The Bombay High Court has quashed Union Bank of India's decision to label Kamlesh Kanungo's account as fraudulent, highlighting the bank's failure to adhere to principles of natural justice. The ruling, delivered by Justices Bharati Dangre and Manjusha Deshpande on May 7, emphasized that Kanungo was not given a show-cause notice or an opportunity to respond before the classification on September 9, 2020. The case involves allegations that Union Bank was defrauded of ₹21.80 crore from 2008 to 2018, leading to a First Information Report (FIR) against Kanungo in May 2023. The bank's forensic audit revealed significant withdrawals from Kanungo's personal account and irregularities in the routing of the company's turnover. The court underscored the importance of compliance with natural justice before taking adverse actions against borrowers. Additionally, it referred to the revised guidelines from the Reserve Bank of India (RBI), which require banks to provide notice and a hearing prior to declaring accounts fraudulent. The court's ruling allows Union Bank to initiate fresh proceedings under these updated guidelines, ensuring due process is followed.