Summary
Borrowers had no right to lawyer representation before the in-house wilful-defaulter committees under the RBI’s 2015 circular. Those committees exercised administrative powers and were not tribunals or persons legally authorised to take evidence for Section 30 of the Advocates Act. Given the serious business consequences, however, the Court required prompt service of the first decision, 15 days for written representation to the Review Committee, and a reasoned review order served on the borrower.
Issues
- Whether borrowers could demand lawyer representation or an oral hearing under the 2015 wilful-defaulter procedure.
- What procedural safeguards were required before the classification became final.
Provisions considered
- Section 30, Advocates Act, 1961Did not confer a right of appearance before these administrative in-house committees, which lacked the State’s judicial power and authority to take evidence. (¶ 10–12)
- Paragraph 3(a)–(c), RBI Master Circular on Wilful Defaulters dated 1 July 2015Read to require service of the first order, a written representation within 15 days to the Review Committee and a reasoned review order served on the borrower. (¶¶ 4, 6–7, 21)
Held
- The in-house committees gathered facts and exercised administrative powers, not judicial power to decide a lis as tribunals. The Delhi High Court’s contrary reasoning did not support a right to counsel under Section 30. (¶ 10–12)
- Natural justice did not invariably require an oral hearing. The circular left personal hearing at the first stage to the committee’s assessment of necessity; meaningful written submissions could satisfy fairness. (¶ 13)
- There was no right to lawyer representation under the procedure in question. Wilful-default determinations ordinarily concerned facts known to the borrower, including capacity to pay, diversion, siphoning and intentional default. (¶ 14–21)
- The direct and immediate business consequences engaged Article 19(1)(g). Reasonable construction therefore required the first committee to supply its order promptly, allow 15 days for a full written representation on facts and law, and require the Review Committee to issue and serve a reasoned decision. (¶¶ 8, 21)
Result
Appeals allowed and impugned judgment set aside. No right to lawyer representation before the in-house committees; the 2015 procedure must include prompt service of the first order, 15-day written review representation and a reasoned review decision served on the borrower.