The classification of individuals as wilful defaulters must be supported by sufficient evidence and adhere to procedural requirements set by RBI guidelines; mere assumptions are inadequate.

ORDER :

Prayer in WP.No.34669 of 2023: Writ Petition filed under Article 226 of the Constitution of India praying to issue Writ of Certiorari calling for the records of the Review Committee of Respondent in the impugned Order No.WDRC/24/(FY2023-24)/WPEL dated 12.10.2023, quash the same.

Prayer in WP.No.34679 of 2023: Writ Petition filed under Article 226 of the Constitution of India praying to issue Writ of Certiorari calling for the records of the Wilful Defaulters Review Committee of Respondent in the impugned Order No.WDRC/24/(FY2023-24)/WPEL dated 12.10.2023, quash the same.

Prayer in WP.No.34662 of 2023: Writ Petition filed under Article 226 of the Constitution of India praying to issue Writ of Certiorari calling for the records of the Review Committee of Respondent in the impugned Order No.WDRC/24/(FY2023-24)/WPEL dated 12.10.2023, quash the same.

The Writ Petitioners were Directors in Winwind Power Energy Private Limited (in short ‘Company’). They challenge proceedings of the Defaulters Review Committee (DRC) of the IDBI Bank on various grounds.

2. Mr.P.V.Balasubramanian and Mr.A.K.Sriram, learned Senior Counsels appear for Mr.R.Palaniandavan, learned counsel on record for the petitioners in W.P.Nos.34669 and 34662 of 2023, Mr.T.Mohan, learned Senior Counsel appears for Vivriti Law, learned counsel on record for the petitioner in W.P.No.34679 of 2023 and Mr.Omprakash, learned Senior Counsel appears for M/s.Ramalingam Associates, for the respondent bank.

3. The submissions of the petitioners are as follows:

i) All petitioners accede to the factum of Directorship in the company.

ii) They accede to the fact that the company had availed financial facilities from IDBI.

iii) None of the petitioners are either direct borrowers, nor are they co-borrowers/guarantors in respect of the loan facilities availed by the company.

iv) The loan account of the company was classified as a Non-Performing Asset (NPA) on 30.09.2014, with effect from 30.06.2012.

v) While an ambiguity has been raised as to how the classification as NPA would be with effect from 30.06.2012 as the loan facility was re-structured only on that date, it has been explained by the bank as follows:

a) It is true that on defaults by the company, there was a request for re-structuring which was also accepted and the financial arrangement restructured on 29.06.2012.

b) However, the defaults in repayment continued and hence the loan account was classified as NPA on 30.09.2014.

c) On classification as NPA, the date would revert back to the original date when the defaults had been identified and the loan restructured and hence the classification as NPA would run from the original date of default onwards.

d) This is the procedure that is followed in accordance with the Reserve Bank of India (RBI) mandate in this regard.

vi) The above explanation is accepted as being proper and appropriate and in accordance with the extant Rules of RBI.

vii) The company had gone into Corporate Insolvency Resolution Process (CIRP) in 2018 under the provisions of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’).

viii) It was transferred as a going concern to Agniti Industrial Parks Private Limited on 14.10.2020 and the take-over was approved by the National Company Law Tribunal (NCLT), Chennai on 08.02.2021.

ix) Only thereafter, in 2022, did the bank wake up and examine the accounts of the company.

x) A show cause notice was issued on 16.06.2022 alleging wilful default in respect of the financial facilities availed by the company.

xi) Replies had been sent by the petitioners on various dates.

xii) The constitution of the wilful Defaulters Identification Committee (Identification Committee) was unknown to the petitioners, despite a specific request for the same having been made in the replies to the show cause notices.

xiii) In sum and substance, the reply of the petitioners was that they had no liability in respect of the defaults committed by the company as they were neither borrowers nor co-borrowers nor