Case BriefsTribunals/Commissions/Regulatory Bodies

“Why is RBI fighting tooth and nail to defend defaulters?”

Central Information Commission (CIC): A Bench comprising of Prof. M. Sridhar Acharyulu issued a show-cause notice to Reserve Bank of India (RBI) Governor Urjit Patel holding him as deemed Public Information Officer (PIO) responsible for non-disclosure of a list of wilful defaulters of big bad loans worth crores of rupees.

A Jaipur-based RTI activist sought information from respondent about wilful defaulters of bank loans of Rs 50 crores and above, names of guarantors, details of sanction of loans, default and details of NPA accounts, and cost and investment of the projects for employment generating schemes initiated by the Central Government between 2005 and 2018 along with the list of failed projects. The CPIO dismissed the request stating that the information was not maintained in the form sought. Aggrieved by the said order, a first appeal was preferred wherein the reply of CPIO was upheld. The said circumstances necessitated the instant second appeal.

The Commission observed that RBI is a statutory regulatory authority whose function is to oversee the functioning of banks and the country’s banking sector. It is supposed to uphold public interest and not the interest of individual banks. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks. Financial institutions are obliged to provide all information to RBI and such information cannot be considered to be shared in the capacity of a fiduciary relationship. RBI was held to be duty bound to comply with provisions of RTI Act and disclose the information sought by the appellant.

Commission issued a show-cause notice to RBI Governor asking him to explain as to why maximum penalty of Rs 25,000 should not be imposed on him for wilful defiance of RTI provisions. It also directed RBI to disclose bad debt details of defaulters worth more than Rs 1000 crore at the beginning, Rs 500 crore or less at a later stage within five days and collect such information from the banks in due course to update their voluntary disclosures from time to time as a practice under Section 4(1)(b) of RTI Act. [Sandeep Singh Jadoun v. PIO, DGEAT, CIC/DGEAT/A/2018/117567, decided on 02-11-2018]



Case BriefsHigh Courts

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]