Ideal Unique Realtors Private Limited and Ors. Vs Reserve Bank of India and Anr. — Calcutta HC (2024) — LawSathi Research

Ideal Unique Realtors Private Limited and Ors. Vs Reserve Bank of India and Anr. — Calcutta HC (2024) — LawSathi Research

What the court decided

AI extract

Outcome

Writ petition disposed of with directions: the forensic internal audit report and the bank's findings to be handed over to the petitioner within two weeks; petitioner to reply within two weeks of receipt; Reserve Bank of India to grant a hearing and pass a reasoned order, with all points including denial of natural justice kept open before it.

Issue for consideration

Whether the bank's decision declaring the petitioners' loan account as fraud is vitiated for violation of the principles of natural justice, on the ground that the forensic internal audit report relied upon by the bank was not furnished to the petitioners.

Court's answer

A copy of the forensic internal audit report and the findings of the bank shall be handed over to the petitioner within two weeks from the date of communication of the order, and the petitioner will be entitled to reply within two weeks from receipt of the report.

Ratio / Principle

The Reserve Bank of India will give a hearing to the petitioner and pass a reasoned order, and all points, including the question of denial of the principles of natural justice, shall be available to the petitioner at the time of disposal of the matter before the Reserve Bank of India.

Key takeaways

The Reserve Bank of India shall grant an opportunity of hearing, as the petitioners have not been able to place their case before the bank.ratio¶17

Detailed headnote1 paragraphs

Petitioners, engaged in real estate business, availed a credit facility from Yes Bank; the loan account was declared NPA and the bank, after concluding its proceedings, declared the account as fraud, which the petitioners challenged as violative of natural justice on the ground that the forensic internal audit report relied upon was not furnished to them. The bank stated that its proceedings were complete, documents had been forwarded to the Reserve Bank of India for approval, and three notices issued to the petitioner went unanswered. Disposing of the writ petition, the Court directed that a copy of the forensic internal audit report and the bank's findings be handed over to the petitioner within two weeks, with liberty to reply within two weeks of receipt; the Reserve Bank of India was directed to grant the petitioners an opportunity of hearing and pass a reasoned order, with all points, including the question of denial of the principles of natural justice, available to the petitioner at the time of disposal before the Reserve Bank of India.

OD-8

WPO/670/2024

IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction ORIGINAL SIDE

IDEAL UNIQUE REALTORS PRIVATE LIMITED AND ORS.

-VERSUS-

RESERVE BANK OF INDIA

BEFORE:

The Hon'ble JUSTICE SHAMPA SARKAR

Date : 1^st August, 2024.

Appearance: Mr. Jishnu Saha, Sr. Adv. Mr. Sourojit Dasgupta, Adv. …. for the petitioner.

Mr. Utpal Bose, Sr. Adv. Ms. Suchismita Ghosh, Adv. ...for the Bank.

The Court: The petitioners are engaged in the business of real estate.

The petitioners availed a credit facility from the Yes Bank. The loan account of the petitioner was declared NPA. The bank initiated proceedings to declare the account as fraud. The proceeding was concluded. The petitioners have challenged such declaration.

Mr. Saha, learned senior advocate contends that the decision of the bank is vitiated being violative of the principles of natural justice. The forensic internal audit report which was relied upon by the bank was not furnished to the petitioners. Hence, all steps taken by the bank should be set aside.

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Mr. Bose, learned senior Advocate appearing for the bank submits that the proceedings, at the end of the bank, is over. All the documents along with the findings and observations of the bank have been forwarded to the Reserve Bank of India for its approval and no further steps remained unfulfilled at the end of the bank. He also denies the allegation that the decision was taken by the bank in violation of the principles of natural justice, as three notices had been issued to the petitioner, but the petitioner chose not to appear before the bank during the proceedings.

Having heard learned Advocates for the respective parties, this Court directs that a copy of forensic internal audit report and the findings of the bank shall be handed over to the petitioner within two weeks from date of communication of this order. The petitioner will be entitled to use a reply to the same within two weeks from receipt of the report. The Reserve Bank of India will give a hearing to the petitioner and pass a reasoned order. All points, including the question of denial of the principles of natural justice, shall be available to the petitioner at the time of disposal of the matter before the Reserve Bank of India. The Reserve Bank of India shall grant an opportunity of hearing as the petitioners have not been able to place their case before the bank.

With the above direction, WPO/670/2024 stands disposed of.

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Learned Advocate-on-record for the petitioner is at liberty to

communicate this order to the Reserve Bank of India.

(SHAMPA SARKAR, J.)

A/s.