Delhi High Court Quashes 'Fraud' Classification Against Anmol Ambani by Union Bank

Court cites violation of principles of natural justice due to lack of proper show cause notice.

In a significant ruling, the Delhi High Court has set aside the classification of Anmol Ambani as 'fraud' by Union Bank of India, citing a breach of principles of natural justice. The court noted the bank's failure to issue a show cause notice to Ambani at his correct address, rendering the classification unsustainable in law.

The judgment, delivered by Justice Jyoti Singh, stemmed from a petition filed by Anmol Ambani challenging Union Bank's declaration dated October 10, 2024. Ambani contended that the classification was made without a prior show cause notice, which he only learned about through media reports.

Ambani's counsel, Mr. Rajiv Nayar, argued that the absence of a show cause notice violated established legal principles and binding precedents. He referenced the Supreme Court's ruling in State Bank of India v. Rajesh Agarwal and other judgments to support his case.

Union Bank, represented by Senior Counsel Mr. Sanjiv Kakra, admitted that the notices were sent to an outdated address despite knowing Ambani's new location. The court emphasized that the bank's awareness of the address change, evident from its complaint to the CBI, invalidated the notices.

Justice Singh, without delving into the merits of the case, set aside the impugned classification solely on procedural grounds. She clarified that Union Bank could issue a fresh show cause notice, allowing Ambani the opportunity to respond within two weeks of receipt.

The ruling underscores the judiciary's commitment to upholding the principles of natural justice, ensuring individuals are not unfairly classified without due process. The case reflects the critical importance of proper communication and adherence to procedural requirements in legal and financial matters.

Bottom Line:

Classification of an individual as 'fraud' by a bank without issuance of a show cause notice is violative of principles of natural justice and unsustainable in law.

Statutory provision(s): Article 226 of the Constitution of India, Master Directions on Fraud Risk Management in Commercial Banks, principles of natural justice.

Anmol Ambani v. Union Bank of India, (Delhi) : Law Finder Doc Id # 2824478