The Supreme Court on Monday stated a borrower must be accorded a hearing before an account is classed as “fraud” and a reasoned order must observe if such an motion is taken.
A Bench headed by Chief Justice D.Y. Chandrachud, whereas upholding a Telangana High Court verdict, stated a classification of accounts as fraud ends in civil penalties for debtors and therefore, a chance of hearing must be given to such individuals.
“Opportunity of hearing must be given by the banks to the borrowers before classifying their accounts as fraud under the Master Directions on fraud,” the Bench stated.
The resolution classifying the borrower account as fraudulent must be adopted by a reasoned order, it stated. The verdict got here on a plea of the State Bank of India.
