2016 (4) TMI 1351 - HC - Indian Laws

Court denies petitioners' right to legal representation before bank's Identification Committee

Dynametic Overseas Private Limited & anr. And Rythem Overseas Trade Limited & anr. Versus State Bank of India & ors.

The court dismissed the petitions, holding that the petitioners are not entitled to be represented by advocates or chartered accountants before the ... Right to get represented by the advocates/chartered accountants at the hearing - Identification Committee of the SBI? - Wilful defaulters or not - Held that:- This Bench in its decision KINGFISHER AIRLINES LIMITED VERSUS UNION OF INDIA AND OTHERS [2016 (1) TMI 43 - BOMBAY HIGH COURT] was called upon to consider whether the United Bank of India (hereafter the UBI) was justified in refusing permission to the petitioning company to be represented by its advocates. It was held, in view of the facts pleaded in the responses to the impugned notices, that the petitioning company could claim no right to be represented by an advocate at the hearing before the GRC of the UBI. The administrative act of grant/refusal to grant must be preceded by quasi-judicial exercises. Insofar as the master circular is concerned, there is no doubt that the lender identifies a defaulting borrower who ought to be placed in the list of wilful defaulters and upon hearing the version of the defaulting borrower ultimately decides in regard to its inclusion/noninclusion in the list. Notwithstanding the requirement of the master circular regarding the requirement of compliance with natural justice, the GRC/Identification Committee of the lending bank not being authorised to take evidence cannot be said to discharge functions other than administrative - Having regard to the above, there is no question of holding in favour of representation of the petitioners before the GRC/Identification Committee by an advocate. It cannot be gainsaid that the right of an advocate to practice is not unrestricted and is subject to reasonable restrictions. Petition dismissed. Issues Involved:1. Whether the petitioners are entitled to be represented by advocates/chartered accountants before the Identification Committee of the SBI.Issue-wise Detailed Analysis:1. Representation by Advocates/Chartered Accountants:The primary grievance of the petitioners was that they were not allowed to be represented by advocates or chartered accountants before the Identification Committee of the SBI. The petitioners argued that this restriction was illegal and arbitrary, and that it violated their right to a fair hearing as per the principles of natural justice. They contended that with the enforcement of Section 30 of the Advocates Act, the right of an advocate to practice cannot be denied, and hence they should be allowed representation by an advocate.Court's Analysis:The court noted that the issue was whether the petitioners were entitled to be represented by advocates/chartered accountants at the hearing before the Identification Committee of the SBI. It referred to its previous decision in Kingfisher Airlines Limited v. Union of India, where it was held that the petitioning company could not claim a right to be represented by an advocate before the Grievance Redressal Committee (GRC) of the United Bank of India (UBI). This decision was affirmed by an Hon'ble Division Bench of the court, which observed that the GRC of the bank is not a tribunal and does not possess any power to take down evidence, hence there is no scope for examining and cross-examining any witness.The court also referred to the decision of the Delhi High Court in Punjab National Bank v. Kingfisher Airlines Limited, which disagreed with the views of the Calcutta and Bombay High Courts and held that the GRC is a tribunal and hence advocates have a right to practice before it. However, the court found the reasoning in the Delhi High Court's decision unpersuasive and held that the GRC/Identification Committee of the lender bank does not wear the hat of an adjudicator upon entrustment of judicial functions by the State by any legislation. Instead, it discharges a purely administrative function as a part of its duty envisaged in the RBI’s master circular.The court concluded that the GRC/Identification Committee of the lender bank has not been delegated judicial functions by the State and cannot be regarded as a 'tribunal' within the meaning of clause (ii) of Section 30 of the Advocates Act. It is nothing more than an administrative authority, and its decision to either identify or declare a defaulting borrower as a willful defaulter is effectively an administrative decision. Therefore, the petitioners can claim no right of representation by an advocate before the Identification Committee of the SBI.2. Representation by Chartered Accountants:The petitioners also sought representation by chartered accountants. The court noted that the petitioners had not set up any necessity of being assisted by a chartered accountant in their response to the notice dated November 27, 2014. The court held that there is no question of the petitioners being allowed the assistance of a chartered accountant. However, the accountant of the petitioners or anyone directly related to the affairs of the petitioner no.1 and in its payroll may be allowed to assist the petitioners.Conclusion:The court dismissed W.P. 3989(W) of 2016 and W.P. 3990(W) of 2016, holding that the petitioners are not entitled to be represented by advocates or chartered accountants before the Identification Committee of the SBI. The Identification Committee was directed to fix a date in May 2016 for hearing the petitioners and to pass appropriate orders in accordance with law.