NDLI: State Bank of India Vs. M/s. Jah Developers Pvt. Ltd. & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Principles of natural justice Art.19(1)(g) 1961 2016 s.29A Insolvency and Bankruptcy Code Committees Advocates Act s.30
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Advocates Act, 1961 (25 of 1961)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8 Referred Case 9
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Advocates Act, 1961 – s.30 – Master Circular dtd. 01.07.13 issued by RBI inter alia setting out mechanism for identification of wilful defaulters, entrusted cases of wilful default to a Committee of higher functionaries, which would then take a preliminary decision – Thereafter, the borrower should be provided 15 days’ time for making representation to the Grievance Redressal Committee headed by the Chairman and the Managing Director and consisting of two other senior officers– Such Committee must give hearing to the borrower if he represents that he has been wrongly classified as a wilful defaulter, and it is only after such hearing that a final declaration as wilful defaulter should be made – Revised Circular dtd. 01.07.15 issued by RBI, replaced the aforesaid scheme by making an Executive Director and two other senior officers examine evidence of wilful default on the part of the borrower – If this First Committee finds that an event of wilful default has occurred, it should first issue show cause notice to the borrower and call for his submissions, and after considering his submissions, issue an order recording the fact of wilful default and reasons for the same – Personal hearing can be given only if the Committee feels that such hearing is necessary – Order of the Committee to be reviewed by another Committee (Review Committee) – Issue as to whether a lawyer ought to be allowed to represent the borrower before the First Committee and/or Review Committee under the Revised Circular – High Court held that the two in-house committees can be considered to be tribunals, and therefore, a lawyer has the right to represent his client before such in-house committees – On appeal, held: In-house committees appointed under the Revised Circular are not vested with any judicial power at all, their powers being administrative powers, to gather facts and then arrive at a result – No lawyer has any right u/s.30 to appear before the in-house committees – Said committees are also not persons legally authorised to take evidence by statute/subordinate legislation – On this score also, no lawyer would have any right u/s.30 to appear before the same – However, Art.19(1)(g) is attracted in the facts of the present case as the moment a person is declared wilful defaulter, the impact on its fundamental right to carry on business is direct and immediate – Given the drastic consequences, the Revised Circular, being in public interest, construed reasonably – Committee comprising of the Executive Director and two other senior officials, being the First Committee must give its order to the borrower as soon as it is made – Borrower can represent against such order within 15 days to the Review Committee – Review Committee must then pass a reasoned order which must then be served on the borrower – All these steps incorporated into the Revised Circular – Impugned judgment set aside – Constitution of India – Art.19(1)(g) – Principles of natural justice – Committees – Insolvency and Bankruptcy Code, 2016 – s.29A. Committees – When not tribunal – Held: Before a body can be said to be a “tribunal”, it must be invested with the judicial power of the State to decide a lis arising before it, must be legally authorised to take evidence by statute/subordinate legislation or otherwise. Principles of natural justice – Revised Circular issued by RBI replacing the mechanism for identification of wilful defaulters as provided in the earlier Circular – In-house committees referred to in the Circular – Right of oral hearing before such committees, if any – Held: Given the scheme of the Revised Circular, it is difficult to state that oral hearing is mandatory – Natural justice is a flexible tool used in order that a person or authority arrives at a just result – Such result can be arrived at in many cases without oral hearing but on written representations given by parties, after considering which, a decision is then arrived at.
Judge	Hon'ble Mr. Justice R.F. Nariman
Neutral Citation	2019 INSC 652
Petitioner	State Bank Of India
Respondent	M/s. Jah Developers Pvt. Ltd. & Ors.
SCR	[2019] 7 S.C.R. 701
Judgement Date	2019-05-08
Case Number	4776

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