JUDGMENT : VIJU ABRAHAM, J. Petitioner has approached this Court essentially challenging Ext.P7 master directions on “frauds - classification and reporting by commercial banks and select FIs., 2016” issued by the Reserve Bank of India. 2. Petitioner is a company engaged in the business of gold, which includes the purchase of imported gold and export of gold ornaments manufactured by the petitioner from and out of the said imported gold so purchased by them. For the conduct of the said business financial facility was arranged by respondents 1 and 2. Petitioner would contend that respondent banks had decided to conduct forensic audit of the accounts of the petitioner since the account of the petitioner had become NPA. Pursuant to the same Ext.P4 notice was issued by the Forensic Auditor. Petitioner submitted Ext.P5 reply to the same. Petitioner submits that the Forensic Auditor has completed his report and the petitioner is apprehensive that the report cannot be conclusive in the light of the various issues which are pending adjudication before the High Courts. Petitioner would further submit that they are aggrieved by Clause 8.9.5 of Ext.P7 circular issued by the 3 rd respondent Reserve Bank of India, which is the master directions on frauds, wherein no provision has been provided for an opportunity of hearing to the borrowers before classifying the account as fraudulent. Clause 8.9.5 of Ext.P7 reads as follows: “8.9.5 The forensic audit must be completed within a maximum period of three months from the date of the JLF meeting authorizing the audit. Within 15 days of the completion of the forensic audit, the JLF shall reconvene and decide on the status of the account, either by consensus or the majority rule as specified above. In case the decision is to classify the account as a fraud, the RFA status shall be changed to Fraud in all banks and reported to RBI and on the CRILC platform within a week of the said decision. Besides, within 30 days of the RBI reporting, the bank commissioning/ initiating the forensic audit should lodge a complaint with the CBI on behalf of all banks in the consortium/MBA. For this purpose, if the bank initiating the forensic audit is a private sector bank, the complaint shall be lodged with the CBI by the PSU bank with the largest exposure to the account in the consortium/MBA. For this purpose, if the bank initiating the forensic audit is a private sector bank, the complaint shall be lodged with the CBI by the PSU bank with the largest exposure to the account in the consortium/MBA. If there is no PSU bank in the consortium / MBA or it is a solo bank lending by a private sector bank/foreign bank, the private bank/foreign bank shall report to the Police as per extant instructions. This would be in addition to the complaint already lodged by the first bank which had detected the fraud and informed the consortium/MBA.” Petitioner submits that going by Clause 8.11.1 of Ext.P7 the banks are required to lodge the complaint with the law enforcement agencies immediately on detection of the fraud and that no opportunity is provided to the borrowers like the petitioner in the said circular to represent before the bank before their accounts are classified as fraudulent and criminal action is initiated as per Clause 8.11.1 of Ext.P7. Petitioner would further submit that even third parties who has connection with the credit sanction, etc. were given opportunity of hearing as per Clauses 8.12.4 and 8.12.5 of Ext.P7 master circular before proceedings are initiated against them. Petitioner would submit that the said master circular was subject matter of challenge before the Apex Court in State Bank of India v. Rajesh Agarwal, 2023 KHC 6324 (Civil Appeal No.7301 of 2022 and connected cases ). Civil Appeal No.7301 of 2022 was filed challenging the judgment dated 10.12.2020 of the Division Bench of the Telangana High Court, while considering Ext.P7 master circular the Court held that the principle of audi alteram partem ought to be read into Clauses 8.9.4 and 8.9.5 of the master directions on frauds. The Court further directed the lender banks to give an opportunity of hearing to the borrowers after furnishing a copy of the forensic audit report and to provide an opportunity of a personal hearing to the borrowers before classifying their account as fraud. The Apex Court upheld the said judgment of the Division Bench of the Telangana High Court dated 10.12.2020 as per judgment dated 27.03.2023 in Rajesh Agarwal ’s case cited supra and summarised the directions as follows: “81.The conclusions are summarized below: i. No opportunity of being heard is required before an FIR is lodged and registered; ii. The Apex Court upheld the said judgment of the Division Bench of the Telangana High Court dated 10.12.2020 as per judgment dated 27.03.2023 in Rajesh Agarwal ’s case cited supra and summarised the directions as follows: “81.The conclusions are summarized below: i. No opportunity of being heard is required before an FIR is lodged and registered; ii. Classification of an account as fraud not only results in reporting the crime to investigating agencies, but also has other penal and civil consequences against the borrowers; iii. 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; iv. 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; v. 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; vi. 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; and vii. In addition, the decision classifying the borrower's account as fraudulent must be made by a reasoned order; and vii. 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.” Direction No.vi in the said judgment specifically ordered that 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 and further directed that the decision classifying the borrower's account as fraudulent must be made by a reasoned order. Petitioner submits that it is apprehending that after considering Ext.P5 reply to Ext.P4 notice the bank will be finalising the audit report without giving an opportunity of hearing before classifying the accounts as fraudulent, that the present writ petition has been filed. 3. Learned standing counsel appearing for the Reserve Bank of India would submit that in tune with the direction issued by the Apex Court in Rajesh Agarwal ’s case cited supra Ext.P7 circular impugned in this writ petition has been recalled and in its place a new master circular dated 15.07.2024 has been issued, incorporating a provision to afford an opportunity of being heard to the borrowers before the accounts are classified as fraudulent. Learned standing counsel refers to Clause 2.1.1, which reads as follows: “2.1.1 There shall be a Board approved Policy on fraud risk management delineating roles and responsibilities of Board/Board Committees and Senior Management of the bank. The Policy shall also incorporate measures for ensuring compliance with principles of natural justices in a time-bound manner which at a minimum shall include: 2.1.1.1 Issuance of a detailed Show Cause Notice (SCN) to the Persons, Entities and its Promoters/Whole-time and Executive Directors against whom allegation of fraud is being examined. The SCN shall provide complete details of transactions/actions/events basis which declaration and reporting of a fraud is being contemplated under these Directions. 2.1.1.2 A reasonable time of not less than 21 days shall be provided to the Persons/Entities on whom the SCN was served to respond to the said SCN. 2.1.1.3. The SCN shall provide complete details of transactions/actions/events basis which declaration and reporting of a fraud is being contemplated under these Directions. 2.1.1.2 A reasonable time of not less than 21 days shall be provided to the Persons/Entities on whom the SCN was served to respond to the said SCN. 2.1.1.3. Banks shall have a well laid out system for issuance of SCN and examination of the responses/submissions made by the Persons/Entities prior to declaring such Persons/Entities as fraudulent. 2.1.1.4 A reasoned Order shall be served on the Persons/Entities conveying the decision of the bank regarding declaration/classification of the account as fraud or otherwise. Such Order(s) must contain relevant facts/circumstances relied upon, the submission made against the SCN and the reasons for classification as fraud or otherwise.” It is submitted that the new master circular issued in tune with the directions of the Apex Court provides for issuance of a show cause notice to the borrowers before a decision is taken by the bank to treat the account as fraudulent. It is submitted that in the light of the directions issued by the Apex Court in Rajesh Agarwal ’s case cited supra and in view of the master circular dated 15.07.2024 issued by the Reserve Bank of India the apprehensions of the petitioner are without any basis. 4. Learned standing counsel for the 1 st respondent would submit that Ext.P4 notice was issued to get the views of the petitioner before they could finalise the forensic audit report and that they will complete the forensic audit report after considering Ext.P5 objection. After the forensic audit report is prepared, definitely the respondent banks are duty bound to follow the directions of the Apex Court in Rajesh Agarwal ’s case cited supra and also the conditions in the master circular dated 15.07.2024 issued by the Reserve Bank of India. Therefore the writ petition is disposed of directing the respondent banks to ensure that the opportunity of hearing, including an opportunity to file a detailed objection to the findings in the forensic audit report as directed by the Apex Court in the judgment in Rajesh Agarwal’s case cited supra and the master circular No.RBI/DOS/2024- 25/118 dated 15.07.2024 issued by the Reserve Bank of India in place of Ext.P7 circular is afforded to the petitioner before taking a final decision as to whether the account is to be classified as fraudulent.