The court emphasized the importance of complying with prevailing guidelines and principles of natural justice in declaring a borrower as a wilful defaulter, and set aside the declaration of the petitioner as a wilful defaulter due to non-compliance with the prescribed procedure.

JUDGMENT

a.S.Chandurkar, J. - Rule. Rule made returnable forthwith and heard the learned counsel for the parties.

2] The petitioner in this writ petition filed under article 226 of the Constitution of India has challenged the action of the respondents of declaring him a wilful defaulter by publication of his name vide public notice dated 29.06.2019. The petitioner seeks a declaration that the said action is in violation of guidelines prescribed by Reserve Bank of India on 01.07.2015.

3] It is the case of the petitioner as pleaded in the writ petition that in 1995, M/s. Munis Forge Ltd was incorporated under the provisions of the Companies act, 1956 in which the petitioner was one of the Directors. The said Company obtained financial assistance from the Central Bank of India (for short, the Bank). The petitioner furnished his personal guarantee for repayment of the credit facility as availed. It is the further case of the petitioner that he resigned as a Director of Company on 14.09.1998 and this fact was informed to the Bank. The Bank found that the Company had failed to maintain its account regularly and hence it declared the Company as a Non Performing asset (NPa). Recovery proceedings were filed against the Company and its directors before the Debts Recovery Tribunal. Though the Tribunal allowed the original application preferred by the Bank on 19.08.2005, the recovery of the entire amount due has not yet been made. The petitioner submits that he had submitted a proposal for discharging his personal liability but the Bank had not accepted such request. On 29.06.2019 a public notice was published in the 'Times of India' Nagpur edition stating therein that the Company was a wilful defaulter alongwith its directors and guarantors. The name of the petitioner was mentioned as director as well as guarantor. The date of NPa was shown to be 31.03.1998. It is this public notice that has been challenged in this writ petition.

4] Shri atul Pande, learned counsel for the petitioner submitted that the petitioner had been declared as a wilful defaulter without granting him any opportunity of hearing. This action was without any prior notice and was thus in breach of principles of natural justice. He submitted that the procedure of declaring a borrower as a wilful defaulter was governed by various circulars issued by the Reserve Bank of India and by relying upon the Master Circular dated 01.07.2015, it was submitted that the procedure prescribed therein was not followed by the Bank. In absence of complying with the principles of natural justice, a declaration of the petitioner to be a wilful defaulter was bad in law. In support of the aforesaid submissions the learned counsel placed reliance on the decision in Erusian Equipment and Chemicals Ltd. vs. State of West Bengal and anr. aIR 1975 SC 266, State Bank of India vs. M/s. Jah Developers Pvt. Ltd. and ors. aIR 2019 SC 2854, Daffodills Pharmaceuticals Ltd. and anr. vs. State of U.P. and anr. 2019 SCC Online SC 1607, Writ Petition (Lodg.) No.345 of 2011 (Finolex Industries Ltd. and anr. vs. Reserve Bank of India and ors.) with connected Writ Petition decided on 23/24th august, 2011 at the Principal Seat, Writ Petition No.2739/2017 (Prafulla Shridhar Vaidya vs. The Chief Manager, Bank of Baroda and ors.) decided on 13.06.2019, Writ Petition (L) No.1630 of 2019 (Kailash Shahra Vs. IDI Bank Ltd.) decided on 16.10.2019 at the Principal Seat and Writ Petition No.1958 of 2020 (Shri Gunwant Deopare and anr. vs. The Branch Manager, Bank of Maharashtra and ors.) decided on 24.08.2021. Referring to various affidavits filed by on behalf of the Bank it was submitted that different and contradictory stands had been taken therein. There was no material on record to indicate that the Bank had followed any procedure before declaring the petitioner to be a wilful defaulter. It was thus submitted that the impugned publication of public notice dated 29.06.2019 was liable to be set aside.

5] Shri S. N. Fuladi, le