As per the case facts the Reserve Bank of India issued directions regarding fraud classification and reporting by banks These directions were challenged in various High Courts primarily because they ... did not provide an opportunity for borrowers to be heard before their accounts were classified as fraudulent The question arose whether the principles of natural justice specifically the right to be heard audi alteram partem are implicitly excluded from the RBI's Master Directions on Frauds Finally the Supreme Court upheld the judgment of the Telangana High Court ruling that the principles of natural justice demand that borrowers must be served a notice and given an opportunity to explain the forensic audit report findings before their account is classified as fraudulent The decision to classify an account as fraudulent must also be made by a reasoned order The Court stated that audi alteram partem must be read into the provisions of the directions to prevent arbitrariness