Do RBI's wilful defaulter norms hinder natural justice?
The Calcutta High Court will seek to answer this in next hearing of the case between Vijay Mallya and United Bank of India in November
Does Reserve Bank of India's fresh norms for declaring borrowers wilful defaulters dispense natural justice?
The Calcutta High Court hearing the Mallya versus United Bank of India would consider this in November when it resumes the case again.
"Whether or not Clause 3(iii) of the Reserve Bank of India guidelines allows a bank to make over the documents it considered under Clause 3(ii) at the hearing of the Grievance Redressal Committee only and not prior thereto requires further consideration. These points....will be considered at the final hearing of the writ petition," Judge Debangsu Basak had said while hearing the case a couple of weeks ago.
The court noted that the bank acted against natural justice refusing to share with Mallya's men the documents based on which the bank declared him a wilful defaulter.
The court will now decide whether RBI's guidelines too fall short of that parameter of natural justice.
"Prima facie, I am of the view that the bank acted in breach of the principles of natural justice in not making over the documents which they considered to form the opinion that the writ petitioners are to be proceeded against under the Reserve Bank of India guidelines for wilful defaulter.
"Again, prima facie, I am of the view that, the bank ought to have made over the documents along with show cause notice or at a stage, at least prior to the date of hearing before the GRC meeting to allow the writ petitioners to make an effective representation with regard to the allegations levelled against it," the court said.
Vijay Mallya won a minor victory on September 26 securing a stay from the Calcutta High Court on the decision of United Bank of India naming him and his four directors of Kingfisher Airlines as wilful defaulters after the grounded airlines failed to pay up loans taken from the bank.
The next date of hearing has been fixed for November 10.
Referring to an earlier order of Delhi High Court, the judge said, "The materials that is relied upon by any authority in arriving at a decision must be made available to the affected party and that the same is an integral part of the principle of natural justice that are enshrined in Article 14 of the Constitution of India."