TaxTMI 
TaxTMI 
2016 (1) TMI 43
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.... Company incorporated and registered under the provisions of the Companies Act, 1956. Respondent No.2 is a statutory body constituted under the State Bank of India Act, 1955 and also a Government Company and "State" within the meaning of Article 12 of the Constitution of India. 6. Reserve Bank of India ("RBI") issued a Circular on 01/07/2014 giving instructions and guidelines on matters relating to Wilful Defaulters. The Master Circular was addressed to all Scheduled Commercial Banks and All India Notified Financial Institutions. 7. The said Master Circular defined the meaning of the term "wilful default" and the terms "diversion of funds" and "siphoning of funds". It also provided for penal measures in para 2.5 and report to be submitted to RBI by Banks/Financial Institutions regarding Wilful Defaulters and the suits filed by them. Consequences of a person being Wilful Defaulter also have been enumerated in the said Circular. Mechanism for the purpose of identifying and reporting instances of Wilful Defaulters are mentioned in para 3. By virtue of the said para, grievance redressal mechanism was established and the Committee of higher Officers headed by Executive Director....
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....t an advocate of its choice to represent the Petitioner at the hearing before the Grievance Redressal Committee. This request was turned down by Respondent No.2 by its letter dated 10/11/2014. Petitioner, thereafter, filed a Writ Petition in this Court being Writ Petition (Lodging) No.2951 of 2014. When the matter came up for hearing before Division Bench of this Court, Respondent No.2 gave an oral undertaking that the Bank would not conduct hearing before the Grievance Redressal Committee until disposal of the said Writ Petition. The said Petition is pending in this Court. 13. Thereafter, on 01/06/2015 Petitioner received a letter from Respondent No.2 dated 29/05/2015 calling upon the Petitioner to attend the hearing before the Committee (as opposed to the GRC) on 16/06/2015 in person and it is submitted that Petitioner - Company was not permitted to be represented through its Lawyers/Chartered Accountants. Being aggrieved by the said letter Petitioner has filed this Petition. SUBMISSIONS : 14. Mr. Milind Sathe, the learned Senior Counsel appearing on benalf of the Petitioner has made the following submissions. (i) Firstly, it was submitted that where complex leg....
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....4 (vii) Lastly, he submitted that the amended RBI Circular was inapplicable to the notice dated 29/05/2015 since the said notice dated 29/5/2015 issued by Respondent No.2 was based on Master Circular of RBI dated 01/07/2014 which did not contain express prohibition for being represented by a lawyer as provided in amended circular which was issued on 07/01/2015. It was submitted that since initial letter was issued on 19/8/2014, procedure under the old Circular had to be followed. He relied on the judgment of the Apex Court in Videocon International Ltd vs. Securities and Exchange Board of India (2015) 4 SCC 33 15. Mr. Samdani, the learned Senior Counsel appearing on behalf of Respondent No.2 & 3 submitted that parameters for declaration of Wilful Defaulters are fixed under the Master Circular in terms of para 2.1. He submitted that the Identification Committee was to form an opinion on the basis of documents and the Committee does not consist of any legal practitioner or legally trained person. He submitted that the details set out in the show cause notice are all based on facts and there are no legal or complex legal questions of law involved. He then submitted that un....
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....1924(W) of 2014 (Kingfisher Airlines Ltd vs. Union of India & Ors). He submitted that the view of the learned Single Judge was upheld by the Division Bench of the Kolkata High Court. He submitted that the decision declaring the Petitioner as defaulter was set aside on a different ground by the learned Single Judge of the Kolkata High Court vide order dated 24/12/2014 passed in Writ Petition No.942 of 2014 (Kingfisher Airlines Limited & Ors vs. Union of India & Ors). FINDINGS: 16. Reserve Bank of India was pleased to issue a Master Circular dated 01/07/2014, laying down guidelines for the purpose of permitting Banks to declare a borrower as "Wilful Defaulter". For the purpose of declaring a borrower as "Wilful Defaulter", in para 3 the procedure which was required to be followed by the Grievance Redressal Committee is laid down. Para 3 of the said Circular dated 01/07/2014 reads as under:- "3. Grievances Redressal Mechanism Banks/FIs should take the following measures in identifying and reporting instances of wilful default: (i) With a view to imparting more objectively in identifying cases of wilful default, decisions to classify the borrower as wil....
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....earing has to be given to the borrower for personal hearing, if the Committee feels that such an opportunity is necessary. The amended Circular of 07/01/2015 therefore gives a discretion to the Committee to decide whether personal hearing should be given or not. In the present case, relying on the amended circular dated 07/01/2015, the Bank has now informed the Petitioner that it would not be entitled to be represented by an advocate. 18. The sum and substance of the arguments advanced by Mr. Milind Sathe, the learned Senior Counsel appearing on behalf of the Petitioner is that since the decision of the Grievance Redressal Committee would entail adverse civil and criminal consequences on the Petitioner, the nature and function of the Committee was not administrative but quasijudicial and therefore the Petitioner has a legal right to be represented by a lawyer. Reliance has been placed on the judgments in J.K. Agarwal vs. Haryana Seeds Development Corporation Ltd and Others(1991) 2 SCC 283, India Photographic Company Ltd vs. Saumitra Mohan Kumar (1983) 2 LLN 796, C.L. Subramaniam vs. Collector of Customs, Cochin(1972) 3 SCC 542 and N.K. Bajpai vs. Union of India (2012) 4 SCC 653 ....
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....ose of such provisions is to ensure that the domestic enquiry is completed with despatch and is not prolonged endlessly. Secondly, when the person defending the delinquent is from the department or establishment in which the delinquent is working he would be well conversant with the working of that department and the relevant rules and would, therefore, be able to render satisfactory service to the delinquent. Thirdly, not only would the entire proceedings be completed quickly but also inexpensively. It is, therefore, not correct to contend that the Standing Order or Section 22(ii) of the Act conflicts with the principles of natural justice." Similarly, the Apex Court in Bharat Petroleum Corporation Ltd. vs. Maharashtra General Kamgar Union and Others(1999) 1 SCC 626, after taking into consideration all the judgments on the point, in para 33 has observed as under:- "33. The earlier decision in N. Kalindi v. Tata Locomotive & Engineering Co. Ltd., [AIR 1960 SC 914 : (1960) 3 SCR 407 : (1960) 2 LLJ 228], Dunlop Rubber Co. (India) Ltd. vs. Workmen [AIR 1965 SC 1392 : (1965) 2 SCR 139 : (1965) 1 LLJ 426 and Brooke Bond India (P) Ltd. v. Subba Raman (S.) [(1961) 2 LLJ 417 : ....
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....observed in para 11 as under:- "11. Following the above decision it has to be held that there is no vested or absolute right in any charge-sheeted employee to representation either through a counsel or through any other person unless the statute or rules/standing orders provide for such a right. Moreover, the right to representation through someone, even if granted by the rules, can be granted as a restricted or controlled right. Refusal to grant representation through an agent does not violate the principles of natural justice." 20. From the conspectus of cases which have been cited before us, we are of the view that there cannot be any straight jacket formula which can decide whether a person is entitled to be represented by an advocate and ultimately it would all depend on facts and circumstances of each case. 21. In the present case, both the Circulars namely Circular dated 01/07/2014 and 07/01/2015 do not expressly provide that the borrower can be represented by a lawyer. The second amended Circular gives a discretion to the Redressal Grievance Committee to decide whether personal hearing should be given or not. There is no express prohibition of the borrower to....
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.... to curtail further time which may be taken for deciding the issue whether the Petitioner is a Wilful Defaulter or not, since the Petitioner may challenge this order in the Apex Court we are of the view that if the Petitioner gives an undertaking to this Court that if it is allowed to be represented by its advocate, its advocate would conclude his submissions in one day then in such an event the Petitioner will be permitted to engage an advocate. The Delhi High Court in its Order dated 28/08/2014 in Kingfisher Airlines Ltd vs. Union of India & Others delivered in W.P. (C) 5532/2014 has made the following observations:- "The apprehension expressed by the learned counsel for the respondent that the petitioner is only seeking to delay the proceedings, can be allayed by fixing timelines. Accordingly, it is directed that the respondent shall provide the petitioner's with copies of all documents that are relied upon by the respondent, if not already provided within a period of one week from today. The authorized representative of the petitioner alongwith an Advocate and a Senior Advocate, if any, will be present in the office of the respondent bank at 10.30 AM on 22.09.2014.....