Bank must provide complete fraud investigation documents to enable effective defense against Show Cause Notice The Delhi HC ruled that a bank's failure to supply relevant documents relied upon in a Show Cause Notice (SCN) for fraud categorization violated ...
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Bank must provide complete fraud investigation documents to enable effective defense against Show Cause Notice
The Delhi HC ruled that a bank's failure to supply relevant documents relied upon in a Show Cause Notice (SCN) for fraud categorization violated principles of natural justice. The court held that non-supply of underlying documents impinges upon a party's right of representation, making it impossible to provide an effective reply. Following precedent, the HC ordered the respondent bank to provide complete underlying documents including the Investigation Report and Stock and Receivables Audit Report with full annexures to enable the petitioner to mount an effective defense. The petition was disposed of with directions for document supply.
Issues: Petition seeking directions to set aside Show Cause Notice (SCN) issued by State Bank of India (SBI) and to provide all supporting documents.
Analysis: The petitioner filed a petition seeking directions to set aside an SCN issued by SBI categorizing the petitioner's account as "Fraud" as per RBI Guidelines. The petitioner requested all supporting documents from SBI to prepare an effective reply. Despite multiple requests, SBI failed to provide all relied upon documents, leading to the petitioner's inability to respond adequately. The petitioner relied on the judgment emphasizing the necessity of providing underlying documents for a fair procedure. The respondent argued that all documents were provided, but the petitioner needed more time to respond effectively. The respondent contended that the petition was premature, citing a Supreme Court judgment. The petitioner highlighted missing documents from the Stock and Receivable Report and Internal Investigation Report, crucial for a proper response.
The court acknowledged the petitioner's grievance regarding non-supply of relevant documents relied upon by SBI in the SCN. It emphasized the importance of providing such documents to enable a proper reply and uphold Principles of Natural Justice. Referring to previous judgments, the court reiterated the necessity of disclosing all relevant materials to ensure fairness, transparency, and accountability in adjudicatory proceedings. The court directed SBI to provide the complete Investigation Report and Stock and Receivables Audit Report, along with annexures, to the petitioner within a week. The petitioner was granted four weeks to file a reply after receiving the documents and was also given the option to request a personal hearing. The petition was disposed of in the mentioned terms, including pending applications.
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