JUDGMENT

(Prayer: Writ Petition filed Under Article 226 of the Constitution of India, to issue a Writ of Certiorari, to call for the records on the file of the respondents and to quash the impugned order in OR:ADV:245:2014-15 dated 6.9.2014 passed by the 3rd respondent.)

The relief sought for in all the present writ petitions is to quash the impugned order passed by the 3rd respondent in proceedings in OR:ADV:245:2014-15 dated 06.9.2014.

2. The writs on hand have been instituted, questioning the validity of the order dated 06.09.2014 passed by the third respondent, declaring the writ petitioners as “Wilful defaulters”.

3. The petitioners are Best & Crompton Engineering Project Limited, Represented by its Managing Director, and its Board of Directors. The history as narrated in the affidavit regarding the formation and development of the Company may not require an adjudication in the present writ petitions as the order under challenge is the order passed by the respondent-Corporation Bank, now amalgamated with the Union Bank of India, declaring the petitioners as 'Wilful defaulters'.

4. The learned counsel for the petitioners mainly contended that the procedures followed for declaring the petitioners as 'Wilful Defaulters' are directly in violation of the Directives of the Hon'ble Supreme Court of India in the case of State Bank of India Vs. Jah Developers Private Limited and Others, reported in (2019) 6 SCC 787.

5. It is an admitted fact that the petitioners are defaulters and not paid the dues. However, an opportunity must be provided to the petitioners and merely declaring the petitioners as 'Wilful defaulters' will result in serious adverse consequences in running the Company and therefore, the order impugned is to be revisited with reference to the Directives issued by the Apex Court and accordingly, the writ petitions are to be allowed.

6. The learned counsel for the petitioners drew the attention of this Court with reference to the order impugned, which was issued by the Assistant General Manger as per the Directives of the Apex Court of India. The Assistant General Manager is not a competent authority and a decision must be taken by the Committee constituted by the Chairman and the General Managers and in the present case, such a procedure had not been followed and thus, the order impugned is in violation of the procedures as contemplated.

7. No doubt, a Show Cause Notice had been issued and the petitioners also responded to the Show Cause Notice by submitting their explanations. Regarding initiation of Wilful default proceedings, the respondent-Bank issued a letter about Mechanism for Redressal of the Grievance. However, they have not followed the procedures as contemplated.

8. The learned counsel for the petitioner solicited the attention of this Court with reference to the serious consequences in the event of classifying a Company as a 'Wilful defaulter'. In view of the fact that the petitioners have been declared as defaulters, no additional facilities to be granted by any Bank/Financial institutions, Entrepreneurs/Promoters would be barred from institutional finance for a period of 5 years, Any legal proceedings can be initiated, including Criminal complaints, Banks/Financial institutions to adopt a proactive approach in changing the management of the Wilful defaulter, Promoter/Director of wilful defaulter shall not be inducted by another borrowing company. As per Section 29-A of the Insolvency and Bankruptcy Code, 2016, a wilful defaulter cannot be a resolution applicant.

9. This being the serious consequences of declaring the petitioners as the 'Wilful defaulters', the respondent-Bank ought to have taken adequate care to ensure that the procedures had been followed strictly in consonance with the Directives issued by the Supreme Court of India. But in the present case, its is not followed and thus, the order impugned is liable to be set aside.

10. The learned counsel appearing on behalf of the respondent-Bank objected the s