#forensic audit

Delhi HC ordered a forensic audit of 17 banks to trace assets hidden to evade a foreign arbitral award, holding that any court-issued undertaking overrides statutory transfer freedoms. It sentenced contempt violators to six months’ imprisonment and attached their assets, signalling that attempts to dissipate award-related property will attract rigorous investigation and severe sanctions.

Calcutta HC quashes Punjab National Bank's fraud classification of borrower accounts, ruling that reliance on undisclosed Joint Lenders Meeting decisions and judicially quashed audit reports violates natural justice. The judgment reinforces that banks must provide borrowers an opportunity to respond to all adverse material before fraud tagging under RBI Master Directions.

The Supreme Court ruled that banks need not grant personal hearings before classifying loan accounts as fraud under RBI Master Directions, but must disclose forensic audit reports to borrowers to uphold procedural fairness. This sets a precedent balancing regulatory efficiency with borrowers' right to defend against fraud allegations.