Principle of Audi Alteram Partem

On 27th March, 2023, the Supreme Court (SC) held that the banks must hear borrowers before classifying an account as ‘fraud’.

  • The court was hearing the civil appeals arising out of a challenge to the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions 2016. These directions were challenged before different High Courts primarily on the ground that no opportunity of being heard is envisaged by borrowers before classifying their accounts as fraudulent.

About the Verdict

  • The SC upheld the Telangana High Court’s decision (December, 2020) that the principles of natural justice must be read ....
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