Disclaimer: This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.
Punjab & Haryana High Court: While considering a petition seeking quashment of the order passed by Respondent 1-Punjab National Bank holding the petitioner responsible for fraud while categorising the account pertaining to the previous employer, Respondent 3-Company, as fraud, the Division Bench of Suvir Sehgal and Vikas Suri*, JJ., held that the petitioner’s replies to the show-cause notice had not been properly considered before passing the impugned order and that no personal hearing had been afforded to him.
The Court accordingly quashed the fraud order, observing that failure to consider the petitioner’s reply and afford an opportunity of personal hearing amounted to a violation of the principles of natural justice.
Background
In the present case, the petitioner joined Respondent 3-Company as Director-HR and General Services and QHSE on 15 March 2013. He was subsequently promoted as Regional Director-HR, General Services, and QHSE. He was inducted as Director on 29 August 2016, resigned on 22 May 2017, and was relieved from the services of Respondent 3 with effect from 14 June 2017.
IDBI Bank issued a show-cause notice dated 28 August 2020 proposing his classification as a “wilful defaulter” based on a forensic audit report. The petitioner challenged the proceedings before this Court, and further proceedings were stayed vide order dated 28 April 2022. Thereafter, the Identification Committee of Respondent 1 exonerated the petitioner vide order dated 17 September 2024, observing that diversion of funds during his tenure could not be established.
Despite the aforesaid exoneration, Respondent 1 issued a fresh show-cause notice dated 4 September 2024 proposing classification of Respondent 3 as “fraud” based on the same forensic audit report and transactions. The petitioner submitted his replies dated 20 September 2024 and 24 February 2025, denying any role, mens rea or financial involvement in Respondent 3.
Further, the proceedings initiated against the petitioner under Section 66, Insolvency and Bankruptcy Code, 2016, alleging fraudulent transactions, were withdrawn by the National Company Law Tribunal vide order dated 10 February 2025.
Thereafter, the Fraud Examination Committee (Committee) of Respondent 1, vide order dated 17 December 2025, declared Respondent 3 as “fraud” and held the petitioner responsible for “misappropriation of funds and criminal breach of trust”. The said order was communicated to the petitioner vide letter dated 26 December 2025.
Aggrieved by the aforesaid order, the petitioner approached the High Court seeking quashing of the order dated 17 December 2025.
Analysis
The Court examined the show-cause notice, replies of the partitioner along with the committee’s view and stated that it was evident that the Committee categorically observed that the petitioner had not provided point wise reply on factors of fraud. However, the Committee also acknowledged that the petitioner had submitted his replies vide letters dated 20 September 2024 and 24 January 2025.
The Court further noted that the petitioner reiterated that he had earlier replied to 2 letters and had appeared before the Committee on 21 May 2024, even before issuance of the show-cause notice, to clarify his position. The petitioner also stated that the queries raised before the Committee remained unanswered.
The Court stated that the petitioner’s reply dated 20 September 2024 to the show-cause notice dated 4 September 2024 contained a bullet-point-wise response to the factors of fraud mentioned in the show-cause notice.
Thus, the Court opined that although the impugned order dated 17 December 2025 stated that the petitioner had submitted his replies vide letters dated 20 September 2024 and 24 January 2025, the said replies were neither perused nor taken into consideration before passing the impugned order.
Further, the Court specified that the Delhi High Court, vide judgment dated 21 January 2026, had already set aside the same impugned order insofar as it related to one of the former Directors of Respondent 3.
Decision
Accordingly, the Court quashed the impugned order dated 17 December 2025, communicated vide intimation letter dated 26 December 2025.
The Court reiterated that an administrative order must contain reasons as recording them is an essential requirement of fair decision-making, it discloses the basis of the decision and enables the affected person to understand the grounds on which the decision has been taken. The Court relied upon Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, and stated that the petitioner’s reply to the show-cause notice was neither been properly examined nor even noticed while arriving at the conclusion against the petitioner. The Court emphasised that that no personal hearing was afforded to the petitioner.
The Court granted liberty to the Committee to proceed afresh in accordance with law, if so advised. Further, it directed that, if Respondent 1 chose to proceed against the petitioner on the same allegations/show-cause notice, it shall strictly adhere to the principles of natural justice and afford the petitioner an opportunity of personal hearing before passing any adverse order.
The Court also stressed that despite the petitioner’s point-wise reply to the show-cause notice being acknowledged in the impugned order, the same was brushed aside by recording an observation fallacious on the face of the record. However, the said reply was brushed aside by recording an observation which was found to be contrary to the record. The Court accordingly directed that, in case Respondent 1 proceeds afresh, it shall also comply with SBI v. Rajesh Agarwal, (2023) 6 SCC 1, in letter and spirit, wherein principles of natural justice were read into the Master Directions on Frauds.
[Andleeb Jain v. Punjab National Bank, 2026 SCC OnLine P&H 25208, decided on 31-7-2026]
*Judgement authored by Justice Vikas Suri
Advocates who appeared in this case :
For the Petitioner: Anand Chhibbar, Amitabh Tewari, Advocate, Ishaan Mundeja, Advocate and Inderjeet Singh, Advocate
For the Respondent: Gaurav Goel, Advocate and Teginder Singh, Advocate
