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IN THE HIGH COURT OF JUDICATURE AT MADRAS
N.SATHISH KUMAR
Kambala Bapiraju – Appellant
Versus
Indian Overseas Bank – Respondent
| Table of Content |
|---|
| 1. petitioner challenges willful defaulter declaration. (Para 1 , 2) |
| 2. rbi circulars define standards for willful default classification. (Para 3 , 11) |
| 3. arguments presented surrounding the rbi guidelines. (Para 4 , 5) |
| 4. court finds lack of evidence for culpability of non-executive director. (Para 10 , 12) |
| 5. final decision to quash the order declared. (Para 13) |
ORDER :
2. The petitioner is the Non Executive Director of ‘M/s. Sai Regency Power Corporation Private Limited’ [‘SRPCPL’ for short]. The petitioner was appointed as Non Executive / Non whole time Director of SRPCPL on 05.07.2005 with no involvement in the company’s day today activities and his limited role is reflected in the statutory filings, i.e., Form 32 and Form MGT-7 and SRPCPL’s annual reports. The SRPCPL is a power generation company and has entered liquidation under the NCLT in 2019- 2020. The first respondent has issued a show cause notice on 21.01.2021 alleging default by SRPCPL. The said notice lacks particulars such as the quantum of loan procured by the borrower, the dues to be paid by the borrower, chain of transactions to establish any siphoning, etc., The petitioner has sent a reply to the sai
A non-whole time director cannot be classified as a wilful defaulter unless there is conclusive evidence of their awareness and consent regarding the default, as per RBI guidelines.
A Non-Whole Time Director cannot be classified as a Wilful Defaulter without clear evidence of knowledge or consent regarding the default, as stipulated by the RBI Master Circular.
A declaration of wilful defaulters against non-executive directors requires specific allegations of involvement in the company's financial decisions; otherwise, it violates principles of natural just....
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.
The declaration of a wilful defaulter must adhere to principles of natural justice, requiring access to relevant documents for a meaningful defense.
The central legal point established in the judgment is the requirement for banks to follow a specific procedure, including issuing a show cause notice, granting a personal hearing, and passing a reas....
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