Madras High Court
P.R.Shanmugam vs The Regional Manager on 23 November, 2023
Author: D.Bharatha Chakravarthy
Bench: Sanjay V.Gangapurwala, D.Bharatha Chakravarthy
WP No.33121 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.11.2023
CORAM
THE HON'BLE MR.SANJAY V.GANGAPURWALA, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
WP No.33121 of 2023
1.P.R.Shanmugam
2.Kolappan Ambujam Kalavathy : Petitioners
Vs
1.The Regional Manager,
Reserve Bank of India, Chennai
2.The Chief Manager,
Punjab National Bank,
Nungambakkam, Chennai : Respondents
Prayer: Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Certiorari calling for the records of the 2nd
respondent culminating in the order dated 22.06.2022 declaring the
Petitioners loan account as fraud quash the same.
For the Petitioners : Mr.Satish Parasaran,
Senior Counsel,
for Mr.B.Harikrishnan
For Respondent No.2 : Mr.M.L.Ganesh
Page 1 of 6
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WP No.33121 of 2023
ORDER
(Made by the Hon'ble Chief Justice)
We have heard Mr.Satish Parasaran, learned Senior Counsel for
the petitioners and Mr.M.L.Ganesh, learned counsel for the second
respondent.
2. The petitioners are challenging the declaration of their
account as 'fraud account'.
3. Though it is said that the account of the petitioners is
declared as a fraud account on 22.06.2022, the order declaring the
said account as a fraud account is not placed on record.
4. The learned Senior Counsel for the petitioners relies upon the
complaint given by the Chief Manager Zonal Shastra Centre, Chennai
to the Branch Head, CBI-ACB, Shastri Bhavan, Chennai wherein
reference is made in paragraph 15 that the fraud angle was examined
and accordingly, fraud has been declared by the bank on 22.06.2022
and was reported to the Reserve Bank of India on 23.06.2022.
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5. The learned counsel for the bank submits that the bank has
declared the account of the petitioners as a fraud account. An
affidavit is also filed by the bank admitting and accepting that the
petitioners' account has been declared as a fraud account.
6. In normal course, we would not have entertained the writ
petition and passed orders in the absence of the impugned order.
However, as the respondent bank also accepts that the petitioners'
account has been declared as a fraud account, and also accepts that
no opportunity was given to the petitioners before declaring the
account as a fraud account, we have considered the writ petition.
7. The Apex Court in the case of State Bank of India vs. Rajesh
Agarwal, under its judgment dated 27.03.2023, has held that the
application of audi alteram partem cannot be impliedly excluded
under the Master Directions on Frauds. It has held as under:
“vi. The principles of natural justice
demand that the borrowers must be served a
notice, given an opportunity to explain the
conclusions of the forensic audit report, and be
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allowed to represent by the banks/ JLF before
their account is classified as fraud under the
Master Directions on Frauds. In addition, the
decision classifying the borrower’s account as
fraudulent must be made by a reasoned order;
and
vii. Since the Master Directions on Frauds
do not expressly provide an opportunity of
hearing to the borrowers before classifying their
account as fraud, audi alteram partem has to be
read into the provisions of the directions to save
them from the vice of arbitrariness.”
8. It is fairly conceded by Mr.M.L.Ganesh, learned counsel for the
bank that the bank has not provided opportunity to the petitioners,
nor any notice was issued to the petitioners before declaring the
account as fraud.
9. We set aside the action and order of the bank declaring the
petitioners' account as a fraud account. Our order would not preclude
the bank from resorting to a proper procedure, in the event it wants
to take steps for declaring the petitioners' account as fraud account.
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10. With this observation, the writ petition is allowed. There will
be no order as to costs. Consequently, WMP Nos.32805 and 32806 of
2023 are also closed. As the petitioners have paid separate Court
fees, WMP 32803 of 2023 is allowed and disposed of.
(S.V.G., CJ.) (D.B.C., J.)
23.11.2023
Index : Yes/No
Neutral Citation : Yes/No
tar
To
1.The Regional Manager,
Reserve Bank of India, Chennai
2.The Chief Manager,
Punjab National Bank,
Nungambakkam, Chennai
https://www.mhc.tn.gov.in/judis
THE HON'BLE CHIEF JUSTICE
AND
D.BHARATHA CHAKRAVARTHY, J.
(tar)
23.11.2023
https://www.mhc.tn.gov.in/judis
