JUDGMENT

1. The writ petitioner Hemant Kanoria was a shareholder and a Director of the SREI Infrastructure and Finance Limited and a Director of SREI Equipment Finance Limited. The Bank of India (BOI), Bank of Baroda (BOB) and Union Bank of India (UBI) were part of a consortium of lenders which had given loans to the said two Companies.

2. The consortium of lenders, at a meeting dated March 24, 2021 of the Joint Lender’s Forum (JLF), commissioned an Auditor, namely KPMG, to audit accounts of the two companies.

3. On October 1, 2021, the Reserve Bank of India (RBI) passed an order under Section 45IE of the Reserve Bank of India Act, 1934 (for short, “the 1934 Act”) for supersession of the Boards of the two Companies, appointing an Administrator. On October 4, 2021, a press release was issued by the RBI wherefrom the petitioner allegedly learnt of the supersession. On and from that date, the petitioner claims to have had no access to the affairs and records of the two companies.

4. On October 8, 2021, by virtue of orders passed by the National Company Law Tribunal (NCLT), a Corporate Insolvency Resolution Process (CIRP) commenced in respect of the said two borrower-companies. Meanwhile, relying on the Forensic Audit Report (FAR) authored by the KPMG, the aforesaid three Banks declared the accounts of the two borrower-companies as “fraud” under the RBI Master directions on fraud. The declarations were challenged by the petitioner by three writ petitions before the Delhi High Court. The said High Court, vide order dated May 12, 2023, set aside the declarations by holding that all actions taken against the petitioner under the Master Directions were set aside.

5. On August 11, 2023, the resolution plans of the two companies were approved by the Adjudicating Authority under the Insolvency and Bankruptcy Code (IBC). The Resolution Applicant subsequently took over both the Companies.

6. Thereafter, the BOI, BOB and UBI, placing reliance on the same FAR authored by KPMG, issued show-cause notices afresh for declaration of the borrower-companies as fraud, serving copies thereof on the petitioner as well in the capacity of Promoter/Director of the said companies.

7. The petitioner has challenged the three show-cause notices issued by the said three banks. In WPA No. 28329 of 2023, the show-cause notice dated December 1, 2023 issued by the BOI has been challenged. The subject-matter of challenge in WPA No. 28980 of 2023 is the show-cause notice dated December 7, 2023 issued by the BOB and in WPA No. 236 of 2024, the show-cause notice dated December 20, 2023 issued by the UBI have been assailed.

8. The BOI and BOB, during pendency of the writ petitions, have issued letters dated January 2, 2024 and December 29, 2023 (both served on January 4, 2024), declaring the petitioner individually as “fraud” and “perpetrator of fraud” respectively, which have been brought on record by supplementary affidavits.

9. The subject-matter of challenge in all the three writ petitions is the said show-cause notices issued on the basis of the same FAR and, as a corollary, the decisions taken on the basis thereof by BOI and BOB.

10. Insofar as WPA No. 29027 of 2024 is concerned, the petitioners, who were Directors/Promoters of SREI Equipment Finance Limited, one of the borrower-companies, have challenged two show-cause notices dated November 28, 2023 and December 9, 2023 issued by the Small Industries Development Bank of India (SIDBI) also under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016 (hereinafter referred to as, “the RBI Master Directions”).

11. In the writ petitions challenging the show-cause notices issued by BOI, BOB and UBI, the challenge thrown against the show-cause notices is, inter alia, based on the premise that those have been issued specifically for declaring the accounts of the borrower-companies, and not the petitioner, as fraud. Hence, learned senior counsel for the petitioner argue