No Unconditional Right to Legal Representation for Wilful Defaulters under RBI Circulars

The court held that there is no unconditional right to legal representation for a person declared as a wilful defaulter under RBI Circulars before such declaration is made. In-house committees under the Revised Circular are not considered tribunals, and oral hearings are not mandatory. Borrowers can provide written representations within 15 days of the First Committee's order, with the Review Committee required to issue a reasoned order on such representations. The Delhi High Court's decision was overturned, and the appeals were granted.

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Issues Involved:
1. Whether a person declared as a wilful defaulter under RBI Circulars is entitled to legal representation before such declaration.
2. Whether the in-house committees constituted under RBI Circulars can be considered as tribunals.
3. Whether an oral hearing is mandatory under the Revised Circular dated 01.07.2015.
4. Whether the right to legal representation is part of natural justice.

Issue-wise Detailed Analysis:

1. Legal Representation for Wilful Defaulters:
The primary question addressed was whether a person declared as a wilful defaulter under the RBI Circulars is entitled to be represented by a lawyer before such a declaration is made. The court examined Section 30 of the Advocates Act, 1961, which grants advocates the right to practice before any tribunal or person legally authorized to take evidence. The court also considered the consequences of being classified as a wilful defaulter, including civil and criminal repercussions, and the impact on the fundamental right to carry on business under Article 19(1)(g) of the Constitution. Despite these serious consequences, the court concluded that there is no unconditional right to legal representation in such in-house proceedings, as the Revised Circular dated 01.07.2015 does not mandate it.

2. In-house Committees as Tribunals:
The court analyzed whether the in-house committees constituted under the RBI Circulars could be considered as tribunals. It was determined that for a body to be considered a tribunal, it must be invested with the judicial power of the State to decide a lis (dispute) between parties after gathering evidence and applying the law. The court held that the in-house committees under the Revised Circular do not possess such judicial power and are instead administrative bodies tasked with gathering facts and arriving at a result. Therefore, these committees cannot be considered tribunals, and advocates do not have the right to appear before them under Section 30 of the Advocates Act.

3. Mandatory Oral Hearing:
The court examined whether an oral hearing is required under the Revised Circular dated 01.07.2015. It was noted that the Revised Circular departs from the earlier Master Circular by allowing the First Committee discretion to grant or deny a personal hearing. The court concluded that oral hearings are not mandatory in all cases and that natural justice can be satisfied through written representations. The court referenced previous judgments stating that natural justice is a flexible tool and does not always require oral hearings.

4. Right to Legal Representation as Part of Natural Justice:
The court reviewed various judgments on whether the right to legal representation is part of natural justice. It was determined that there is no absolute right to legal representation in administrative or domestic proceedings unless specifically provided by statute or rules. The court emphasized that the right to be represented by a lawyer depends on the facts and circumstances of each case and the governing rules. In the context of wilful default, the court found that the issues typically involve factual determinations that do not necessitate legal representation.

Conclusion:
The court held that there is no right to legal representation before the in-house committees constituted under the Revised Circular dated 01.07.2015. The committees are not tribunals, and oral hearings are not mandatory. The borrower can make a written representation within 15 days of the First Committee's order, and the Review Committee must pass a reasoned order on such representation. The impugned judgment of the Delhi High Court was set aside, and the appeals were allowed.

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