The verdict got here on a plea of the State Bank of India.
The resolution classifying the borrower account as fraudulent should be adopted by a reasoned order.
The Supreme Court on Monday stated a borrower should be accorded a listening to earlier than an account is assessed as “fraud” and a reasoned order must follow if such an action is taken.
A bench headed by Chief Justice D Y Chandrachud, while upholding a Telangana High Court verdict, said a classification of accounts as fraud results in civil consequences for borrowers and hence, an opportunity of hearing must be given to such persons.
“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 should be adopted by a reasoned order, it stated. The verdict got here on a plea of the State Bank of India.
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