Natural justice applies before fraud classification of a borrower's account, requiring notice, hearing, and a reasoned order.

The rule of audi alteram partem is read into the Master Directions on Frauds before a borrower's account is classified as fraud, because such classification entails grave civil consequences. Prior notice, disclosure of the material relied upon, a meaningful opportunity to respond to forensic audit findings, and a reasoned order are required unless excluded expressly or by necessary implication. Mere participation in the forensic audit does not satisfy fairness. The directions' silence on hearing and their time-frame leave room for a pre-decisional opportunity, and the absence of reasons renders the classification vulnerable to challenge.

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Issues: Whether the rule of audi alteram partem must be read into the Master Directions on Frauds before a borrower's account is classified as fraud, and whether such classification can stand without notice, an opportunity to respond to the forensic audit findings, and a reasoned order.

Analysis: The directions operate in the regulatory sphere, but classification of an account as fraud carries serious civil consequences, including debarment from institutional finance, denial of restructuring, stigma, and consequences affecting business reputation and credit access. Administrative action with such consequences must conform to natural justice unless expressly or by necessary implication excluded. The directions do not expressly exclude a prior hearing, and the time-frame they prescribe leaves room for a pre-decisional opportunity. Mere participation during forensic audit is not enough, because fairness requires notice of the material relied upon, an opportunity to explain the adverse findings, and a chance to make representations before the final fraud classification. The obligation to record reasons also follows, because a reasoned order guards against arbitrariness and enables effective challenge.

Conclusion: The rule of audi alteram partem is implied into Clauses 8.9.4 and 8.9.5 of the Master Directions on Frauds, borrowers must be given notice and a meaningful opportunity to respond before fraud classification, and the decision must be supported by reasons. The impugned classifications made without such hearing are invalid.

Ratio Decidendi: Where an administrative classification entails grave civil consequences and the governing instrument is silent on hearing, the principles of natural justice, including prior notice, opportunity to represent, and a reasoned decision, must be read into the instrument unless expressly or by necessary implication excluded.

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