(1.) The civil appeals arise out of a challenge to the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions 2016.["Master Directions on Frauds"] Issued by the Reserve Bank of India["RBI"], these directions were challenged before different High Courts primarily on the ground that no opportunity of being heard is envisaged to borrowers before classifying their accounts as fraudulent. The High Court of Telangana has held in the impugned judgment[Writ Petition No. 19102 of 2019] that the principles of natural justice must be read into the provisions of the Master Directions on Frauds. The decision has been assailed by the RBI and lender banks through these civil appeals.
(2.) In this background the court has to consider whether the principles of natural justice should be read into the provisions of the Master Directions on Frauds. For the reasons to follow, we hold that the principles of natural justice, particularly the rule of audi alteram partem, has to be necessarily read into the Master Directions on Frauds to save it from the vice of arbitrariness. Since the classification of an account as fraud entails serious civil consequences for the borrower, the directions must be construed reasonably by reading into them the requirement of observing the principles of natural justice.
(3.) B S Limited is a company engaged in the business of power transmission and distribution, passive telecom infrastructure, renewable energy, and mineral resources. It availed loans amounting to Rs.1406.00 crores from various banks. The company failed to meet its payment obligations to lender banks, thereby defaulting in repayment of credit facilities. In accordance with the Master Directions on Frauds, all the lender banks formed a Joint Lenders Forum["JLF"] with State Bank of India as the lead bank.
ABOUT US "REGENT COMPUTRONICS PVT. LTD." is a Company incorporated in 1991 under the provisions of the Companies Act, 1956. Since its inception to 1995, the Company was busy in carrying out the activities related to various Banks' Job Work..
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