Court Halts Bank Actions on Fraud Declaration, Upholds Natural Justice, Allows Investigation & Petitioner Defense.

The HC restrained respondent banks from taking further actions against the petitioner based on the fraud declaration during the interim period, pending a full hearing. The court emphasized adherence to the principles of natural justice, allowing the petitioner to contest the declaration while permitting statutory authorities to proceed with investigations.

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Issues:
1. Petitioner declared as fraud by respondent banks without following principles of natural justice.

Analysis:
In the judgment delivered by the High Court, the petitioner, represented by Mr. Saurabh Kirpal, raised concerns about being declared a fraud by respondent banks without due process. The petitioner contended that the declaration was made in response to a circular issued by the Reserve Bank of India (RBI) on 01.07.2016, updated on 03.07.2017. The court, under the guidance of HON'BLE MR. JUSTICE RAJIV SHAKDHER, issued notices to all respondents, including representatives from RBI, UOI, SBI, IDBI Bank, ICICI Bank, and others. The court directed the respondents to file counter affidavits within four weeks, with a provision for rejoinder before the next hearing scheduled for 23.07.2020.

The court allowed the petitioner's plea, subject to exceptions, and restrained any further actions based on the fraud declaration during the interim period. However, the judgment clarified that the order did not impede investigative agencies or statutory authorities from pursuing proceedings against the petitioner. This balance aimed to protect the petitioner's rights while ensuring that legal processes could continue unhindered. The court's decision highlighted the importance of following principles of natural justice in such matters and ensured a fair opportunity for the petitioner to present their case.

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