Court affirmed that adequate process was followed in declaring the petitioner as a wilful defaulter, satisfying the requirements laid out in the Master Circular issued by RBI.

ORDER

This writ petition has been filed challenging the decision taken by the Wilful Defaulters' Review Committee dated 12.10.2023 declaring the petitioner also as one of the wilful defaulter.

2.The case of the petitioner is that he was inducted as a director (marketing) of M/s.Tecpro Infra Projects Limited on 30.09.2010. This Company was sanctioned credit facilities to the tune of Rs.40 crores by the respondent Bank. It is stated that the petitioner was not involved in the day-to-day affairs of the Company and he was neither a promoter nor a whole time director. Apart from that during his tenure as a director, the Company was repaying the loans without any default. The petitioner submitted his resignation with effect from 02.09.2013. Much later on 22.10.2014, the bank account of the Company was declared as Non-Performing Assets [NPA]. A show cause notice dated 04.11.2022, was served on the petitioner to show cause as to why he amongst others should not be declared as wilful defaulters. The petitioner submitted his reply.

3.The Wilful Defaulters' Review Committee also provided an opportunity to the petitioner and he appeared before the Committee. The Committee was relying upon forensic audit report. The copy of certain pages was selectively given to the petitioner and thereafter the petitioner submitted a detailed reply and sought for dropping further proceedings against him.

4.The grievance of the petitioner is that the Review Committee did not properly consider the reply given by the petitioner and included the name of the petitioner also as a wilful defaulter which according to the petitioner is in violation of the Master Circular issued by the RBI dated 01.07.2015. Aggrieved by the same, the present writ petition has been filed before this Court.

5.The respondent Bank has filed a counter affidavit and they have taken a stand that the present writ petition is not maintainable since the respondent Bank is a private sector bank which does not come within the purview of Article 12 of the Constitution of India.

6.Apart from the above, the respondent Bank has taken a stand that working capital facilities was sanctioned to the Company and the Company defaulted in repayment of the loan as a result of which the loan account became NPA. Proceedings were initiated for recovery of the amount from the Company and its directors.

7.The respondent Bank has taken a stand that the petitioner was effectively involved in the administration of the affairs of the Company and it was found that the amounts borrowed has been transferred to the group compannies which became evident from the forensic audit report dated 28.10.2021. Therefore, the show cause notice was issued and the reply was given by the petitioner and an opportunity of hearing was also given to the petitioner and ultimately the petitioner was declared as a wilful defaulter. It is stated that the decision taken by the respondent Bank is strictly in line with the Master Circular issued by the RBI. Accordingly, the respondent Bank sought for the dismissal of this writ petition.

8.Heard both sides.

9.The only issue that is involved in the present writ petition is as to whether the decision taken by the Review Committee is in line with the Master Circular of the RBI dated 01.07.2015 and it is in line with the judgment of the Apex Court in State Bank of India vs Jah Developers Private Limited and others reported in2019 6 SCC 787 For proper appreciation, para 24 of the judgment is extracted hereunder:

24.Given the above conspectus of case law, we are of the view that there is no right to be represented by a lawyer in the in- house proceedings contained in Para 3 of th