The central legal point established in the judgment is that the Wilful Defaulter's Committee must adhere to the requirements of the Master Circular in identifying wilful defaulters, issuing show-cause notices, and making decisions, and any deviation from the Master Circular vitiates the process.

Debangsu Basak, J.

A show-cause notice, purported to be issued under the provisions of the Master Circular on Wilful Defaulter dated July 1, 2015 is under challenge in the present writ petition.

2. Learned advocate for the petitioner submits that, assuming that, the impugned notice is considered to be a notice under the Master Circular, then also, the impugned notice stands vitiated as the person purporting to exercise such powers, is without jurisdiction. He refers to the Master Circular and particularly to paragraph 3 thereof and submits that, the Wilful Defaulter's Committee consisting of the designated person has to meet and form an opinion that an event of wilful default, within the meaning of such Master Circular, has occurred for it to issue a show-cause notice. In the present case, a Regional Manager of the Bank has issued a notice claiming that, the petitioner would be classified as a wilful defaulter, if adequate cause is not shown. According to him, the impugned writing being wholly without jurisdiction should be quashed.

3. Learned advocate for the Bank submits that, the Bank has formulated a policy of Non-Cooperative Borrowers and Wilful Defaulters 2018-19. In terms of such policy, the Wilful Defaulters Committee constituted in terms of the Master Circular meets to identify the wilful defaulters. Upon such identification being made, the branch is informed of the same. The Regional Manager-in-Charge of such branch, then proceeds to issue the notice calling upon such wilful defaulter to show-cause. According to him, it is not necessary that the Wilful Defaulter's Committee itself issues the show-cause notice. Therefore, the Court should not intervene.

4. Reserve Bank of India formulated the Master Circular on Wilful Defaulters dated July 1, 2015. The Master Circular is binding upon the Bank. The Master Circular provides the mechanism for identification of wilful defaulters. Paragraph 3 of such Master Circular, provides the mechanism for identification of Wilful Defaulters. For the sake of convenience, paragraphs 3(a) and (b) of the Master Circular are set out below:

"3. Mechanism for identification of Wilful Defaulters The mechanism referred to in paragraph 2.5 above should generally include the following:

(a) The evidence of wilful default on the part of the borrowing company and its promoter/whole-time director at the relevant time should be examined by a Committee headed by an Executive Director or equivalent and consisting of two other senior officers of the rank of GM/DGM.

(b) If the Committee concludes that an event of wilful default has occurred, it shall issue a Show Cause Notice to the concerned borrower and the promoter/whole-time director and call for their submissions and after considering their submissions issue an order recording the fact of wilful default and the reasons for the same. An opportunity should be given to the borrower and the promoter/whole-time director for a personal hearing if the Committee feels such an opportunity is necessary."

5. To my understanding, the Master Circular requires formation of a Wilful Defaulter's Committee by a Bank consisting of persons identified in such Master Circular. The Committee must be of three members. The Committee must be headed by an Executive Director or equivalent of the Bank. The other two members must be of the rank of General Manager/Deputy General Manager. Upon such Wilful Defaulter's Committee being constituted, such committee is to meet to identify events of default. The master Circular requires the Committee to examine the evidence of wilful default. Upon examination of such evidence, if the Committee concludes that an event of wilful default has occurred, the Master Circular requires the Committee to issue the show-cause notice calling upon the person to explain itself. The Master Circular allows the Committee to afford the person concerned an opportunity of hearing if the Committee feels such an opportunity is necessary. The Committee must