In a writ petition filed before the Bombay High Court against the inclusion of the petitioner’s name in the Central Fraud Registry maintained by the Reserve Bank of India (RBI), a Division Bench of Justice M.S. Sonak and Justice Advait M. Sethna quashed and set aside the petitioner’s inclusion in the Central Fraud Registry.
The petitioner sought the Court’s interference on the ground that, before his name was included in said Registry, the principles of natural justice and fair play had not been complied with. The respondents averred that the petitioner’s name was included in 2018, whereas the petition was only filed in 2024. It was also contended that the Master Circular applicable at the time did not provide for any requirement of issuing a show-cause notice before such inclusion in the Registry.
The Court stated that the inclusion of any person’s name in the Registry maintained by the RBI subjects a person to serious civil consequences, including reputational damage. It was said that a minimal compliance with principles of natural justice and fair play was imperative before such inclusion in the Registry.
The Court referred to State Bank of India & Ors. v. Rajesh Agarwal & Ors. 2023 (6) SCC 1 and stated that the courts have consistently held that an opportunity of hearing ought to be provided before a person is blacklisted.
Considering the aspects mentioned by the Supreme Court in various decisions, the Court stated that the inclusion of the petitioner’s name in the Central Registry of Fraud deserved to be struck down. Regarding the argument that the petition was belated, the Court noted that the petitioner was not aware of the inclusion until 2021 and stated that writ petitions are not merely dismissed on grounds of delay but on laches.
Further, the Court stated that the Master Circular of July 15, 2024, provided for the issuance of a show-cause notice before including any person in the Registry maintained by the RBI. Thus, the Court quashed and set aside the petitioner’s inclusion in the said Registry.
However, it was clarified that despite the quashing, the respondents could issue a show cause notice against the appellant and take such steps as necessary after complying with the requirements of natural justice if they wished to include the appellant’s name in the Registry. Lastly, it was held that the respondents must act in accordance with the Master Directions on Fraud Risk Management in Commercial Banks, issued on July 15, 2024.
Appearances:
For Petitioner – Mr. Darpan Bhatia, Ms. Prapti Kedia, Mr. Rushikesh Dusane, Agman Law Associates
For Respondents – Ms. Rathina Maravarman, Ms. Tasneem, Mr. Abhishek Saman, Ms. Pranti R. Rawool
