Borrowers must be accorded hearing before classifying bank account as fraud: SC
1 min read 27 Mar 2023, 11:44 AM ISTA bench headed by Chief Justice D Y Chandrachud, while upholding a Telangana High Court verdict, said a classification of accounts as fraud results in civil consequences for borrowers and hence, an opportunity of hearing must be given to such persons.Borrowers must give opportunity of hearing before classifying bank account as fraud
PremiumThe Supreme Court (SC) on 27 March said that borrowers must be heard before their accounts are classified as fraud. The court added that a reasoned order must follow if such an action is taken.
This verdict came on a plea of the State Bank of India.
A bench headed by Chief Justice D Y Chandrachud and Justice Hima Kohli upheld the judgement passed by the Telangana High Court in 2020. It also set aside the contrary view of the Gujarat High Court.
In its order, the top court said a classification of accounts as fraud results in civil consequences for borrowers and hence, an opportunity of hearing must be given to such persons.
The bench added that the opportunity of hearing must be given by the banks to the borrowers under the Master Directions on fraud.
The decision classifying the borrower account as fraudulent must be followed by a reasoned order, it said. The verdict came on a plea of the State Bank of India.
