ORDER :

The lis involved in both the writ petitions and the respondents are same, both the writ petitions were heard together and decided by way of this common order.

2. These two writ petitions are filed to declare the minutes of resolution/order of 3rd respondent dated 25.08.2022 communicated to the petitioner vide letter dated 14.09.2022 confirming the minutes and resolution/order of 2nd respondent in minutes of meeting No.15/2021-22, dated 09.12.2021 wherein the petitioner was declared as willful defaulter, as illegal and consequently quash the same.

3. Heard Sri P. Somasekhara Naidu, the learned counsel for the petitioners, Sri M. Raghavendra Satya Gopal, learned standing counsel appearing for respondents. Perused the record.

(For the sake of convenience, the parties are referred to as they are referred in W.P.No.36248 of 2022).

4. The grievance of the petitioners is that respondent Nos.2 and 3 have passed the impugned orders dated 09.12.2021 and 25.08.2022 without following the procedure laid down under RBI Master Circular on willful defaulters dated 01.07.2015 and also in violation of the principle laid down by the Apex Court.

5. According to the petitioner in W.P.No.36248 of 2022, he is the erstwhile Director of M/s Lanco Solar Private Limited (LSPL). Whereas, according to the petitioner in W.P.No.27283 of 2022, he joined service in LSPL in the year 2010 as Chief Operating Officer-Manufacturing (COOM) and was promoted as whole time Director on 26.11.2012 in his professional capacity. Though he was designated as whole time Director, he was in charge of the technical issues pertaining to the manufacturing of solar materials such as poly silicon and modules of the borrower and he had no role in the financial dealings of the borrower. He had continued in the said capacity till 08.02.2017 and he had submitted resignation to the directorship of the said company.

6. According to the petitioners in both the writ petitions, 2nd respondent/Identification Committee and 3rd respondent/Review Committee without following the procedure laid down under RBI Master Circular on willful defaulters, passed orders dated 09.12.2021 and 25.08.2022.

7. In view of the aforesaid specific contentions, it is relevant to note that Clause No.3 of the said Master Circular on willful defaulters dated 01.07.2015 of RBI, deals with mechanism for identification of willful defaulters. The said Clause is relevant and it is extracted below:-

Clause No.3:- Mechanism for identification of Wilful Defaulters:-

The mechanism referred to in paragraph 2.5 above should generally include the following:-

(a) The evidence of wilful default on the part of the borrowing company and its promoter/whole-time director at the relevant time should be examined by a Committee headed by an Executive Director or equivalent and consisting of two other senior officers of the rank of GM/DGM.

(b) If the Committee concludes that an event of wilful default has occurred, it shall issue a Show Cause Notice to the concerned borrower and the promoter/ whole time director and call for their submissions and after considering their submissions issue an order recording the fact of wilful default and the reasons for the same. An opportunity should be given to the borrower and the promoter/ whole-time director for a personal hearing if the Committee feels such an opportunity is necessary.

(c) The Order of the Committee should be reviewed by another Committee headed by the Chairman/Chairman & Managing Director or the Managing Director & Chief Executive Officer/CEOs and consisting, in addition, to two independent directors/non-executive directors of the bank and the Order shall become final only after it is confirmed by the said Review Committee. However, if the Identification Committee does not pass an Order declaring a borrower as a wilful defaulter, then the Review Committee need not be set up to review such decisions.

8. As per the aforesaid clause, the Identification Committee shall examine the evidence of