Disposed¶25

Rajiv Gupta v. Karur Vysya Bank & Anr.

Delhi HC21 Jan 2026W.P.(C)/5524/2024

Case brief

AI extract

What is this about?

fraud classification of borrower account; principles of natural justice; personal hearing; empty formality; forensic audit report; Master Directions on Frauds; State Bank of India v. Rajesh Agarwal (2023) 6 SCC 1 para 98.6; Karur Vysya Bank; RCI Industries & Technologies Ltd.; Article 226; certiorari; mandamus; impugned order set aside; reasoned/speaking order; Review Committee; joint lenders forum; NPA; Delhi High Court; Jasmeet Singh, J.; W.P.(C) 5524/2024.

What did the court decide?

Impugned Order dated 05.04.2024 set aside; Respondent No. 1 directed to give personal hearing on 27.02.2026 at 11:30 a.m. and supply the documents sought; Review Committee to afford personal hearing and pass a reasoned order; respondent not restricted from lawful actions; petition disposed of with pending applications. ¶25

Rajiv Gupta Vs Karur Vysya Bank & Anr. — Writ and Judicial Review | Delhi HC (2026)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the classification of the petitioner's account as fraud vide order dated 05.04.2024 by Respondent No. 1 was made in compliance with the principles of natural justice (notice, opportunity of hearing, supply of sought documents, reasoned order). +2 more

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Court's answer

Non-supply of the documents sought by the petitioner on 21.03.2024 rendered the personal hearing an empty formality, which cannot be construed as compliance with the principles of natural justice.

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Ratio / Principle

Since the declaration of fraud is an action with serious consequences, the principles of natural justice must be strictly followed (adopting the Supreme Court's para 98.6 requirement of notice, opportunity to explain the forensic audit conclusions, representation, and a reasoned order before fraud classification).

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Key takeaways

Respondent No. 1 is directed to give the petitioner a personal hearing at MRJ Tower, 2nd Floor, Faiz Road, Karol Bagh, New Delhi – 110005 on 27.02.2026 at 11:30 a.m.; the petitioner to furnish a list of relevant documents within one week, to be supplied within one week thereafter if available with the respondent.ratio¶22
In compliance with the Principles of Natural Justice in letter and spirit, the Review Committee shall afford a personal hearing and thereafter pass a reasoned Order.ratio¶23

Detailed headnote1 paragraphs

Delhi High Court (Jasmeet Singh, J.), W.P.(C) 5524/2024, decided 21.01.2026: A former Director of M/s RCI Industries and Technologies Ltd. challenged, under Article 226, Karur Vysya Bank's order dated 05.04.2024 classifying his account as fraud, and the underlying Forensic Audit & Transaction Audit Report dated 16.08.2023 by M/s ATK & Associates. Documents sought on 21.03.2024 were never supplied, so the personal hearing was an empty formality. Relying on para 98.6 of State Bank of India v. Rajesh Agarwal (2023) 6 SCC 1, the Court held that natural justice must be strictly followed before fraud classification: it set aside the impugned order, directed a personal hearing (27.02.2026), supply of sought documents, and a reasoned order by the Review Committee, leaving the bank free to take lawful action.

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$~4

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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W.P.(C) 5524/2024 & CM APPL. 22694/2024 RAJIV GUPTA ....Petitioner Through: Mr. Abhishek Garg, Adv. Mr. Yash Gaiha, Adv. Mr. Naman Mehta. Adv. versus KARUR VYSYA BANK & ANR. .....Respondents Through: None for R1

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CORAM: HON'BLE MR. JUSTICE JASMEET SINGH O R D E R % 21.01.2026

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This is a writ petition filed under Article 226 of the Constitution of India seeking the following reliefs:

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“A) Issue appropriate writ in the nature of certiorari or directions/order quashing the Impugned Order dated 05.04.2024 issued by Respondent No. 1;

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B) Issue appropriate writ in the nature of certiorari or directions/order setting aside the Forensic Audit & Transaction Audit Report dated 16.08.2023 conducted by M/s ATK & Associates on the instructions of resolution professional of RCI Industries & Technologies Ltd. which is the sole basis of the Impugned Order as being biased and in teeth of principles of natural justice and all consequential proceedings thereto;

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C) Issue appropriate writ in the nature of mandamus or directions/order to stay the operation of Impugned Order and all the consequent proceedings arising out of the Impugned Order dated 05.04.2024 issued by Respondent No. 1 thereto”

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There is nobody appearing on behalf of the respondent No. 1, namely

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2026 at 13:14:50

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Karur Vysya Bank.

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The brief facts of the case are that the petitioner is a former Director of M/s RCI Industries and Technologies Ltd., engaged in the business of trade of copper and non-ferrous metals. The M/s RCI Industries and Technologies Ltd. availed loans from a consortium of banks for the purpose of expansion but suffered losses and was declared a non-performing asset by the joint lenders forum between 2019 and 2020.

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Thereafter, between December 2023 and January 2024, the banks participating in the joint lenders meeting issued show cause notices relying on the audit report, proposing to declare the account of M/s RCI Industries and Technologies Ltd. and the petitioner as fraud. Consequently, the petitioner was declared as fraud vide order dated 05.04.2024.

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The petitioner in the present petition challenges the impugned Order dated 05.04.2024 issued by the respondent No. 1. 6. In the present case, the petitioner sought documents from the respondent No. 1 on 21.03.2024 but the same has not been supplied. Hence the formality of a personal hearing was an empty formality and cannot be construed as compliance with the principles of natural justice.

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The Hon’ble Supreme Court in paragraph No. 98.6 of the judgment titled as State Bank of India and Others vs. Rajesh Agarwal and Others (2023) 6 SCC 1 has observed that the Principles of Natural Justice demand that the borrowers must be given an opportunity of hearing before classifying their accounts as fraud and the same must be done by a speaking order. The relevant paragraph of the said judgment reads as under:

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“98.6. The principles of natural justice demand that the borrowers must be served a notice, given an opportunity to explain the conclusions of the forensic audit report, and be

¶18

This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2026 at 13:14:50

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allowed to represent by the banks/JLF before their account is classified as fraud under the Master Directions on Frauds. In addition, the decision classifying the borrower's account as fraudulent must be made by a reasoned order.”

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Since the declaration of fraud is an action with serious consequences, I am of the view that the principles of natural justice must be strictly followed.

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For the said reasons, it is directed that the respondent No. 1 shall give a personal hearing to the petitioner at MRJ Tower, 2nd Floor, Faiz Road, Karol Bagh, New Delhi – 110005 on 27.02.2026 at 11:30 a.m. 10. Within one week from today, the petitioner shall furnish a list of relevant documents which he seeks from the respondent No. 1, and if available with the respondent, the same shall be supplied to the petitioner within one week thereafter.

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I am of the view that in compliance with the Principles of Natural Justice in letter and spirit, the Review Committee shall afford a personal hearing and thereafter pass a reasoned Order.

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Consequently, the impugned Order dated 05.04.2024 is hereby set aside. 13. The Court has not restricted the respondent from taking any actions that are available to the respondent in accordance with law.

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The petition is disposed of in the aforesaid terms along with pending applications, if any.

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JASMEET SINGH, J

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JANUARY 21, 2026/AS

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/01/2026 at 13:14:50

Rajiv Gupta v. Karur Vysya Bank & Anr.

Case brief

What is this about?

What did the court decide?

Rajiv Gupta v. Karur Vysya Bank & Anr.

Case brief

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What did the court decide?

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What the court decided

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