Two civil appeals arose from High Court judgments (Calcutta and Delhi) concerning the classification of borrower accounts as 'fraud' by banks (State Bank of India and Bank of India). The High Courts, interpreting the Supreme Court's judgment in `State Bank of India and Others vs. Rajesh Agarwal and Others` (Rajesh Agarwal (supra)), had mandated personal hearings for borrowers and full disclosure of forensic audit reports before such classification. The banks and RBI contended that a notice, opportunity to reply, and a reasoned order were sufficient, and that personal hearings were not mandated by `Rajesh Agarwal (supra)` nor were full audit reports required to be furnished.
On 20.08.2019, the loan account of respondent No.1 (Amit Iron Private Limited) was classified as a Non-Performing Asset (NPA) by the State Bank of India due to defaults in repayment obligations.
On 27.12.2023, the State Bank of India issued a show cause notice to the respondents (Amit Iron Private Limited & Ors.) alleging non-compliance with loan terms and fraudulent activity, asking why the account should not be categorized as 'fraud'.
On 08.02.2024, respondent Nos.1 and 2 submitted replies denying any breach of the terms and conditions of the loan agreement.
On 13.03.2024, the State Bank of India communicated to the respondents that the loan account had been classified as 'fraud' and a speaking order was communicated.
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The loan account of respondent No.1 (Amit…
The State Bank of India issued a show cause…
Two civil appeals arose from High Court judgments (Calcutta and Delhi) concerning the classification of borrower accounts as 'fraud' by banks (State Bank of India and Bank of India). The High Courts, interpreting the Supreme Court's judgment in `State Bank of India and Others vs. Rajesh Agarwal and Others` (Rajesh Agarwal (supra)), had mandated personal hearings for borrowers and full disclosure of forensic audit reports before such classification. The banks and RBI contended that a notice, opportunity to reply, and a reasoned order were sufficient, and that personal hearings were not mandated by `Rajesh Agarwal (supra)` nor were full audit reports required to be furnished.
On 20.08.2019, the loan account of respondent No.1 (Amit Iron Private Limited) was classified as a Non-Performing Asset (NPA) by the State Bank of India due to defaults in repayment obligations.
On 27.12.2023, the State Bank of India issued a show cause notice to the respondents (Amit Iron Private Limited & Ors.) alleging non-compliance with loan terms and fraudulent activity, asking why the account should not be categorized as 'fraud'.
On 08.02.2024, respondent Nos.1 and 2 submitted replies denying any breach of the terms and conditions of the loan agreement.
On 13.03.2024, the State Bank of India communicated to the respondents that the loan account had been classified as 'fraud' and a speaking order was communicated.
…The loan account of respondent No.1 (Amit…
The State Bank of India issued a show cause…