MUMBAI : The Bombay High Court on Thursday granted an interim stay on a show-cause notice issued by IDBI Bank to Naresh Goyal, former promoter of debt-laden carrier Jet Airways.
In accordance with Reserve Bank of India’s (RBI) master Circular on wilful defaulters, IDBI Bank’s review committee issued a notice accusing Goyal of being a wilful defaulter on 31 May. Goyal had challenged the notice before a division bench of the Bombay High Court.
In his petition submitted to the high court, Goyal asserted that he was denied the opportunity to put forth his submissions to the show-cause notice which, he argued, violated the principles of natural justice and contravened RBI’s circular on fraud classification and reporting. Goyal also said that the review committee failed to consider his response based on the information available with him.
In a significant verdict, the Supreme Court in March said that borrowers must be heard before their accounts are classified as fraud. The court held the principles of “audi alteram partem” (let the other side be heard) must be read into the circular issued by RBI on classifying bank accounts as fraud.
It also said that since classifying a fraud account entails serious civil consequences for a borrower, directions must be interpreted and analysed reasonably, adhering to the principles of natural justice.
Goyal, also alleged that the notice is a “sham and an empty formality”, and strongly criticized its legality, terming it as “ex-facie illegal, bad perverse, and completely contrary to the settled positions of law,” and urged the court to set aside the bank’s notice.
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Updated: 06 Jul 2023, 10:52 PM IST