SBI Decision to Declare BS ltd Account As ‘Fraud’ Suspended
Hyderabad: Justice C.V. Bhasker Reddy of the Telangana High Court suspended an order of State Bank of India (SBI) declaring the account BS Limited as a fraud account. The judge also directed various banks, including Canara Bank, Punjab National Bank and United Bank of India not to take coercive steps of declaring the account of BS Limited as a fraud account.
Senior counsel L. Ravichander, appearing for businessman Rajesh Agarwal, pointed out that the action in unilaterally declaring the account as fraud was a matter of serious civic consequences and could not be done in violation of principles of natural justice. He pointed to a judgment of a division bench of the High Court in favour of the petitioner while stating that the requirement of an opportunity of hearing is required to be read into the RBI master direction on fraud issued on July 1, 2016 and an opportunity of hearing is required to be provided before any account is declared as fraud.
The said view was upheld by the apex court and the petitioner contended that the show cause notice required the petitioner to submit documents and statements which were not supplied by the official liquidator as the company is sold as a going concern to Vasavi Realty ltd and all documents and records were in its custody. The petitioner reached out to the realty firm in order to obtain the said documents but was informed that the same would take time. In view of the same, the SBI was requested to provide the petitioner with all the documents relied upon while issuing the show cause notice.