Zonal Office Committee Report For Classification Of Bank Employee As 'Fraud' Must Be Supplied To Delinquent: Allahabad High Court

The Allahabad High Court has held the report of Zonal Office Committee for Classification of Fraud must be provided to the delinquent employee to enable him to challenge it. It also held that if procedures prescribed in the RBI Master Direction are followed, the order labelling delinquent employee “fraudulent” can stand and he/she can pursue appropriate legal remedy against the report of the Zonal Office Committee for Classification of Fraud.A Zonal Office Committee for Classification of Fraud is an organization with a bank or financial institution at their zonal office involved in assessing and categorizing fraudulent activities within its jurisdiction. The RBI Master Direction on classification of persons and/ or entities as frauds entails both civil and criminal consequences. Justice Saurabh Shyam Shamshery held,“Court is of considered view that said report of ZOCCF ought to have been served upon petitioner so that petitioner may take a legal remedy against said report. Court is also of the view that if ZOCCF has taken a decision and made a recommendation and was communicated by impugned order, all procedure prescribed in Master Direction are substantially complied with.”Petitioner was suspended briefly due to complaints made against him while he was a Branch Head at Bank of Baroda. The suspension was set aside by the High Court and no further disciplinary action was taken against him. Thereafter, the respondent-bank initiated proceedings to classify the petitioner as “fraud” in terms of RBI Master Direction on Fraud Risk Management in Commercial Banks including Regional Rural Banks and All India Financial Institutions dated 15.07.2024. A show cause notice was issued to the petitioner highlighting certain suspicious activities. Petitioner filed his reply and the matter was referred to the Zonal Office Committee for Classification of Fraud. The Committee submitted its recommendation for labelling the petitioner “fraudulent”. Based on these recommendations, an order was passed labelling petitioner “fraudulent” on grounds that he had committed cheating, forgery and misappropriation of funds during his tenure as the Branch Manager. Petitioner approached the High Court against this order on grounds that a copy of the report of the Zonal Office Committee for Classification of Fraud was not provided to him before passing the order to be able to defend himself. It was argued that the procedure prescribed in Master Directions was not followed. Since the Court observed that all procedures were carried out in compliance with the procedure prescribed in Master Direction on Fraud, except giving a copy of the report to the petitioner, it did not set aside the order labelling the petitioner “fraudulent”. The Court also observed that the FIR which had been lodged against petitioner and other under Section 61(2) and 318 of B.N.S. and Section 13(2) read with Section 13(1)(a) of Prevention of Corruption Act was not solely based on the report of the Zonal Office Committee for Classification of Fraud. It noted that Central Bureau of Investigation was obligated to conduct independent inquiry. Accordingly, the writ petition was disposed of with a direction to provide a copy of the report of Zonal Office Committee for Classification of Fraud to the petitioner to enable him to pursue appropriate legal remedy. Case Title: Rohit Dahiya v. Union Of India And 3 Others [WRIT - A No. - 8536 of 2025]Counsel for Petitioner : Devansh MisraCounsel for Respondent : Anadi Krishna Narayana, Anant Kumar Tiwari Click Here To Read/Download Order

Zonal Office Committee Report For Classification Of Bank Employee As 'Fraud' Must Be Supplied To Delinquent: Allahabad High Court

Upasna Agrawal

Tags