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IN THE HIGH COURT OF ORISSA AT CUTTACK
S.K.PANIGRAHI
Gautam Malhotra – Appellant
Versus
IDBI Bank Ltd., Bhubaneshwar – Respondent
| Table of Content |
|---|
| 1. challenge to declaration as wilful defaulters (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. petitioners argue against the declaration (Para 8) |
| 3. opposite party bank justifies actions (Para 9) |
| 4. court's analysis of wilful defaulter process (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 5. court orders removal of wilful defaulter tag (Para 18) |
| 6. writ petition disposed with order (Para 19 , 20) |
JUDGMENT :
1. The Petitioner through this Writ Petition has challenged the action of the Opposite Party Bank in declaring the Petitioners as “wilful defaulters” under the Reserve Bank of India’s Master Circular on Wilful Defaulters dated 01.07.2015.
2. The concise yet comprehensive factual record of the case, pertaining to the matter at hand, is presented succinctly as follows:
4. Clause 3 of the RBI Master Circular dated 01.07.2015 (’RBI Master Circular’) provides for a three-tier mechanism in order to declare any person as a wilful defaulter. The first stage is issuance of a show cause notice in accordance with law providing the basis on which a person is to be identified as a wilful defaulter along with the supporting documents relied upon by the bank.
6. This three stage mechanism is provi
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....
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 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.
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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