Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Kar) 24091

THE HIGH COURT OF KARNATAKA
Lalitha Kanneganti, J
T. Varadaraj Pai – Appellant
Versus
Union of India – Respondent
WRIT PETITION NO. 3043 OF 2026

Advocates:
For the Appellants/Petitioners: Vinayak Kamath K.
For the Respondents: Swamini Ganesh Mohanambal, Prakasha Hegde K.

The issuance of a show cause notice by an authorized official under the direction of a properly constituted Identification Committee, even if the Master Circular implies the Committee itself should issue it, does not invalidate the proceedings if it does not prejudice the petitioner's right to a fair hearing.

Headnote:(A) Master Circular on Willful Defaulters, 2015 - Clause 3 - Identification Committee - Procedural deviation in issuance of show cause notice - Whether notice issued by Chief General Manager instead of the Committee invalidates proceedings - The Court held that when an Identification Committee is duly constituted in terms of the Master Circular and directs the issuance of a notice, the administrative act of the Chief General Manager issuing the notice does not cause prejudice or invalidate the process if the substantive decision-making power remains with the competent Committee. (Para 14)

Facts of the case:
The petitioners sought to quash a notice for declaration as willful defaulters and a forensic audit notice, contending that the show cause notice was issued by an officer (Chief General Manager) not compliant with the specific composition or authority designated under the RBI Master Circular for the identification of willful defaulters.

Findings of Court:
The Court found that the Committee had duly examined the material and arrived at a prima facie satisfaction to initiate proceedings. The issuance of the notice by the Chief General Manager was an administrative act carrying out the Committee's directive, which did not deprive the petitioner of a reasonable opportunity to be heard.

Issues: Whether the issuance of a show cause notice by an officer other than the Identification Committee renders the notice and subsequent proceedings invalid under the RBI Master Circular.

Ratio Decidendi: Procedural requirements in a Master Circular are intended to ensure fairness and reasonable opportunity. Where the substantive decision to initiate proceedings is made by a properly constituted Committee, the subsequent ministerial act of issuing the notice by a directed subordinate does not invalidate the proceedings, provided no prejudice is caused to the party's right to defend themselves.

Result: Writ petition dismissed.

Table of Content
1. petitioner's prayer to quash willful defaulter and forensic audit notices. (Para 1 , 2 , 3)
2. arguments regarding rbi master circular violations in notice issuance. (Para 4 , 5 , 6 , 7)
3. bank's defense regarding proper committee constitution and findings. (Para 8 , 9 , 10 , 11 , 12)
4. court holds administrative notice issuance does not invalidate substantiated committee decisions. (Para 13 , 15)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE NOTICE FOR THE DECLARATION OF WILLFUL DEFAULTER DATED 06.06.2024 ANNEXURE-A.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

ORAL ORDER

The present writ petition is filed seeking the following prayers:

a. To quash the Notice for the declaration of Willful Defaulter dated 06.06.2024 "Annexure-A" issued by the Respondent No.3.

b. To quash the “Annexure-B" Forensic Audit Notice dated 03.12.2025 issued by E-mail by the Respondent No. 2 & 3.

b. Under the facts and circumstances stated in the above petition the Petitioner prays that a direction in the form of a Writ of Quo warrant or any other writ be issued for the Demand Notice (Section 13(2)) dated 16.04.2024Annexure -AG" [Originally Demand Notice (Section 13(2)) dated 04.05.2023 Annexure-E] declaration for the NPA by the Respondent No.2.

d. To issue Writ of Mandamus against the Respondent No.2 to comply with the "ANNEXURE-F" Gazette Notification dated 29.05.2015, "ΑΝΝEXURE-G" RBI, Framework dated 17.03.2016 and "ANNEXURE-H to H2 the COVID-19 to H2 crisis, the RBI, acknowledging the unique vulnerabilities of MSMES, introduced special financial support frameworks under various Resolution Frameworks dated 07.09.2020, 05.05.2021, and 04.06.2021 legally mandated directives before declaring the eligible Petitioner MSME Firms Loan Account as NPA and resultantly to Quash all that proceedings initiated under the provisions of SARFAESI Act, 2002 and RDB Act, 1993 .

e. To issue Writ of Mandamus to the Respondent No. 1 to 3 to adhere to the "ANNEXURE-F" Gazette Notification dated 29.05.2015, "ANNEXURE-G" RBI, Framework dated 17.03.2016 and "ANNEXURE-H to H2 the COVID-19 crisis, the RBI, acknowledging the unique vulnerabilities of MSMEs, introduced special financial support frameworks under various Resolution Frameworks dated 07.09.2020, 05.05.2021, and 04.06.2021 legal mandates and such directives to verify the compliance and to consider the "ANNEXURE-N" The original a formal Request Letter seeking COVID-19 assistance, dated 26.05.2020, "ANNEXURE-P" The original Proposal for Restructuring of Working Capital facilities and Moratorium for the existing term loan supplied Request Letter dated 18.06.2021, The original Proposal for under a "ANNEXURE-Q" Restructuring of Working Capital facilities and Moratorium for the existing term loan supplied under a Request Letter dated 19.06.2021 and "ANNEXURE-R20 The Original online generated reminder letters (emails) on 09.07.2021, 13.08.2021 and 27.09.2021. The representations of the Petitioners before declaration of NPA.

f. Under the facts and circumstances stated in the above petition a direction in the form of a Mandamus or any other writ against the Respondent No.1, 4 and 5 to initiate appropriate legal actions under the law against the Respondent No. 2 and 3 for non compliance of the ANNEXURE-F Gazette Notification dated 29.05.2015, ANNEXURE-G RBI Framework dated 17.03.2016 and ANNEXURE-H the COVID-19 crisis, the RBI, acknowledging the unique vulnerabilities of MSMES, introduced special financial support frameworks under various Resolution Frameworks dated 07.09.2020, 05.05.2021, and 04.06.2021 the legal mandates.”

2. Petitioner is aggrieved by the notice dated 06.06.2024 and also the Forensic Audit Notice initiated by E-mail dated 03.12.2025.

3. Learned counsel appearing for the petitioner has restricted the arguments to prayer Nos.a and b i.e., to quash th

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2026 Supreme(Online)(Kar) 24091

THE HIGH COURT OF KARNATAKALalitha Kanneganti, JT. Varadaraj Pai – AppellantVersusUnion of India – RespondentWRIT PETITION NO. 3043 OF 2026

Cases Referred (1)

THE HIGH COURT OF KARNATAKA
Lalitha Kanneganti, J
T. Varadaraj Pai – Appellant
Versus
Union of India – Respondent
WRIT PETITION NO. 3043 OF 2026