Natural justice in banking action: show cause notice kept in abeyance until relied-upon material and forensic audit report are disclosed.

Where a proposed banking action may cause serious civil consequences, the affected party should ordinarily receive notice, the material relied upon, and a meaningful opportunity to respond before adverse action is taken. Applying that natural justice principle, the Court found the show cause notice vulnerable at the interim stage because the relied-upon documents, including the forensic audit report, had not been supplied and deeper examination was needed. Interim protection was granted by keeping the notice in abeyance, while directing the respondent to file a reply and place the forensic audit report on record.

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Issues: Whether the impugned show cause notice deserved to be kept in abeyance pending filing of reply and disclosure of the forensic audit report, having regard to the requirement of natural justice before adverse action affecting the petitioners.

Analysis: The order proceeds on the prima facie view that the challenge raised by the petitioners required deeper examination. Reliance is placed on the settled principle that where proposed action may entail serious civil consequences, the affected party should ordinarily be given notice, supplied the material relied upon, and afforded a meaningful opportunity to respond before any adverse decision is taken. On that basis, and noting the asserted status of petitioner no. 1, the prior forensic audit, and the absence of supply of relied upon documents, the Court found the impugned notice vulnerable at the interim stage.

Conclusion: The petitioners obtained interim protection, and the operation of the impugned show cause notice was directed to remain in abeyance while the respondent was directed to file a reply and place the forensic audit report on record.

Ratio Decidendi: Where an adverse banking action is likely to cause serious civil consequences, the authority must act consistently with audi alteram partem by supplying the relied upon material and affording a fair opportunity before proceeding further.

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