IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 16.03.2026 CORAM THE HON’BLE MR JUSTICE M.DHANDAPANI and WMP.No.22714 of 2024 Anil Kumar Ojha .. Petitioner Vs.

The Manager, Union Bank of India, (Corporation Bank), 12, Ormes Road, Kilpauk, Chennai-600 010. .. Respondent Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for a Writ of Certiorari to call for the records pertaining to the impugned order dated 09.03.2018 passed by the respondent declaring the petitioner’s account as fraud and to quash the same as being arbitrary, illegal, violative of the principles of natural justice.

For Petitioner : Mr.Suhrith Parthasarathy for M/s.Adithya Varadarajan For Respondent : Mr.M.Muthuperiasamy

ORDER

This Writ Petition is filed challenging the impugned order of the respondent dated 09.03.2018, in and by which the petitioner’s bank account was declared as fraud for the default committed by the petitioner’s company in repayment of loan.

2. The learned counsel appearing for the petitioner would submit that the petitioner is one of the Directors of the company called M/s.SLO Industries Ltd., which availed credit facility from the respondent bank For the default committed by the petitioner’s company, the petitioner’s bank account was declared as fraud, vide impugned order dated 09.03.2018. According to the petitioner, the said impugned order was passed without any providing opportunity to the petitioner and also in blatant violation of the principles of natural justice. Similar issue was dealt by the Hon’ble Apex Court in the decision in State Bank of India and Others v. Rajesh Agarwal and Others [(2023) 6 SCC 1], in and by which the Master Circular issued by the RBI in “Frauds – Classification and Reporting” came up for consideration, wherein the Hon’ble Supreme Court observed that Clause 8.9.6 of the Master Directions on Frauds contemplates that the entire exercise commencing from the detection of fraud by an individual bank upto the declaration of fraud is to be completed within six months and before classifying the borrower as fraud, it is mandatory to issue show cause notice and thereafter to pass orders. However, contrary to the order of the Hon’ble Supreme Court, the present impugned order came to be passed and as such, the same is liable to be set aside.

3. Per contra, learned counsel appearing for the respondent bank would submit that the Master Circular came into effect only after 2018 and before that, there is no Master Circular available for providing opportunity to the borrower before declaring as Fraud and in the present case, the petitioner company have availed credit facility and committed default and thereby the respondent bank has initiated recovery proceedings on the file of the Debt Recovery Tribunal in T.A.No.1/2017 and the declaration of the petitioner company as fraud would amounts to cautioning the other banks before advancing loan to the petitioner company and further, as per the Master Circular there is no provision available to issue show cause notice before passing the impugned order and prays for dismissal of the writ petition.

4. Heard the learned counsel on either side and perused the materials on record.

5. The facts are not in dispute. Admittedly, the petitioner company availed credit facility from the respondent Bank and committed default in payment of loan amount and recovery proceedings is pending consideration before the Debt Recovery Tribunal in T.A.No.1 of 2017. The dictum laid down in the judgment of the Hon’ble Supreme Court in Rajesh Agarwal’s case (cited supra) does not apply retrospectively and it can be applied only prospectively. It is seen that the impugned order declaring the petitioner Company as Fraud was issued in the year 2018, however the writ petition came to be filed only in the year 2024 and at this distant point of time, no useful purpose would be served in setting aside the impugned order and remanding the matter back to the respondent. Therefore, without s