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Kingfisher Airlines Limited Versus Union of India and Others

2016 (1) TMI 43 - BOMBAY HIGH COURT

Denial of legal representation of the Petitioner-Company through its advocate to appear before the Redressal Grievance Committee - whether such denial amounts to denial of reasonable opportunity of defending itself and violation of principles of natural justice? - Held that:- The Petitioner is not entitled to be represented by a lawyer and therefore principles of natural justice will not be violated if the Petitioner is heard without being represented by a lawyer. However, in the peculiar facts .....

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ed:- 15-7-2015 - JUDGMENT: (Per V.M. Kanade, J.) For The Petitoner : Mr. Milind Sathe, Sr. Counsel with Mr. Rohan Cama i/b M/s. Bachubhai Munim and Co. For The Respondent : Mr. N.R. Prajapati, Mr. P.K. Samdani, Sr. Counsel with Mr. Gaurav Joshi, Sr. Counsel and Mr. Vikash Kumar i/b Mr. Anil T. Agarwal 1. Heard. 2. Rule. Rule is made returnable forthwith. Respondents waive service. By consent of parties, Petition is taken up for final hearing. 3. The short question which falls for consideration b .....

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mpanies Act, 1956. Respondent No.2 is a statutory body constituted under the State Bank of India Act, 1955 and also a Government Company and State within the meaning of Article 12 of the Constitution of India. 6. Reserve Bank of India ( RBI ) issued a Circular on 01/07/2014 giving instructions and guidelines on matters relating to Wilful Defaulters. The Master Circular was addressed to all Scheduled Commercial Banks and All India Notified Financial Institutions. 7. The said Master Circular defin .....

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para, grievance redressal mechanism was established and the Committee of higher Officers headed by Executive Director and consisting of two other Senior Officers of the rank of GM/DGM was to be constituted. 8. The Grievance Redressal Committee was to give a hearing to the borrower if a representation had been made that he was wrongly classified as Wilful Defaulter and thereafter decision would be taken by the Committee. Perusal of the said Master Circular dated 01/072014 reveals that it does not .....

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, it would then issue a show cause notice to the concerned borrower and call for other submissions and thereafter pass an order whether the borrower was a Wilful Defaulter or not. Para 3(b) which has amended the mechanism as laid down in para 3 of the original circular mentioned that an opportunity would be given to the borrower for personal hearing, if the Committee felt that such an opportunity was necessary to be given. 10. In the present case, Petitioner received notice dated 19/08/2014 unde .....

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the investigative Report of Ernst & Young dated 11/08/2014. Since the said report was not given, Petitioner filed Writ Petition No.2112 of 2014, seeking a direction to Respondent No.2 to give the concerned documents. This Court by its order dated 25/09/2014 directed Respondent No.2 to disclose all documents including the Report of Ernst and Young within a period of two weeks. 12. On 22/10/2014, Petitioner submitted their representation, requesting Respondent No.2 to permit the Petitioner to .....

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until disposal of the said Writ Petition. The said Petition is pending in this Court. 13. Thereafter, on 01/06/2015 Petitioner received a letter from Respondent No.2 dated 29/05/2015 calling upon the Petitioner to attend the hearing before the Committee (as opposed to the GRC) on 16/06/2015 in person and it is submitted that Petitioner - Company was not permitted to be represented through its Lawyers/Chartered Accountants. Being aggrieved by the said letter Petitioner has filed this Petition. S .....

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He submitted that the said determination of the issue was not a mere fact finding exercise but also involved crucial legal issues including the question of mens rea. He submitted that hearing before the appropriate Committee was not merely to ascertain the facts but also to determine various legal issues. (ii) Secondly, he submitted that where an adverse decision would have serious civil and pecuniary consequences, denial of legal representation through a legal practitioner would be violative o .....

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llowed even in the absence of a person being pitted against a legal practitioner, if a case is being handled by a trained prosecutor. He relied on the judgment of the Apex Court in C.L. Subramaniam vs. Collector of Customs, Cochin (1972) 3 SCC 542 (iv) Fourthly, he submitted that section 30 of the Advocates Act, 1961 gave a right to the advocate to appear at the hearing before GRC and that such right was recognized under Article 19(1)(g) of the Constitution. In support of the said submission, he .....

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W.P. No.22439 of 2012, Order dated 8/10/2014 (vii) Lastly, he submitted that the amended RBI Circular was inapplicable to the notice dated 29/05/2015 since the said notice dated 29/5/2015 issued by Respondent No.2 was based on Master Circular of RBI dated 01/07/2014 which did not contain express prohibition for being represented by a lawyer as provided in amended circular which was issued on 07/01/2015. It was submitted that since initial letter was issued on 19/8/2014, procedure under the old C .....

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ist of any legal practitioner or legally trained person. He submitted that the details set out in the show cause notice are all based on facts and there are no legal or complex legal questions of law involved. He then submitted that under the amended RBI Circular, only written reply was required to be given to the Identification Committee and the personal hearing was only a matter of discretion. He further submitted that no personal hearing as a matter of right was available to the Petitioner be .....

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gments:- 1. Krishnachandra Tandon vs. Union of India (1974) 4 SCC 374 (para 70) 2. Crescent Dyes and Chemicals Ltd vs. Ram Naresh Tripathi (1993) 2 SCC 115 3. Bharat Petroleum Corporation Ltd. vs. Maharashtra General Kamgar Union and Others (1999) 1 SCC 626 4. Cipla Ltd and Others vs. Ripu Daman Bhanot and Anr. (1999) 4 SCC 188 5. National Seeds Coprn Ltd. vs. K.V. Rama Reddy (2006) 11 SCC 645 6. D.G. Railway Protection force & Ors vs. K. Raghuram Babu (2008) 4 SCC 406 7. Shri D.I.M. Sarpal .....

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iam vs. Collector of Customs, Cochin(1972) 3 SCC 542 and other judgments are distinguishable. He submitted that no reliance could be placed on the judgment of the Delhi High Court in Kingfisher Airlines Limited vs. Union of India & Ors delivered in W.P.(C) 5532/2014, since the appeal was pending in the Apex Court. He submitted that the Petitioner had filed a case against the Union Bank of India and its demand for representation through an advocate was declined by the learned Single Judge of .....

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irlines Limited & Ors vs. Union of India & Ors). FINDINGS: 16. Reserve Bank of India was pleased to issue a Master Circular dated 01/07/2014, laying down guidelines for the purpose of permitting Banks to declare a borrower as Wilful Defaulter . For the purpose of declaring a borrower as Wilful Defaulter , in para 3 the procedure which was required to be followed by the Grievance Redressal Committee is laid down. Para 3 of the said Circular dated 01/07/2014 reads as under:- 3. Grievances .....

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would be well documented and supported by requisite evidence. The decision should clearly spell out the reasons for which the borrower has been declared as wilful defaulter vis-a-vis RBI guidelines. (iii) The borrower should thereafter be suitably advised about the proposal to classify him as wilful defaulter along with the reasons therefor. The concerned borrower should be provided reasonable time (say 15 days) for making representation against such decision, if he so desires, to a Grievance Re .....

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representation being made by the advocate on behalf of the borrower. The consequences of a borrower being declared as a Wilful Defaulter are definitely adverse and the borrower would then not qualify to obtain loan facility from the Financial Institutions. Penal action could also be taken thereafter in accordance with the procedure laid down in Criminal Procedure Code. Under the old circular, Grievance Redressal Committee has to arrive at a decision after giving reasons that the borrower is a Wi .....

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issue show cause notice to the concerned borrower to make his submissions and thereafter an opportunity of hearing has to be given to the borrower for personal hearing, if the Committee feels that such an opportunity is necessary. The amended Circular of 07/01/2015 therefore gives a discretion to the Committee to decide whether personal hearing should be given or not. In the present case, relying on the amended circular dated 07/01/2015, the Bank has now informed the Petitioner that it would not .....

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laced on the judgments in J.K. Agarwal vs. Haryana Seeds Development Corporation Ltd and Others(1991) 2 SCC 283, India Photographic Company Ltd vs. Saumitra Mohan Kumar (1983) 2 LLN 796, C.L. Subramaniam vs. Collector of Customs, Cochin(1972) 3 SCC 542 and N.K. Bajpai vs. Union of India (2012) 4 SCC 653 in which judgment of Justice Denning in Pett vs. Greyhound Racing Association Ltd. (1969) 1 QBD 125 has been relied upon. The gist of the decisions relied upon by the learned Senior Counsel appea .....

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consequences of unfavourable decision are some of the factors which are to be kept in mind. 19. On the other hand, the judgments on which reliance has been placed by the learned Senior Counsel appearing on behalf of Respondent Nos. 2 and 3 disclose that in subsequent decisions, decisions relied upon by the learned Senior Counsel appearing on behalf of the Petitioner have been considered and it has been held that the law in India does not concede an absolute right of representation to an employee .....

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o be represented through counsel or agent unless the law specifically confers such a right. The requirement of the rule of natural justice insofar as the delinquent's right of hearing is concerned, cannot and does not extend to a right to be represented through counsel or agent. In the instant case the delinquent's right of representation was regulated by the Standing Orders which permitted a clerk or a workman working with him in the same department to represent him and this right stood .....

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nt and the relevant rules and would, therefore, be able to render satisfactory service to the delinquent. Thirdly, not only would the entire proceedings be completed quickly but also inexpensively. It is, therefore, not correct to contend that the Standing Order or Section 22(ii) of the Act conflicts with the principles of natural justice. Similarly, the Apex Court in Bharat Petroleum Corporation Ltd. vs. Maharashtra General Kamgar Union and Others(1999) 1 SCC 626, after taking into consideratio .....

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resentation of an employee as part of his right to be heard. It was further specified that there is no right to representation as such unless the company, by its Standing Orders, recognizes such a right. In this case, it was also laid down that a delinquent employee has no right to be represented in the departmental proceedings by a lawyer unless the facts involved in the disciplinary proceedings were of a complex nature in which case, the assistance of a lawyer could be permitted. Thereafter, t .....

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in its discretion allow the employee to avail of such assistance. So also in Dunlop Rubber Co. (India) Ltd. vs. Workmen [AIR 1965 SC 1392 : (1965) 2 SCR 139 : (1965) 1 LLJ 426 it was laid down that an employee has no right to be represented in the disciplinary proceedings by another person unless the Service Rules specifically provided for the same. A three-Judge Bench of this Court in Crescent Dyes and Chemicals Ltd. vs. Ram Naresh Tripathi [(1993) 2 SCC 115 : 1993 SCC (L & S) 360 : 1992 Su .....

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proceedings would not be bad only for the reason that the assistance of an advocate was not provided to him. Similar view has been taken by the Apex Court in D.G. Railway Protection force & Ors vs. K. Raghuram Babu(2008) 4 SCC 406 and in the said judgment the Apex Court has observed in para 11 as under:- 11. Following the above decision it has to be held that there is no vested or absolute right in any charge-sheeted employee to representation either through a counsel or through any other p .....

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represented by an advocate and ultimately it would all depend on facts and circumstances of each case. 21. In the present case, both the Circulars namely Circular dated 01/07/2014 and 07/01/2015 do not expressly provide that the borrower can be represented by a lawyer. The second amended Circular gives a discretion to the Redressal Grievance Committee to decide whether personal hearing should be given or not. There is no express prohibition of the borrower to be represented by a lawyer. The purp .....

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owes an amount of ₹ 6,900 crores from consortium of banks. Repayment of this public money is nowhere in sight. If the allegations in the show-cause notice issued by the Grievance Redressal Committee are correct then it would lead to further depletion of the funds of the Petitioner - Company which would make it impossible for consortium of Banks including Respondent No.2 - Bank to recover the public money which has been given to the Petitioner. 23. Taking into consideration the urgency in t .....

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d by the Division Bench of the Kolkata High Court in AST No.320 of 2014 in Kingfisher Airlines Limited vs. Union of India & Others with CAN No.8329 of 2014 decided on 28/08/2014. 24. Though the Petitioner had preferred an SLP before the Apex Court, the SLP had become infructuous because, by that time, the Petitioner had been declared as Wilful Defaulter. Though the said order was again challenged by the Petitioner before the Kolkata High Court and the Order of Grievance Redressal Committee w .....

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may challenge this order in the Apex Court we are of the view that if the Petitioner gives an undertaking to this Court that if it is allowed to be represented by its advocate, its advocate would conclude his submissions in one day then in such an event the Petitioner will be permitted to engage an advocate. The Delhi High Court in its Order dated 28/08/2014 in Kingfisher Airlines Ltd vs. Union of India & Others delivered in W.P. (C) 5532/2014 has made the following observations:- The appre .....

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fice of the respondent bank at 10.30 AM on 22.09.2014. It is also clarified that the petitioner shall confine their oral submissions on that day to not more than six hours. The hearing will be concluded on 22.09.2014 itself. The petitioner is at liberty to file written submissions alongwith any documents that the petitioner wishes to rely upon before the Committee on that date. The Committee shall thereafter take a decision whether the petitioner is a wilful defaulter. 27. We are of the view tha .....

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