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Case Law Details

Case Name : Rajesh Agrarwal Vs Reserve Bank of India (Telangana High Court)
Appeal Number : Writ Petition No. 19102 of 2019
Date of Judgement/Order : 10/12/2020
Related Assessment Year :
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Rajesh Agrarwal Vs Reserve Bank of India (Telangana High Court)

Aggrieved by the non-inclusion of principles of natural justice in the Master Directions on Fraud (‘the Master Circular’, for short), dated 01.07.2016, issued under Section 35A of the Banking Regulation Act, 1949 by the Reserve Bank of India, aggrieved by the decision of the Joint Lenders Forum (‘the JLF’, for short) dated 15-02-2019, and aggrieved by the resolution of the Fraud Identification Committee (‘FIC’, for short) dated 31.07.2019, whereby both the JLF and the FIC have classified the account of M/s. B. S. Limited, (‘the Company’, for short), of which the petitioner was the former Chairman and Managing Director, as ‘fraud’ and ‘willful defaulter’, the petitioner, Mr. Rajesh Agarwal, has approached this Court.

A bare perusal of the resolution of FIC, dated 31.07.2019, also reveals that the said resolution is based on the Report submitted by Dr. K.V. Srinivas, IRP. However, there is no evidence available on record to establish the fact that a copy of the said Report was furnished to the borrower Company, or to the petitioner. Thus, neither the borrower Company, nor the petitioner, nor any other Director was given a chance to explain, or to challenge the finding of the said Report. A copy of the said Report has not been placed even before this Court by the respondents. Therefore, the decision taken by FIC is again based on a piece of evidence, which was never brought to the notice of the borrower Company, or to the notice of the petitioner. Therefore, a vital requirement of audi alteram partem is conspicuously missing. Therefore, the resolution of the FIC, dated 31.07.2019 is legally unsustainable.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

Aggrieved by the non-inclusion of principles of natural justice in the Master Directions on Fraud (‘the Master Circular’, for short), dated 01.07.2016, issued under Section 35-A of the Banking Regulation Act, 1949 by the Reserve Bank of India, aggrieved by the decision of the Joint Lenders Forum (‘the JLF’, for short) dated 15-02-2019, and aggrieved by the resolution of the Fraud Identification Committee (‘FIC’, for short) dated 31.07.2019, whereby both the JLF and the FIC have classified the account of M/s. B. S. Limited, (‘the Company’, for short), of which the petitioner was the former Chairman and Managing Director, as ‘fraud’ and ‘willful defaulter’, the petitioner, Mr. Rajesh Agarwal, has approached this Court.

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