Bombay High Court Quashes Bank Of India Order Classifying Naresh Goyal's Loan Account As 'Fraud'

The Bombay High Court recently quashed and set aside a show cause notice issued to Jet Airway's founder Naresh Goyal, by which the Bank of India (BoI) classified his loan account as 'fraud.'A division bench of Justices Riyaz Chagla and Farhan Dubash noted that the Bank did not provide an opportunity to Goyal to represent against the July 1, 2025 show cause notice classifying his account as fraud."The Petitioner has not been granted an opportunity of a representation before the classification of the Petitioner's account as “fraud”. The mere re-examination of the earlier classification of the Petitioner's account as fraud does not meet with the rule of audi alteram partem as per the law laid down by the Supreme Court. The order classifying the Petitioner's account as “fraud” as in paragraph 2 of the impugned Show Cause Notice dated 1st July, 2025 is accordingly quashed and set aside," the bench said in the order passed on September 25.According to Goyal, he was served with a show cause notice on July 1, referring to an earlier order passed on December 30, 2024 by which his loan account was declared 'fraud.' By the latest show cause notice, the bank wanted to re-examine the account which was declared fraud by the December 30, 2024 order. The judges considered the contention raised by Goyal that the bank failed to follow the principles of natural justice, as mandated by the Supreme Court and also the RBI's Master Circular, before declaring any account as fraud. It noted that the petitioner was not provided with the copy of the forensic audit report, prepared by the bank. In the latest show cause notice, the bank relied on the December 30 order (classifying his account as fraud) and relied on the said forensic report. Goyal argued that the bank's actions were arbitrary and violated the principles of natural justice as the order declaring his account as fraudulent was never served on him. The bench, therefore, quashed the December 30, 2024 order classifying his loan account as fraud and also the July 1 show cause notice issued to him. The judges, however, granted liberty to the bank, to issue a fresh Show Cause Notice to Goyal but by following the due procedure of law. "The Bank shall comply with the principles of natural justice and the rule of Audi Alteram Partem in carrying out the exercise pursuant to the issuance of fresh Show Cause Notice in the event they so desire to carry out such an exercise for the purpose of determining whether the Petitioner's account to be classified as 'fraud'," the bench said. Appearance:Senior Advocate Sharan Jagtiani along with Advocates Ameet Naik, Abhishek Kale, Tushar Hathiramani, Shraddha Achliya, Pranjal Agarwal, Harish Khedkar, Devashish Jagirdar and Ronit Doshi instructed by Naik Naik and Co. appeared for Ambani. Advocates Dr Abhinav Chandrachud, Rakesh Singh, Kedar Nayak and SD Shetty instructed by MV Kini and Co. represented the Bank. Case Title: Naresh Jagdishrai Goyal vs Bank of India [Writ Petition (L) 26973 of 2025]Click Here To Read/Download Order

Bombay High Court Quashes Bank Of India Order Classifying Naresh Goyal's Loan Account As 'Fraud'

Narsi Benwal

Tags