A declaration of wilful default must be based on intentional and objective assessments of actions, rather than isolated incidents, considering the overall track record of the borrower.

JUDGMENT

Purushaindra Kumar Kaurav, J.

1. By way of this Writ Petition filed under Article 226 of the Constitution of India, the Petitioner has challenged the impugned order dated 23.3.2023 passed by the Review Committee of the Respondent, Bank of Baroda ("Respondent Bank"). By the said impugned order, the Review Committee of the Respondent Bank confirmed the order dated 19.8.2022 passed by the Identification Committee, declaring the Petitioner as a Wilful Defaulter under the "Master Circular on Wilful Defaulters, 2015" ("Master Circular"), issued by the Reserve Bank of India ("RBI").

Facts of the case

2. It is stated that the Petitioner is the Chairman of Hindustan Power Projects Pvt. Ltd., which runs a 1200 mega-watt power plant and supplies electricity to three States namely, U.P., M.P. and Haryana. The Petitioner's company has availed loan facilities amounting to thousands of crores from various banks and it is stated that there has never been any default in servicing the debt since inception.

3. However, the Respondent Bank sought to declare the Petitioner as a Wilful Defaulter with respect to his association in another company known as Moser Baer Solar Ltd. ("MBSL") under the Master Circular, thereby, depriving the Petitioner from availing credit facilities for his present and prospective business enterprises.

4. It is stated that, another company namely, Moser Baer India Limited ("MBIL") was a company incorporated in 1983 by the father of the Petitioner to manufacture storage discs. MBIL exported discs to large multinational companies like Sony, Hitachi, TDK, Fuji, Mitsubishi etc.

5. As per the case of the petitioner, around the year 2005, it was realized that the business of storage discs began to slow down due to the technological advancement and emergence of new mediums of storage like Cloud. Hence, it was decided to diversify the business into more upcoming fields, at that time, like the solar cells and modules.

6. It is submitted that, accordingly, Moser Baer Solar Limited ("MBSL"), the company in question, was incorporated on 6.3.2007 and was engaged in the business of manufacture of solar cells and modules. MBSL was a 100% subsidiary of MBIL. As stated, the solar business of MBSL was valued at more than USD 1 billion at the relevant time when several institutional investors made investment in MBSL. The Petitioner was appointed as Director of MBSL on 29.3.2007.

7. It is stated that MBSL had availed credit facilitates from various Banks including the Respondent Bank from 2007 onwards. The Respondent Bank sanctioned credit facility to MBSL on 20.9.2007, 22.2.2008, 5.4.2011 and 5.4.2013.

8. It is stated that when MBSL was started in 2007, the global photovoltaic industry which manufactures solar cells and modules was passing through rapid growth. The manufacturing was concentrated in Europe, USA and Japan. The Chinese share of manufacture was only about 15% at that time.

9. It is further submitted that, however, post the global financial crisis of 2008, the prices of solar panels in European market collapsed. Simultaneously, the Chinese government infused a stimulus package of USD 570 billion for its domestic solar panel industry, which included USD 43 billion in subsidies.

10. It is also submitted that, armed with substantial subsidies, the Chinese companies started dumping solar cells and modules across the globe, including in India, at significantly lower prices. This led to bankruptcies in companies in almost all jurisdictions involved in manufacturing of solar cells. The USA, in order to protect its domestic industry, imposed a 70% anti-dumping d