Debt Recovery

On going though the documents which have been filed along with reply and writ petition, it is found that Committee has taken into consideration the evidence available on record for identification of petitioners as willful defaulter. Show cause notice was issued to petitioners on 04.07.2020. On going through the said notice, it is found that evidence, facts and other material which is available against petitioners have not been referred to in the notice and only reasons are given for identification of petitioners as willful defaulter. In show cause notice evidence and facts which were considered by Committee for identification was not supplied to petitioners. Since, material available with the Bank and facts relied upon by Bank for identification of petitioner as willful defaulter has not been supplied to petitioners, therefore, petitioners do not have adequate and proper opportunity of hearing. Mechanism provided by RBI in Master Circular dated 01.07.2015 in Clause-3(B) has not been followed.(p10) Bank considered representation of petitioners through its Advocate and same was communicated on 16.07.2022 to petitioners. Representation of petitioners was rejected on ground that powers for identification of a person or company as willful defaulter is administrative in nature. Lawyer has no right to appear before said Committee and reliance was placed on State Bank of India Vs. M/s. Jah Developers Pvt. Ltd. and Ors. (2019) ibclaw.in 136 SC and representation was rejected by Advocate of Bank. Representation of petitioners as per Clasue-3(B) is to be considered by Committee and not by an Advocate, Therefore, mechanism under Clause-3(B) was violated.(p11) On going through communication dated 08.10.2021, it is found that in paragraph-16 it is mentioned by respondents that there is no provision of review as envisaged by RBI, therefore, decision on representation is to be treated as a letter and not a decision in review. Further considering the minutes of meeting dated 09.03.2022, it is found that 14 accounts were submitted for review to Review Committee of willful defaulters which included the case of petitioners company i.e. M/s Sanwaria Consumer Limited but Review Committee has only considered the case of seven companies for review. Case of petitioners for review was not considered by Review Committee. In view of aforesaid facts and circumstances of the case, there is violation of RBI Master Circular dated 01.07.2015.(p12-13) Hon’ble Court concluded that orders dated 12.08.2021, 08.10.2021, 22.03.2022 and 04.08.2021, are quashed. Respondents-Bank is directed to issue show cause notice to petitioners along with material which was considered in minutes of meeting for identification of petitioners as willful defaulter. Thereafter, petitioners’ representation shall be considered by the Committee in accordance with Master Circular of RBI dated 01.07.2015 and also opportunity of personal hearing be provided to Director, Borrower or Promoter before Committee and further order passed by Committee shall be supplied to petitioner and representation, if any, be considered by Review Committee in accordance with Master Circular of RBI dated 01.07.2015 and procedure as envisaged in Jah Developers