Introduction

The Hon’ble Supreme Court of India (“Hon’ble SC”) in its recent judgment dated March 27, 2023, in State Bank of India & Ors. v. Rajesh Agarwal & Ors.[i], has conclusively decided on the question of whether the principles of natural justice should be read into the provisions of the Reserve Bank of India (“RBI”) (Fraud Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016[ii] (“Master Directions on Frauds”). The question, which has been pending before various High Courts and was raised before the Hon’ble SC in numerous appeals, has now been answered in the affirmative by the Hon’ble SC by holding that the principles of natural justice, particularly the rule of audi alteram partem, has to be necessarily read into the Master Directions on Frauds to save it from vice of arbitrariness as classification of an account as fraud entails serious civil consequences for the borrowers.Continue Reading Principles of Natural Justice Prevail: Supreme Court Reads Rule of Audi Alteram Partem into Master Directions on Frauds