JUDGMENT :

1. Heard learned advocate Mr. Anand B. Gogia for the petitioners and learned advocate Mr. Bhaskar Sharma for respondent nos.1 and 2.

2. Rule returnable forthwith. Learned advocate Mr. Bhaskar Sharma waives service of notice of rule on behalf of respondent.

3. By this petition under Article 226 of the Constitution of India, the petitioners have challenged the order dated 09.08.2018 passed by respondent - Bank of Baroda, whereby the petitioners were declared as “Willful Defaulters” and also challenged show cause notices dated 07.04.2018 and 04.06.2018.

4. Brief facts of the case are as under :

4.1) The petitioner no.1 is a partnership firm registered under the Indian Partnership Act. Petitioner nos. 2 and 3 are the partners of the firm.

4.2) The petitioners are the borrowers of respondent bank and had availed the loan facilities.

4.3) For default in payment of loan availed, the respondent bank issued notice dated 14.10.2015 under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘the SARFAESI Act’) stating that loan account of the petitioners has been classified as Non Performing Asset (NPA) and the bank has to recover total Rs.23,65,33,962.51 as on 30.06.2015.

4.4) The petitioners thereafter received notice dated 07.04.2018 from the respondent bank calling upon to show cause why the petitioners should not be declared as willful defaulter and to classify the account as willful defaulter.

4.5) The petitioners made a representation dated 25.04.2018 against the show cause notice refuting the allegations made in the show cause notice.

4.6) The petitioners thereafter received a notice dated 4.06.2018 giving them personal hearing. The petitioners had attended such personal hearing and given written submissions dated 20.06.2018.

4.7) It is the case of the petitioners that without considering any averments made in the written submissions filed by the petitioners, the respondent bank passed the final order dated 09.08.2018.

4.8) Being aggrieved by the aforesaid action of the respondent bank, the petitioners have preferred the present petition.

5. Learned advocate Mr. Gogia for the petitioners submitted that the petitioners have been classified as willful defaulter without complying with the procedure prescribed in Clause 3 of the Circular of the RBI in respect of the classification of the willful defaulter and no reasons have been assigned for classifying the petitioners as willful defaulter and the petitioners have been classified as willful defaulter in violation of principles of natural justice.

6. It was submitted that the Committee which has held the petitioners to be willful defaulters and which has decided the appeal of the petitioners was not constituted in accordance with the RBI guidelines.

7. Learned advocate Mr. Gogia for the petitioners submitted that the classification of the petitioners was required to be done in terms of the RBI guidelines contained in the master circular of willful defaulter. Clause 3 of the circular provides for the Grievance Redressal mechanism and contains the procedure to be followed for taking a decision to classify the borrower as willful defaulter and in deciding the representation against the decision by the Grievance Redressal Committee as also the constitution of the Committee. Clause 3(ii) of the circular provides that the decision on classification of willful defaulter should be well documented and supported by the requisite evidence and the decision should clearly spell out the reason for which the borrower has been declared as willful defaulter vis-a-vis the guidelines. However, the impugned decision does not contain any reason whatsoever and it simply mentions that Review Committee is left with no option except to confirm the decision of the Committee. Thus, the decision was already taken, before the final decision dated 09.08.2018 and there is no independent application of mind by Grievance Redressal Committee and theref