VISHAL SHREYAS DOSHI Vs. BANK OF INDIA

JUDGEMENT

(1.) By the present writ petition filed under Article 226 of the Constitution of India, the Petitioners have sought the order setting aside the Show Cause Notice dated 23 rd July 2024 (impugned SCN) and the subsequent order dtd. 3/7/2025 (impugned Order) passed by the Respondent Bank by which it has declared the account of the Petitioners' erstwhile company, Shrenuj and Co. (Company) as 'fraud'.

(2.) The Petition asserts that the Company was the flagship entity of the Shrenuj Group dealing in cut and polished diamonds, jewellery manufacturing, branding and retailing and since 1982, it had a banking relationship with a consortium of various banks (BOI Consortium) with the Respondent as its lead member. Until the Financial Year (FY) 2015-16, the Company was regularly servicing the loans extended by the BOI Consortium and as on 31 st March 2016, a sum of about Rs.1536.00 crores had been sanctioned from the BOI Consortium to the Company with approximately Rs.205.00 crores therefrom, being sanctioned by the Respondent.

(3.) The Petition further asserts that on account of the slowdown in the gem and jewellery industry, high inventory and delayed payments from its customers, the Company suffered a loss in FY 2015-16, as against a profit in the previous FY 2014-15 and this led to a sharp fall in the financial condition of the Company which ultimately resulted in it being unable to service its dues. This resulted in the Company's account being classified as a Non- Performing Asset (NPA) by the banks comprised in the BOI Consortium in the year 2015. In or about September 2015, it is asserted that the BOI Consortium constituted itself as a Joint Lender's Forum (JLF) under the RBI guidelines applicable at the relevant time and on 8/10/2018, the Respondent appointed M/s. Kirtane & Pandit LLP (Forensic Auditors) on behalf of the JLF, to conduct a forensic audit of the Company.