allegations. The Petitioner argued that the absence of such documents rendered it impossible to submit a proper reply to the SCNs. The Petitioner highlighted the following key points: The Petitioner did not have access to the banking transactions, bank loans, and other documents of the company, as they were under the control of the Resolution Professional (RP) appointed after the company was admitted into Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments relied upon by the Petitioner were not applicable to the present case, and they did not provide for granting a personal hearing to the Petitioner. The Respondents relied on the Supreme Court's order in Rajesh Agarwal's case to contend that granting a personal hearing by the banks was not mandatory. Discussions and Findings of the Court The Court discussed the settled principles of law regarding the applicability of the Principles of Natural Justice and the requirement to provide relevant documents forming the basis of a SCN. The Court relied on the Supreme Court judgments in Kanwar Natwar Singh Kanwar Jagat Singh Versus Directorate of Enforcement - 2010 (10) TMI 156 - Supreme Court and T. Takano v. Securities and Exchange Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company available with SBI (the lead bank). The Petitioner and/or his authorized representative shall also be allowed to inspect the records of the company available with the RP. Upon inspection, the Petitioner shall state the specific documents required from the company's records that form the basis of the SCNs. These documents shall be provided to the Petitioner. The cost of providing copies of the relevant documents shall be borne by the Petitioner. The process of inspection, stating the specific documents, and providing the relevant documents shall be completed within specified timelines. Upon receipt of the documents, the Petitioner shall file a reply to the respective SCNs within a specified timeline. The Petitioner is at lib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Exchange Board of India and State Bank of India v. Rajesh Agarwal, to emphasize the importance of disclosing relevant materials and providing an opportunity to be heard before taking an adverse decision. The Court acknowledged that fair procedure and the Principles of Natural Justice require the provision of requisite documents forming the basis of a SCN to enable the concerned party to submit a proper reply. Failure to provide relevant documents would render the entire procedure an empty formality. Considering the submissions made by the lead bank (SBI) and the Petitioner's counsel regarding the availability of the company's records with the Resolution Professional (RP), the Court issued directions for the Petitioner and/or his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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