Borrowers proposed to be classified as wilful defaulters have a right to be represented by an advocate before the GRC

Delhi High Court– While deciding a case wherein the issue involved was whether a person who is proposed to be classified as a wilful defaulter by a Bank / FI and who, in accordance with the Master Circular dated 01.07.2013 issued by the RBI, has availed of opportunity to be heard by Grievance Redressal Committee (GRC) of the said bank/FI to oppose such a proposal, has a right to be represented by an advocate in the said hearing, the division bench of G. Rohini CJ and R.S. Endlaw J held that the restriction placed by the GRC of the appellant banks to appearance of advocates on behalf of borrowers before it, not by any law but otherwise, cannot be sustained and is bad. The Court further observed that the opposition of the GRC of the appellant bank regarding appearance is based on an illogical presumption that the borrower’s advocate might delay the proceedings before it, which has no basis. The Court also pointed out that the members of GRC can always control and guide the proceedings before it and as per the exigencies limit the time of hearing.

In the instant case, the appellants had challenged the high court order which had allowed lawyers to represent the borrower in the proceedings before GRC to decide whether the borrower can be held wilful defaulters. In order to reach the decision the Court also dealt with the issue as to whether the GRC can be called a ‘Tribunal’ within the meaning of clause (ii) of Section 30 of the Advocates Act.

Relying on a catena of cases like, ICICI Bank Ltd. v. Official Liquidator of APS Star Industries Ltd. (2010) 10 SCC 1 and Peerless General Finance & Investment Co. Limited v Reserve Bank of India (1992) 2 SCC 343, the Court stated that GRC satisfies the test of having been constituted by the State and thus can be held to be a Tribunal within the meaning of Section 30 of the Advocates Act. The advocates would have a right to practice before it and axiomatically the borrower before such GRC will have a right to engage and avail the services of an advocate. [Punjab National Bank v. Kingfisher Airlines Limited,  2015 SCC Online Del 14128, decided on 17.12.2015]

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