Nothing should be used against the person which has not been brought to his notice: The High Court of Delhi

It is a valuable safeguard under the Master Circular, as the affected party can make a full representation on facts and law. The representation must then be considered by the Review Committee, and a reasoned decision should be passed. The aforesaid has been established by the Delhi High Court in the case of Kavi Arora v. Central Bank of India [W.P.(C) 6581/2021] which was decided by a single judge bench comprising Justice Prateek Jalan on 15 July 2021.

The facts of the case are as follows. This petition under Article 226 of the Constitution is directed against proceedings taken by the Bank against the petitioner under the Master Circular on Wilful Defaulters issued by the Reserve Bank of India [“RBI”]. The petitioner resigned from his post of MD and CEO of Religare Finvest Executive. The Bank issued a show cause notice, calling upon the petitioner to show cause as to why he should not be treated as a wilful defaulter under the Master Circular, and also seeking information as to whether there was any change in his status as a Director of Religare. The petitioner’s contentions were not accepted by the Bank, and this was communicated to the petitioner by a letter. The Bank took the position that the proceedings against the petitioner were in terms of the Master Circular, and also confirmed that it would afford a personal hearing to him. The petitioner thereafter, by a letter, requested the Bank to supply the documents relied upon in the show cause notice.

Learned counsel for the petitioner, submitted that the documents supplied by the Bank do not include all the documents referred to in the show cause notice. Counsel for respondent, on the contrary, submitted that the documents supplied are sufficient to enable the petitioner to meet the case made out against him in the show cause notice. He further contended that the observations of the Bank in the aforesaid communications addressed to the petitioner are prima facie in nature and that the Identification Committee has not arrived at a conclusive decision at this stage, which will be done only after affording the petitioner an opportunity of hearing.

The court considered the facts and arguments presented. It was of the opinion that “Identification Committee is yet to give a hearing to the petitioner and reach a final decision. Subsequent to the decision of the Identification Committee, the petitioner would also have an opportunity of making a representation to the Review Committee of the Bank constituted under Clause 3 (c) of the Master Circular. I am therefore of the view that the Bank is entitled to undertake the procedure under the Master Circular, leaving it open to the petitioner to take his legal remedies thereafter. The matter remains pending before the Bank, and it is for the Bank to ensure that the documents relied upon are supplied to the petitioner, in compliance of the principles of natural justice. While doing so, the Bank will also have to bear in mind the petitioner’s contention that he is not a serving director or officer of Religare, and may not have access to the company’s records.”

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