A division bench of Justices Revati Mohite Dere and Neela Gokhale was hearing a petition filed by Anil Ambani challenging the October 10, 2024 order passed by the Union Bank of India
Representational Pic/File
The Bombay High Court on Friday raised concerns over the "cut, copy, paste manner" in which banks pass orders declaring accounts as 'defaulter' or 'fraud', and asked industrialist Anil Ambani to approach the RBI against an order of the Union Bank of India declaring his loan account as 'fraud'.
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A division bench of Justices Revati Mohite Dere and Neela Gokhale was hearing a petition filed by Anil Ambani challenging the October 10, 2024 order passed by the Union Bank of India.
He was not granted any hearing before the order was passed, he claimed, challenging two show-cause notices issued by the bank. He had also asked for copies of the documents on which the bank had relied before passing the order, but no documents were furnished, the petition claimed.
During Friday's hearing, the court said it was repeatedly coming across cases where banks declare accounts as 'fraud' or 'willful defaulter' without following the guidelines laid down by the Reserve Bank of India.
"There cannot be such cut, copy and paste orders. There has to be some application of mind. Ultimately this is public money. We cannot have such orders passed in such a casual manner. There has to be some mechanism put in place," the bench said.
Banks have to be mindful of the fact that guidelines, published in the RBI's 'master circulars', are in place, the HC said.
Such orders will continue to be passed unless the RBI takes action against bank officials, and it was advisable that the RBI put in place some mechanism, the court said.
"We feel this is being done deliberately. There has to be some checks and balances, otherwise this will go on," it said.
Senior counsel Venkatesh Dhond, appearing for the RBI, said any aggrieved person can lodge an online complaint with the RBI if they feel that a bank order violated the principles of natural justice.
Advocate Dhond, however, clarified that the RBI will not go into the merits of the case after a complaint is filed, but only see if mandatory procedures were followed before passing the order.
The court accepted his statement, and asked Anil Ambani to lodge a complaint with the RBI.
"Let the petitioner upload his complaint. Let us start with that," the HC said.
The court also directed the Union Bank of India to file its affidavit in response to Ambani's petition, and posted the matter for further hearing on March 13.
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