WRIT PETITION NO.3037 OF 2025

Writ petition under Article 226 of the Constitution challenging show-cause notice dated 20-12-2023 and order dated 13-06-2025 classifying RCOM’s account as fraud and reporting petitioner’s name to RBI.

Quashing of the impugned show-cause notice and order, and restraining SBI from acting upon them.

Petitioner alleged violation of principles of natural justice due to lack of personal hearing, absence of specific allegations in the show-cause notice, non-compliance with Master Directions 2024, and that the show-cause notice under the 2016 directions stood superseded.

The Fraud Identification Committee of SBI had earlier declared the RCOM account as fraud on 10-11-2020, but the decision was recalled following the Supreme Court’s decision in State Bank of India v. Rajesh Agarwal (2023) 6 SCC 1 due to absence of prior notice or opportunity of representation. A fresh show-cause notice was issued on 20-12-2023.

Whether the impugned order violates principles of natural justice by not providing personal hearing. Whether the show-cause notice contained adequate allegations against the Petitioner. Whether the Master Directions 2024 supersede the earlier show-cause notice issued under Master Directions 2016. Whether vicarious liability can be imposed on a non-executive director under Master Directions 2024.

Petitioner: Non-compliance of Master Directions 2024 and judgments of the Supreme Court; failure to give personal hearing; show-cause notice lacked specific allegations; order contrary to clause 2.1 and 4.4.1 of Master Directions 2024; show-cause notice under 2016 directions superseded. Respondent No.1: Personal hearing not mandated under Master Directions 2024 or Rajesh Agarwal; only opportunity to represent is required; petitioner given ample opportunity but failed to respond; petitioner was promoter and person in control of RCOM and hence vicariously liable.

By this petition, the Petitioner challenges the show- cause notice dated 20 th December 2023 issued by the Respondent No.1 – State Bank of India (“SBI”) and the resultant order dated 13 th June 2025 passed by the Respondent No.1, classifying the account of Reliance Communications Ltd. (“RCOM”) as ‘fraud’ and reporting the name of the Petitioner to the Respondent No.2 – Reserve Bank of India (“RBI”) in terms of the Master Directions on Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions dated 15 th July 2024 (“Master Directions 2024”) and as such seeks quashing and setting aside of the same. Mr. Chinoy, learned senior counsel for the Respondent No.1 opposed the petition on all counts. He submitted that in the facts of the present case, the Petitioner has no right to be given a personal hearing. He submitted that neither does the judgment of the Apex Court in Rajesh Agarwal (supra) nor the Master Directions 2024 contemplate a personal/oral hearing before action can be taken by a bank to declare an account as fraud.

The writ petition was filed on 7 July 2025. The matter was heard and reserved for judgment on 22 August 2025, and judgment was pronounced on 3 October 2025. The operative part of the judgment is not available in the provided extract.

• Master Directions on Fraud Risk Management in Commercial Banks and All India Financial Institutions, 2024: Clause 2.1, Clause 4.4.1
• Master Directions on Fraud – Classification & Reporting by Commercial Banks & Select Financial Institutions, 2016: Not specified