2020 (8) TMI 951 - HC - Companies Law

Seeking a direction to quash the communication/notice issued by respondent No. 1/Bank - Wilful Defaulter or not - petitioner has submitted that the entire proceedings initiated to declare the petitioner as a wilful defaulter are misplaced and illegal and contrary to the Circular of RBI pertaining to declaration of wilful defaulters dated 01.07.2015 - HELD THAT - It would be appropriate for the petitioner to appear before the Wilful Defaulter Identification Committee of the Bank for a personal hearing which has been fixed for tomorrow. The petitioner may appear before the Wilful Defaulter Identification Committee and is free to raise all the submissions raised herein before the said Committee. At this stage, learned senior counsel for the petitioner states that the time to prepare for the personal hearing is very short as the hearing is to be held tomorrow - Liberty is granted to the petitioner to appear before the Wilful Defaulter Identification Committee and make a request for a short adjournment to an appropriate date which is suitable to the said Committee. In case such a request is made, the Committee is requested to consider the same favourably. Keeping into account the facts and circumstances of the case, especially, the fact that on the same facts multiple proceedings have been commenced against the petitioner, the petitioner is also given liberty to file written submissions within two weeks from today before the Wilful Defaulter Identification Committee - The Identification Committee may deal with the submissions of the petitioner as per law and pass an appropriate reasoned order. Petition disposed off.

Summary

Issues:
1. Petition seeking to quash a communication/notice issued by a bank.
2. Allegations of wilful default against the petitioner by the bank.
3. Legal challenge to the proceedings initiated by the bank.
4. Request for representation through a counsel during the proceedings.
5. Alternate remedy available to challenge the decision of the Wilful Defaulter Identification Committee.
6. Appropriate course of action for the petitioner in light of the circumstances.

Analysis:
The petitioner filed a writ petition seeking to quash a notice issued by the bank regarding wilful default allegations. The petitioner claimed to have resigned as a Director of the Company in question in 2012 and argued that the bank's actions were contrary to RBI Circulars. The petitioner contended that as they were neither a promoter nor a whole-time director at the relevant time, the bank lacked jurisdiction to proceed under the Master Circular. Reference was made to a judgment of a Coordinate Bench in a similar case to support the argument for legal representation during proceedings.

The respondent opposed the petition, highlighting the availability of an alternate remedy to challenge the decision before the Review Committee. Citing a Supreme Court judgment, the respondent argued against the petitioner's request for legal representation. The court directed the petitioner to appear before the Wilful Defaulter Identification Committee for a personal hearing, allowing the petitioner to raise all submissions before the Committee. The petitioner was granted liberty to request a short adjournment and file written submissions within two weeks.

Considering the multiple proceedings against the petitioner, the court granted the petitioner the right to file written submissions before the Committee and directed that any order passed by the Committee should not be made public for four weeks. The petitioner was entitled to receive a copy of the reasoned order promptly. The court disposed of the petition with these directions, allowing the petitioner to take further legal steps if unsatisfied with the Committee's decision, without prejudice to the parties' rights and contentions.