LAGADAPATI MADHUSUDHAN RAO Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The present appeal has been filed by the appellants being aggrieved by the order dtd. 13/3/2023, passed by the learned Single Judge in W.P.(C) 12672/2022. The said writ petition was filed by the appellants seeking (i) setting aside of the letter dtd. 19/8/2022 issued by the respondent, whereby the appellants have been declared as Wilful Defaulters; and (ii) setting aside of the decision taken by the Identification Committee of the respondent bank on 27/7/2022 identifying the appellants as Wilful Defaulters.

(2.) By the aforesaid impugned order dtd. 13/3/2023 the learned Single Judge has dismissed the writ petition filed by the appellants and has granted liberty to the appellants to file a detailed representation within 10 days from the date of the said order before the Review Committee under the RBI Master Circular, which would be considered by the said Review Committee, and a reasoned order passed thereon. The contention of the appellants that relevant documents were not supplied to them was also left open to be considered by the Review Committee. The said order reads as under:-

(3.) The contention of the appellants in the present appeal is that the learned Single Judge failed to appreciate that there has been breach of principles of natural justice inasmuch as the appellants have been declared as Wilful Defaulters by the respondent without being given an opportunity to make submissions before the Identification Committee. It is submitted that the learned Single Judge has failed to appreciate that the respondent bank has failed to follow the procedure as prescribed under clause 3 of the RBI Master Circular bearing No. DBR No. CID.BC.22/20/16/3/2015-16 dtd. 1/7/2015[Master Circular"]read with judgment of the Supreme Court in State Bank of India v. Jah Developers Put. Ltd. & Ors.,(2019) 6 SCC 787 It is stated that basis of such declaration against the appellants is a Forensic Audit Report/Transaction Audit Report, yet the appellants were provided only with the relevant extracts of the said report, instead of the full report and the appellants were constrained to obtain the said report from another bank of the consortium. It is contended that the learned Single Judge has failed to appreciate that the respondent bank has not provided the appellants with any document, material or evidence (except for two pages of Forensic Audit Report), which have been relied on by the respondent bank, before declaring them as a Wilful Defaulters. It is submitted that no effective representation could be made by the appellants before the Identification Committee due to unavailability of the said documents. It is contended that till the time all such documents substantiating the event of wilful default are provided to the appellants, the proceedings before the Review Committee will be an exercise in futility. It is also contended that the scope and ambit of the Review Committee is limited and it only looks into the correctness of the decision- making process followed by the Identification Committee and therefore, the same is not an efficacious remedy. The appellants thus contend that the impugned order dtd. 13/3/2023 be set aside.