The petitions include two filed by erstwhile promoters of Jet Airways Naresh Goyal and his wife Anita Goyal
Bombay High Court. File Pic
The Bombay High Court on Monday granted interim stay on the effect of the master circulars issued by the Reserve Bank of India that permits banks to declare any account as a fraud account without a hearing.
ADVERTISEMENT
A division bench of Justices Gautam Patel and Neela Gokhale stayed effect of the Reserve Bank of India Master Directions on Frauds Classification and Reporting by Commercial Banks and Select FIs issued in 2016 till September 11 when it would hear petitions challenging the same.
The petitions include two filed by erstwhile promoters of Jet Airways Naresh Goyal and his wife Anita Goyal.
The pleas said the circulars were in violation of the principle of natural justice as no opportunity to be heard was being given to borrowers before classifying their accounts as fraudulent.
As per the circulars, once a bank classifies an account as fraud, it is the responsibility of that bank to report the same to the Central Repository of Information on Large Credits platform to alert other banks.
If a bank decides to straightaway classify the account as fraud, it is obligated to report the fraud to RBI within 21 days and report the case to any investigating agency.
The petitions claimed that, in effect, the banks were neither giving the opportunity to borrowers to be heard nor giving them copies of material relied upon by the bank before taking further precipitative action.
The HC bench, on Monday, admitted all the petitions and said it would take them up for hearing on September 7 and 8.
"The effect of the circulars shall remain stayed till September 11," the court said.
This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever.
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
