SOUTHERN GOLD PVT. LTD. Vs. FEDERAL BANK

JUDGEMENT

(1.) Petitioner has approached this Court essentially challenging Ext.P7 master directions on "frauds - classification and reporting by commercial banks and select FIs., 2016" issued by the Reserve Bank of India.

(2.) Petitioner is a company engaged in the business of gold, which includes the purchase of imported gold and export of gold ornaments manufactured by the petitioner from and out of the said imported gold so purchased by them. For the conduct of the said business financial facility was arranged by respondents 1 and 2. Petitioner would contend that respondent banks had decided to conduct forensic audit of the accounts of the petitioner since the account of the petitioner had become NPA. Pursuant to the same Ext.P4 notice was issued by the Forensic Auditor. Petitioner submitted Ext.P5 reply to the same. Petitioner submits that the Forensic Auditor has completed his report and the petitioner is apprehensive that the report cannot be conclusive in the light of the various issues which are pending adjudication before the High Courts. Petitioner would further submit that they are aggrieved by Clause 8.9.5 of Ext.P7 circular issued by the 3rd respondent Reserve Bank of India, which is the master directions on frauds, wherein no provision has been provided for an opportunity of hearing to the borrowers before classifying the account as fraudulent. Clause 8.9.5 of Ext.P7 reads as follows:

(3.) Learned standing counsel appearing for the Reserve Bank of India would submit that in tune with the direction issued by the Apex Court in Rajesh Agarwal's case cited supra Ext.P7 circular impugned in this writ petition has been recalled and in its place a new master circular dtd. 15/7/2024 has been issued, incorporating a provision to afford an opportunity of being heard to the borrowers before the accounts are classified as fraudulent. Learned standing counsel refers to Clause 2.1.1, which reads as follows: