Strict Compliance with Service Requirements under IT Rules is Mandatory for Valid Quasi-Judicial Adjudication

The Respondent No. 1 (Wardha Bank) maintained a current account with the Appellant (YES Bank).

On 24.05.2023, 24 allegedly fraudulent RTGS/NEFT transactions totaling ₹1,21,16,004/- occurred.

Wardha Bank filed a complaint before the Adjudicating Officer (AO), Maharashtra, under Sections 43 and 43A of the IT Act.

Following a High Court directive for expeditious disposal, the AO issued a notice for hearing.

Although the Appellant provided four specific, corrected email addresses for communication on 29.10.2024, the AO sent the final hearing notice dated 06.02.2025 to incorrect addresses.

Consequently, the Appellant failed to appear at the final hearing.

By an order dated 11.02.2025, the AO directed the Appellant to refund the disputed sum with 18% interest and pay ₹29,83,996/- in compensation.

The Appellant challenged this order on grounds of natural justice violations.

1. Whether the procedure adopted by the Learned Adjudicating Officer in passing the Impugned Order satisfied the mandatory requirement of a reasonable and effective opportunity of hearing under Section 46(2) of the Information Technology Act, 2000, read with relevant Procedural Rules?

2. Whether the order is liable to be set aside on the ground of violation of the Principles of Natural Justice, particularly the doctrine of audi alteram partem?

Section 46(2) of the Information Technology Act, 2000, which mandates a "reasonable opportunity for making representation".

Rules 4 and 7 of the IT (Manner of Holding Enquiry) Rules, 2003, which require "sufficient evidence of actual delivery" of electronic notices.

The constitutional principle of audi alteram partem as an essential ingredient of Article 14 and 21, citing Maneka Gandhi v. Union of India (procedure must be "right, just and fair").

Sahara India v. CIT (civil consequences necessitate natural justice).

State Bank of India v. Rajesh Agarwal, establishing that the right to a fair hearing includes the right to know and meet the evidence.

The Tribunal found that the AO's office was formally notified of the Appellant’s correct service coordinates on 29.10.2024, yet failed to use them for the final hearing notice.

Per Rule 7, electronic service requires proof of delivery, which was absent from the record.

The AO erroneously invoked the ex parte power under Rule 4(h), as valid notice is a condition precedent for such action.

The AO failed to dispose of the Appellant's substantive applications to summon the Investigating Officer and forensic auditors.

The duty to act judicially is implicit in Section 46, and a High Court directive for "expeditious disposal" does not authorize the truncation of due process or the bypass of mandatory service rules.

The exchange of written pleadings alone did not satisfy the requirement for an effective hearing when oral arguments and evidence were requested.

The Tribunal held that the Impugned Order dated 11.02.2025 was passed in gross violation of the principles of natural justice and statutory procedural requirements.

The Tribunal quashed and set aside the order and remitted the matter to the Adjudicating Officer for de novo adjudication on merits, directed to be concluded within four months.

The Tribunal issued comprehensive "General Directions" to all Adjudicating Officers nationwide to standardize procedures regarding complaint registration, multi-modal service of notice, hybrid hearings, and the publication of cause lists.