A declaration of wilful default under the Master Circular requires objective consideration of facts, particularly the source of funds for investments, which must be borrowed funds to invoke liability.

JUDGMENT

Purushaindra Kumar Kaurav, J.

1. This writ petition is filed by the petitioner under Article 226 of the Constitution of India challenging the validity of the impugned order dated 23.3.2023 passed by the Review Committee of the Respondent i.e., the Bank of Baroda ("respondent-Bank"), whereby, the decision dated 19.8.2022 taken by the Committee of Executives ("CoE"), declaring the petitioner as wilful defaulter under the "Master Circular on Wilful Defaulters, 2015" ("Master Circular"), issued by the Reserve Bank of India ("RBI"), was confirmed.

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, Uttar Pradesh, Madhya Pradesh and Haryana. Petitioner's company has availed loan facilities amounting to thousands of crores and it is stated that there has never been any default in servicing the debt since inception.

3. However, it is alleged that the respondent-Bank sought to declare the petitioner as a wilful defaulter with respect to his association in another company known as Moser Baer India Ltd. ("MBIL") under the Master Circular, thereby, depriving the petitioner from availing credit facilities for his present and prospective business enterprises.

4. It is stated that MBIL was founded in 1983 by the father of the petitioner namely, Mr. Deepak Puri. MBIL diversified into manufacturing of floppy diskettes, CDs and DVDs. Between 1993 to 2005, it was the second largest disk manufacturer in the world. During 2000-2004, Warburg Pincus Group ("WPG") invested in MBIL and a Shareholder's Agreement dated 17.6.2000 was executed, which had a condition that the petitioner shall be a Director of MBIL till the time WPG is a shareholder in MBIL. Accordingly, the petitioner became a Director of MBIL on 19.7.2000, which is reflected in Form-32 filed by MBIL with the Registrar of Companies ("RoC").

5. It is the case of the petitioner that MBIL flourished as the business of CDs and DVDs was a lucrative business. However, with the emergence of newer platforms of storage, CDs and DVDs started becoming obsolete and could not sustain the growth trajectory.

6. It is stated that in order to look for more financially viable fields, MBIL entered into other forays and formed two subsidiaries namely, Moser Baer Photo Voltaic Limited ("MBPV") (now known as Helios Photo Voltaic Limited) in 2005 and Moser Baer Solar Limited ("MBSL") in 2007, respectively. These companies were created to manufacture solar cell modules which was upcoming technology as countries attempted to move towards clean energy. The solar business of the subsidiaries was valued at more than USD 1 billion and several investors invested in the same with investments of around USD 193.50 million from global investors like IDFC, Nomura, Morgan Stanley, GIC, CDC etc. under two Investor Agreements.

7. In 2006, MBIL had availed a loan facility from the respondent- Bank and certain other banks. The respondent-Bank had sanctioned the loan facility by sanction letters dated 12.12.2006 and 24.4.2010.

8. It is stated that the global financial crisis in the year 2007 and the dumping of solar panels by Chinese companies severely impacted the business of MBIL and its subsidiaries. Several applications were filed seeking imposition of anti-dumping duties. The Directorate of Anti- Dumping in India made a recommendation to the Government to impose anti-dumping duties a