Bombay High Court Quashes Bank of India’s ‘Fraud’ Tag on Naresh Goyal’s Account
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The Bombay High Court has quashed the Bank of India’s decision to classify Jet Airways founder Naresh Goyal’s account as “fraud”.
A Bench of Justices RI Chagla and Farhan P Dubash, in a judgment delivered on September 25, held that the bank had not given Goyal a chance to be heard before taking the decision.
The Court said, “The Petitioner has not been granted an opportunity of representation before the classification of his account as ‘fraud’. Mere re-examination of the earlier classification does not satisfy the rule of natural justice.”
The dispute began with a show cause notice issued on July 1, 2025, which referred to an earlier order declaring Goyal’s account as fraudulent. The first notice, issued in December 2024, had not shared the forensic audit report with Goyal. The July notice included the report but still relied on the earlier classification without hearing him.
In the present case, two show cause notices were issued. The first notice, dated 30th December 2024, was issued without providing the petitioner with the report of the forensic audit conducted by the bank. This report was later provided with the second notice dated 1st July 2025. However, as held by the Supreme Court in Rajesh Agarwal & Ors., the petitioner was not given an opportunity to make a representation before the classification of his account as “fraud”. The mere re-examination of the earlier classification of the petitioner’s account as fraud does not satisfy the rule of audi alteram partem as laid down by the Supreme Court in the same case.
Goyal challenged both notices in the High Court, arguing that the bank’s actions were arbitrary and violated the principles of natural justice. He said no fraud order had ever been served on him, making the classification baseless.
Although the bank defended its actions, its lawyers informed the Court that no further steps would be taken based on the earlier orders. The Court recorded this assurance and directed the bank not to act on the fraud classification.
The Court, however, clarified that the bank is free to issue a fresh show cause notice, but it must be done by a different committee and strictly follow the rules of natural justice.
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