Shubhash Chandra Roy vs The Union Of India And 6 Ors

Court
Gauhati High Court

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GAHC010212972024

2026:GAU-AS:12619
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/5468/2024
SHUBHASH CHANDRA ROY
S/O- LATE SADHU CHARAN ROY,
RESIDENT OF WARD NO. 2,
GAURIPUR TOWN, P.O.- GAURIPUR,
DIST.- DHUBRI (ASSAM).
VERSUS
THE UNION OF INDIA AND 6 ORS
REPRESENTED BY ITS SECRETARY TO THE GOVT. OF INDIA,
MINISTRY OF FINANCE,
JEEVAN DEEP BUILDING, SANSAD MARG,
NEW DELHI- 110001.
2:THE RESERVE BANK OF INDIA
REPRESENTED BY ITS GOVERNOR

18TH FLOOR
CENTRAL OFFICE BUILDING

SHAHID BHAGAT SINGH ROAD

MUMBAI- 400001.
3:THE CHIEF COMMISSIONER OF INCOME TAX
GOVERNMENT OF INDIA
1ST FLOOR
AAYAKAR BHAWAN

CHRISTIAN BASTI
G.S. ROAD

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GUWAHATI-05.
4:THE AXIS BANK LTD.
( A COMPANY INCORPORATED UNDER THE COMPANIES ACT
1956 AND CARRYING ON ITS BUSINESS UNDER THE BANKING
REGULATION ACT
1949)
HAVING ITS CENTRAL OFFICE AT AXIS HOUSE

BOMBAY DYEING COMPOUND
PANDURANG BUDHKAR MARG

WORLI
MUMBAI- 400024. REPRESENTED BY ITS MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER.
5:FININCIAL CRIME INTELLIGENCE (ASSAM AND NE)
AXIS BANK LTD.
GOVIND AASHIL COMPLEX
2ND FLOOR

NEAR RAJIV BHAWAN
G.S. ROAD

GUWAHATI- 05.
6:LOAN CENTRE
THE AXIS BANK LTD.
GOVING AASHIL COMPLEX
2ND FLOOR

NEAR RAJIV BHAWAN
G.S. ROAD

GUWAHATI- 05.
7:THE BRANCH MANAGER
AXIS BANK LIMITED
DHUBRI BRANCH
KALIBARI ROAD

DHUBRI
PIN- 783301

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BEFORE
HON’BLE MR. JUSTICE DEVASHIS BARUAH

For the Petitioner(s) : Mr. A. H. M. R. Choudhury, Advocate

For the Respondent(s) : Mr. P. Hazarika, Advocate
: Mr. A. Chetia, Advocate


· Date on which Judgment was reserved : N/A
· Date of Pronouncement of Judgment : 31.08.2026
· Whether the pronouncement is of
the Operative Part of the Judgment : Yes

· Whether the full Judgment has been
Pronounced : No
JUDGMENT AND ORDER (ORAL)
Heard Mr. A. H. M. R. Choudhury, the learned counsel appearing
on behalf of the Petitioner and Mr. P. Hazarika, the learned counsel
appearing on behalf of the Respondent No.2. I have also heard Mr.
A. Chetia, the learned counsel appearing on behalf of the
Respondent Nos. 4 to 7.
2. The present writ petition has been filed by the Petitioner
primarily challenging the fraud report which has been submitted to
the Reserve Bank of India by the Respondent Nos. 4 to 7 as well as
freezing the Petitioner's Savings Bank Account bearing
No.9200100534763571 maintained in the Branch of the

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Respondent No.4 at Dhubri arrayed as the Respondent No.7.
3. The case of the Petitioner herein is that the Petitioner is a
registered valuer under the Chief Commissioner of Income Tax,
Guwahati and in that regard, he is Registered vide a letter dated
11.09.2008 issued by the Chief Commissioner of Income Tax,
Guwahati for valuation of immovable properties, (other than
Agricultural land, Plantations, Forests, Mines, and Quarries).
4. The Respondent No.4 Bank executed an agreement with the
Petitioner on 30.05.2019 whereby the Petitioner was engaged as a
Service Provider to perform function as valuer of non-agricultural
property. The period of the agreement was for 3 (three) years,
which was renewed in the year 2022.
5. The Petitioner has a Savings Bank Account maintained with
the Respondent Bank bearing No.9200100534763571 in the Dhubri
Branch of the Respondent No.4 Bank. It is the case of the
Petitioner that all of a sudden, on 02.11.2023, the Respondent
Bank terminated the engagement of the Petitioner as Service
Provider by alleging negligence and deficiency of service. The
Petitioner was also given 7 (seven) days' time to submit all the
pending dues/bills, which shall be paid by the Respondent Bank

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upon submission of the bills.
6. The Petitioner's Savings Bank Account which was maintained
in the Respondent No.7's Branch was made non-functional. Under
such circumstances, the Petitioner submitted an application on
01.05.2024 requesting to make the Bank Account functional.
Nothing happened for which the Petitioner was compelled to issue
a legal notice on 11.06.2024. The Respondent Bank replied to the
legal notice on 04.07.2024, stating that the Respondent Bank was
examining the matter.
7. It is the further case of the Petitioner that thereupon also,
there was no response for which the Petitioner submitted yet
another representation on 31.08.2024, requesting the Respondent
Bank to defreeze the Petitioner's Account. The Respondent Bank
thereupon issued a communication to the Petitioner on 06.09.2024
informing him to contact with the Respondent Nos. 5 and 6 for
unblocking his Savings Bank Account. When the Petitioner
approached the Respondent Nos. 5 & 6, the Petitioner was
informed that a fraud report had been submitted by the
Respondent Bank through the Respondent No. 2 which led to a
registration of a Fraud Case No.UTIB2402-10276 under the Central
Fraud Registry, Reserve Bank of India. It is under such

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circumstances, the Petitioner has approached this Court seeking
the reliefs of setting aside and quashing the Fraud Case
No.UTIB2402-10276 as well as for defreezing the Petitioner's Bank
Account.
8. The learned counsel appearing on behalf of the Petitioner
submitted that the Petitioner is not challenging the termination in
the present proceedings.
9. Upon filing of the instant writ petition, the learned Coordinate
Bench of this Court on 28.10.2024 issued notice.
10. The Respondent Nos. 4 to 7 filed an affidavit-in-opposition
justifying the reasons as to why the Petitioner's services were
terminated; as to why the bank account of the Petitioner was
frozen as well as why steps have been taken for initiation of a
fraud case against the Petitioner before the Reserve Bank of India.
11. It is the specific case of the Respondents that the said fraud
report was made in terms with the RBI circular dated 01.07.2016
and more particularly Clause 3.2.6, which mandates that when a
case of a fraud of ₹50 million and above is involved, within a week
of such fraud coming to the notice of the Bank, a Flash Report has
to be made in the form of a DO letter addressed to the

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PCGM/CGM-in Charge, DBS, RBI, Central Office, Mumbai with a
copy to CFMC, Bangaluru. It is therefore the case of the
Respondent Nos. 4 to 7 that on account of a fraud having been
committed by the Petitioner, the Flash Report was submitted
immediately on coming to learn.
12. It is relevant to take note of that the Petitioner had filed an
affidavit-in-reply whereby another circular of the Reserve Bank of
India dated 15.07.2024 was brought on record.
13. This Court finds it relevant to take note of that vide an order
dated 24.06.2026, this Court sought for instructions from the
learned counsel representing the Respondent Nos. 4 to 7 on two
specific queries i.e.
(i) Whether it was permissible on the part of the Respondent
Axis Bank to terminate the contract with a stigma attached
thereto upon the Petitioner without giving the Petitioner an
opportunity to show cause?
(ii) Whether the account of the Petitioner which is maintained in
the Axis Bank could have been frozen by the Axis Bank
unilaterally without the intervention of the Court or the
Authorities who are empowered to do so?

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14. The writ petition was listed on 27.07.2026 when Mr. P.
Hazarika, the learned counsel appearing on behalf of the Reserve
Bank of India placed the Circular of the Reserve Bank of India
dated 15.07.2024 which stipulates the manner in which a report of
fraud has to be intimated to the Reserve Bank of India. The said
document was kept on record and marked with the letter “X”.
15. In the backdrop of the above, this Court has heard the learned
counsels appearing on behalf of the parties and has also perused
the materials on record.
16. From the materials on record, it is seen that the Respondent
Nos. 4 to 7 in their affidavit-in-opposition have made various
serious allegations against the Petitioner and it is claimed by the
Respondent Nos. 4 to 7 that in view of such seriousness of the
allegations coupled with the confession of the Petitioner, which
have been enclosed to the affidavit-in-opposition, steps have been
taken against the Petitioner for termination as well as the
consequential action of freezing the Petitioner's Bank Account and
the initiation of the fraud case. It is also relevant to take note of
that Clause 3.2.6 of the RBI circular dated 01.07.2016 mandates
the reporting of a fraud of ₹50 million and above within 7 (seven)
days from the date of coming to notice of the bank officials about

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the fraud.
17. This Court now finds it very relevant to take note of that in
terms with Clause 3.2.6 of the RBI circular dated 01.07.2016, the
period mentioned of one week is too less a time to comply with the
principles of natural justice. Under such circumstances, the circular
dated 01.07.2016 issued by the Reserve Bank of India was put to
challenge before the various High Courts on the ground of not
affording an opportunity of hearing to the affected person upon a
Flash Report of fraud being initiated.
18. The said dispute travelled to the Supreme Court in various civil
appeals which were filed by the Banks and the lead matter being
State Bank of India and others Vs. Rajesh Agarwal and Others
(2023) 6 SCC 1
reported in . The conclusions of the said judgment
are relevant for the purpose of deciding the present dispute which
is contained in Paragraph No.98, and as such, the same is
reproduced herein under.
“ 98. The conclusions are summarised below:
98.1. No opportunity of being heard is required before an FIR is lodged and
registered.
98.2. Classification of an account as fraud not only results in reporting the crime to
the investigating agencies, but also has other penal and civil consequences against

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the borrowers.
98.3. Debarring the borrowers from accessing institutional finance under Clause
8.12.1 of the Master Directions on Frauds results in serious civil consequences for the
borrower.
98.4. Such a debarment under Clause 8.12.1 of the Master Directions on Frauds is
akin to blacklisting the borrowers for being untrustworthy and unworthy of credit by
banks. This Court has consistently held that an opportunity of hearing ought to be
provided before a person is blacklisted.
98.5. The application of audi alteram partem cannot be impliedly excluded under

the Master Directions on Frauds. In view of the time-frame contemplated under the
Master Directions on Frauds as well as the nature of the procedure adopted, it is
reasonably practicable for the lender banks to provide an opportunity of a hearing to
the borrowers before classifying their account as fraud.
98.6. The principles of natural justice demand that the borrowers must be served
a notice, given an opportunity to explain the conclusions of the forensic audit report,
and be allowed to represent by the banks/JLF before their account is classified as
fraud under the Master Directions on Frauds. In addition, the decision classifying the
borrower’s account as fraudulent must be made by a reasoned order.
98.7. Since the Master Directions on Frauds do not expressly provide an
opportunity of hearing to the borrowers before classifying their account as fraud, audi
alteram partem has to be read into the provisions of the directions to save them from
the vice of arbitrariness.”
19. From the perusal of the above quoted paragraph, it is seen
that the Supreme Court observed that the principles of natural
justice demand that the borrowers must be served a notice,

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thereby giving an opportunity to explain the conclusions of the
forensic audit report and be allowed to represent by the banks of
its JLF before their account is classified as fraud under the Master
Directions on Fraud. In addition to that, the decision classifying the
borrowers account as fraudulent must be made by a reasoned
order.
20. It may not be out of place to mention that the Master Circular
dated 01.07.2016 primarily relating to frauds committed by the
borrowers. Be that as it may, in view of the judgment passed by
the Supreme Court in the case of State Bank of India (supra) , the
Master Circular dated 01.07.2016 was replaced by the Circular
dated 15.07.2024. It is very pertinent to mention that the Circular
dated 15.07.2024 not only is confined to borrowers but also
includes persons, entities and its promoters/whole-time and
executive directors against whom allegations of fraud are to be
examined. There is a complete framework provided in the Master
Circular dated 15.07.2024 by which a Show Cause notice would be
issued giving at least an opportunity of not less than 21 days and
thereupon a reasoned order has to be passed.
21. This Court further takes note of the submission of the learned
counsel appearing on behalf of the Petitioner whereby he

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submitted that insofar as the termination of the Petitioner's
agreement, he would not like to press the said before this Court,
and if necessary, avail appropriate remedies before the competent
Court of Civil Jurisdiction. However, the Petitioner's limited
challenge in the writ petition is as regards the initiation of the fraud
report, which have resulted in the Petitioner not being able to carry
out any business with any banks or institutions. The further
grievance of the Petitioner is that the Petitioner's Bank Account has
been frozen by the Respondent Nos. 4 to 7 without the
intervention of any court order or orders of the authorities
concerned.
22. In the backdrop of the above, this Court finds it very pertinent
to observe that initiation of a fraud case and reporting to the
Reserve Bank of India entails drastic consequences and it is in the
form of a blacklisting. Under such circumstances, the minimum
requirement was that the Petitioner should have been issued a
show cause and thereupon, after giving the Petitioner an
opportunity of hearing, action could have been taken for reporting
it to the Reserve Bank of India. Insofar as the freezing of the
Petitioner's Bank Account is concerned, the Respondent Bank
cannot be permitted to carry out such action without the
intervention of a Court or orders from the authorities concerned.

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23. Considering the above, the instant writ petition therefore
stands disposed of with the following observations and directions:
(i) The initiation of the fraud case by a Flash Report registered as
Fraud Case No. UTIB2402-10276, thereby informing the
Reserve Bank of India is in violation of the principles of
natural justice which is a facet of Articles 14 and 21 of the
Constitution and accordingly set aside and quashed. The
Respondent No.2 as well as the Respondent Nos. 4 to 7 are
jointly and severally directed to remove the fraud report from
the website of the Respondent No.2.
(ii) The quashing of the said Flash Report which led to the
registration of Fraud Case No. UTIB2402-10276 would not
come in the way of the Respondent Nos. 4 to 7 to initiate a
proceedings de novo against the Petitioner by issuance of a
Show Cause Notice as per the stipulations contained in the
RBI's Master Circular dated 15.07.2024 and thereupon pass a
reasoned order after giving the Petitioner an opportunity of
hearing.
(iii) The freezing of the Petitioner's Bank Account bearing
No.9200100534763571 maintained in the Dhubri Branch of

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the Respondent No.4 Bank is interfered with and the
Respondent No.7 is directed to forthwith defreeze the
Petitioner's Bank Account.
(iv) It is, however, observed that the defreezing of the Petitioner's
Bank Account vide the present judgment shall not come in the
way of the Courts or the authorities to pass appropriate
directions for freezing of the Petitioner's Bank Account, if the
circumstances exist.
(v) This Court grants leave to the Petitioner to assail the
Termination Notice dated 02.11.2023 before the competent
Court of Civil Jurisdiction.

Bijoy
Saha
Digitally signed
by Bijoy Saha
Date: 2026.09.02
15:27:59 +05'30'
JUDGE
Comparing Assistant