SANDIP KUMAR BAJAJ Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The challenge in this writ petition is to a notice issued by the respondent State Bank of India to the petitioners by which the petitioners have been called upon to show cause and make submissions in writing within 30 days from the date of receipt of the notice as to why their names should not be included in the list of wilful defaulters as per the Reserve Bank of India (RBI) Guidelines. The Show Cause Notice dated 14th November, 2019 was followed by correspondence between the parties culminating in a notice for personal hearing dated 6th August, 2020 by which the petitioners were called upon to personally appear before the Wilful Defaulter Identification Committee on 24th August, 2020 at a specific time. Both these notices have been challenged in this writ petition and the petitioners seek cancellation of these notices.

(2.) The petitioners claim to be the erstwhile promoters/directors of Mohan Motors Udyog Private Limited (the Company) which is presently in a Corporate Insolvency Resolution Process (CIRP) under the relevant provisions of The Insolvency and Bankruptcy Code 2016 (IBC). The insolvency proceedings commenced on 17th March, 2020 by an order of the National Company Law Tribunal, Kolkata Bench.

(3.) The contentions of Mr. Sabyasachi Chowdhury, learned counsel appearing for the petitioners, are two-fold. Counsel submits that by reason of the moratorium under section 14 of the IBC being operational in respect of the Company, proceedings under the master circular of the RBI for being declared as wilful defaulters should be stayed during the operation of the moratorium period. The second limb of Mr. Chowdhury s argument is that the impugned Show Cause Notice dated 14th November, 2019 and the notice of hearing dated 6th August, 2020 are bad by reason of the fact that they have not been issued by the committee which is empowered to do so under the RBI Master Circular on Wilful Defaulters, 2015. Counsel submits that a notice was initially given on 13th September, 2019 on an appropriate committee examining the conduct of the account of the Company and concluding that a wilful default has been committed. The notice had the heading Gujarat NRE Coke Ltd . On the mistake being pointed out to the Bank by the Company by its letter dated 31st October, 2019, the respondent no. 1 (State Bank of India) issued a fresh notice dated 14th November, 2019 which is the impugned notice in this case. Counsel submits that the notice does not disclose the particulars of the appropriate committee which has allegedly examined the conduct of the account and the credit facilities of the Company and also fails to disclose the particulars of the alleged meeting where the conduct of the Company has been examined. It is submitted that the notices do not disclose the satisfaction of the Identification Committee and is not in consonance with the relevant clause of the RBI circular. Counsel relies on Atlantic Projects Limited versus Allahabad Bank, a decision of a learned Single Judge of this court in W.P. No. 7471 (W) of 2019 where the court held that the requirement of clause 3(b) of the Master Circular must be discharged by the Identification Committee before a show-cause notice can be issued. According to counsel, Atlantic Projects held that clause 3(b) requires application of mind by the Identification Committee at all stages before a show-cause notice can be issued on a defaulting borrower.