The judgment emphasized the principles of natural justice, the need for providing reasons for decisions in administrative proceedings, and the requirement to consider the petitioner's reply in compliance with RBI guidelines and the SARFAESI Act, 2002.

JUDGMENT :

1. This petition has been filed by the petitioner with the following prayers:-

“In view of the foregoing premise, it is, most respectfully, prayed that the Hon’ble Court may be pleased to:

(i) Issue a writ, order or direction in the nature of certiorari to quash the letter bearing reference number CFS: ND 21: 730 dated 14.05.2018 declaring the Petitioner and its Directors as willful defaulter; and

(ii) Issue a writ, order or direction in the nature of certiorari to quash the impugned show cause notice No.CFS: ND: 20:1837 dated 23.11.2017 for declaring the petitioner and its directors as willful defaulters; decision dated 20.02.2018 of the Committee of Executives holding that the petitioner has defaulted in meeting its repayment obligations and siphoned off the funds which were not utilized for the designated purpose for which the finance was availed of along with decision of the Review Committee dated 03.05.2018 confirming the decision dated 20.2.2018 of the Committee of Executives;

(iii) issue an appropriate writ order or direction to hold and declare that the impugned Circular bearing reference no. DBR.No.CID.BC.22/20.16.003/2015-16 dated 01.07.2015 issued and promulgated by respondent no.2 is unconstitutional and quash the same;

(iv) issue a writ order of direction in the nature of mandamus calling for the records of respondent no.l relating to Non-Performing Asset of the petitioner;

(v) pass such other orders, as the Hon’ble Court may deem fit and proper in the facts and circumstances of the case, in favour of the Petitioner and its Directors and against the Respondents.”

2. In substance, the challenge in this writ petition is, to a communication dated May 14, 2018 whereby the petitioner was communicated the decision of the Bank to declare the petitioner a willful defaulter.

3. It is the submission of Mr. Sandeep Sethi, learned Senior Counsel appearing for the petitioner that the petitioner is a Public Limited Company. On November 18, 2002, a Concession Agreement was entered between the Madhya Pradesh Road Development Corporation and the petitioner for reconstruction, strengthening, widening and rehabilitation of Seoni-Balaghat-Rajegaon Section of State Highway 11 and 26 Road in the state of Madhya Pradesh on Built, Operate & Transfer basis. In the year 2008, the project was completed and tolling started through O&M and Tolling contract, MBL. A request was made by the petitioner to the respondent No.1 for term loan of Rs.50 Crores for toll securitization. The respondent no.1 Bank sanctioned term loan of Rs.50 Crores at 12% interest p.a. for repayment of existing term loan of Punjab National Bank and for utilization in projects of promoter/holding company MBL.

4. A show cause notice dated November 23, 2017 was issued to the petitioner wherein it is alleged as under:-

a. Term Loan sanctioned for construction and toll collection on 114 Km state highway no. 11 and 26 on Seoni Balaghat Gondia Road built on BOT basis, awarded by Govt. of Madhya Pradesh under Sole Banking arrangement. As per the terms of the sanction the company has to deal exclusively with us and entire toll collection to be routed with us.

b. The company is not regular in depositing the toll collection. Company is maintaining current account with Corporation Bank, Sarita Vihar, New Delhi without prior approval/consent of the Bank and depositing the toll collection and transferring the funds to M/s MBL Infrastructure Ltd.

Thus the unit has defaulted in meeting its payment/repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilized for specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets.

In terms of RBI guidelines and to comply principles of natural justice, if you desire, you may send your submission for consideration by the Committee of Executives, headed by our Executive Director within 15 days from the date of this letter as to why your account a