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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
NAGESH BHEEMAPAKA
Vidyasagar Parchuri – Appellant
Versus
State Bank of India, Rep. by its Authorised Representative – Respondent
ORDER :
NAGESH BHEEMAPAKA, J.
Petitioners state that Respondent No.1, a public sector bank forming part of a consortium of lenders to Respondent No.2 company, has unjustly and unlawfully classified both the Petitioners and Respondent No.2 as willful defaulters in violation of the RBI Master Circulars on willful default. It is stated, Respondent No.2 company was engaged in the manufacture of hybrid seeds, an activity heavily dependent on climatic conditions. The unprecedented drought of 2012-13 severely affected agricultural output across multiple States, resulting in crop failure and causing severe disruption to the company's seed production, revenues and liquidity. They assert that this natural calamity was the primary cause of financial distress, leading to temporary inability to service loan obligations, and that there was no deliberate or intentional default on their part. It is also stated, during this critical period, the consortium banks, including Respondent No.1, failed to release sanctioned working capital, failed to disburse the approved Pre-CDR Priority Debt, delayed approval of CDR package, delayed execution of Master Restructuring Agreement, and made only partial disbur
Court found that the classification as willful defaulters complied with RBI guidelines, with no violation of procedural rights or natural justice principles, thus dismissing the writ petition.
Classification of corporate debtors as wilful defaulters requires adherence to RBI guidelines, and failure to establish procedural violations will not warrant judicial intervention.
Banks classified as private corporations are not subject to writ jurisdiction under Article 12 of the Constitution; compliance with RBI directives is necessary for classifying borrowers as 'willful d....
The main legal point established in the judgment is that the actions of the borrower-Company, including non-repayment, diversion of funds, and disposal of assets, constituted wilful default under the....
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 main legal point established in the judgment is the requirement for quasi-judicial authorities to act fairly, provide an opportunity of personal hearing, and pass reasoned orders in accordance wi....
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.
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