2016 (4) TMI 1351 - HC - Indian Laws

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

The court dismissed the petitions, holding that the petitioners are not entitled to be represented by advocates or chartered accountants before the ... Right of advocate to practise - application of Section 30 of the Advocates Act - administrative authority versus tribunal/quasi judicial body - principles of natural justice - representation by non employee experts (chartered accountants) - master circular on wilful defaultersRight of advocate to practise - application of Section 30 of the Advocates Act - administrative authority versus tribunal/quasi judicial body - master circular on wilful defaulters - principles of natural justice - Entitlement of the petitioners to be represented by advocates at the hearing before the Identification Committee/GRC of the bank - HELD THAT: - The court held that the Identification Committee/GRC constituted under the RBI master circular does not discharge judicial functions delegated by the State and, therefore, does not qualify as a 'tribunal' within clause (ii) of section 30 of the Advocates Act. The proceedings before the Committee are administrative/fact finding in character, intended to enable the lender to decide on inclusion in the list of wilful defaulters and do not involve adjudication of a lis between parties in the sense required for vesting State judicial power. Although principles of natural justice apply and a hearing must be fair and reasoned, the master circular contains no entitlement to representation by an advocate and clause (iii) of section 30 cannot be invoked to create such a right where the enabling instrument does not provide for it. The Division Bench decision of this Court in Kingfisher and related authorities govern and bind this Bench; the contrary view in Punjab National Bank (Delhi High Court) was examined and rejected on the basis that it elevates the GRC/Identification Committee to a tribunal in a manner inconsistent with Supreme Court authorities distinguishing administrative/quasi judicial fora from tribunals exercising the State's judicial power. The petitioners therefore have no right to be represented by advocates at the Identification Committee hearing. [Paras 29, 30, 31, 32, 44]No right to be represented by advocates at the Identification Committee/GRC; the claim for such representation is rejected.Representation by non employee experts (chartered accountants) - principles of natural justice - master circular on wilful defaulters - Whether the petitioners were entitled to be represented or assisted by independent chartered accountants at the Identification Committee hearing - HELD THAT: - The court found no basis to infer a right to be represented by an independent chartered accountant from the master circular and the petitioners did not plead or prove any necessity for such assistance in their responses. The bench observed that assistance by an accountant who is part of the petitioner's payroll or directly concerned with the petitioner's affairs may be allowed, but there is no right to engage external chartered accountants or consultants to represent the petitioners as of right before the Committee in the absence of an enabling provision. [Paras 46]Assistance by an in house accountant or employee directly related to the petitioner may be permitted; no right to representation by independent chartered accountants or consultants was recognised.Master circular on wilful defaulters - principles of natural justice - Direction to the Identification Committee to afford hearing and pass orders in accordance with law - HELD THAT: - Having dismissed the petitions on merits, the court nevertheless directed that, in compliance with the requirement of giving a hearing under the master circular and the earlier coordinate Bench order, the Identification Committee shall fix a hearing date in May 2016 with at least 72 hours' notice to the petitioners and thereafter pass appropriate reasoned orders in accordance with law. This is a procedural direction to enable the Committee to consider the petitioners' representations and to decide the matter observing natural justice. [Paras 48]Identification Committee to fix hearing in May 2016 with 72 hours' notice and thereafter pass appropriate orders in accordance with law.Final Conclusion: Writ petitions dismissed. The petitioners have no entitlement to be represented by advocates or by external chartered accountants before the bank's Identification Committee/GRC; an in house accountant or employee may assist. The Identification Committee is directed to afford a hearing (with 72 hours' notice) in May 2016 and thereafter pass reasoned orders in accordance with law. 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.