Mumbai, Feb 28: The Bombay High Court on Friday criticized the practice of banks declaring accounts as ‘fraud’ or ‘defaulter’ in a "cut, copy, paste" manner without proper application of mind. The court advised industrialist Anil Ambani to file a complaint with the Reserve Bank of India (RBI) against the Union Bank of India’s decision to label his loan account as ‘fraud.’
A division bench of Justices Revati Mohite Dere and Neela Gokhale was hearing Ambani’s plea challenging the bank’s order dated October 10, 2024. He argued that the decision was made without granting him a hearing and that two show-cause notices issued by the bank lacked transparency, as he was denied access to supporting documents.
During the hearing, the court expressed concerns over banks repeatedly failing to adhere to the guidelines outlined in RBI’s master circulars. "There cannot be such cut, copy, and paste orders. There has to be some application of mind. Ultimately, this involves public money. Such casual decision-making cannot continue. There needs to be a proper mechanism in place," the bench remarked.
The court emphasized that unless the RBI holds bank officials accountable, such arbitrary declarations will persist. "We feel this is being done deliberately. There has to be checks and balances, or this will continue," the court added.
Senior counsel Venkatesh Dhond, representing the RBI, stated that any aggrieved individual could file an online complaint if they believe a bank’s order violates natural justice. However, he clarified that the RBI would not review the merits of a case but only assess whether due process was followed.
The court accepted this statement and directed Ambani to submit his complaint to the RBI. "Let the petitioner upload his complaint. Let us start with that," the bench said.
Furthermore, the court instructed the Union Bank of India to file its affidavit in response to Ambani’s petition and scheduled the next hearing for March 13.
