Delhi High Court Quashes Decision To Declare Religare Finvest's Account As 'Fraud'

The Delhi High Court has recently quashed the decision of State Bank of India (SBI) declaring Religare Finvest's account as “fraud” and including it on the Central Fraud Registry of Reserve Bank of India (RBI).

Justice Purushaindra Kumar Kaurav said that SBI will be at liberty to take an appropriate action in accordance with law, if so necessitated.

The court disposed of a plea filed by Religare Finvest Limited (RFL), a wholly-owned subsidiary of Religare Enterprises Ltd (REL), challenging SBI's decision.

The plea also sought removal of RFL's name from the fraud list under the Central Fraud Registry, constituted under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016.

The counsel appearing for SBI, on instructions, submitted that the opportunity of hearing was not extended to RFL before its account was declared as fraud.

The court was also informed by the parties that RFL's account was settled and a no due certificate was issued to SBI.

“It is thus seen that in view of the principles laid down in the case of Rajesh Agarwal and Ors. (supra), the impugned action of the respondent deserves to be set aside. Accordingly, the respondent's action of declaring the petitioner's account as fraud is hereby set aside,” the court said.

It added: “The respondent, however, is at liberty to take an appropriate action in accordance with law, if so necessitated. The petition stands disposed of accordingly.”

Title: RELIGARE FINVEST LIMITED v. STATE BANK OF INDIA

Citation: 2023 LiveLaw (Del) 1346

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