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TMI Blog2024 (5) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioners, based on which the writ petition was filed. Subsequently, having been served with a copy of the detailed minutes of the RC, the same has been annexed to a supplementary affidavit filed in connection with the second writ petition and also brought within the fold of the challenge. 4. Thus, the subject-matter of consideration in the present writ petitions is whether the respondent-Bank, that is, the Central Bank of India was justified in declaring the petitioners to be willful defaulters through its First Committee and in affirming the same in the decision of the RC. 5. Upon hearing learned counsel for the parties, each of the components of challenge is being dealt with separately hereinbelow. 6. The first ground taken by the petitioners is that the sole basis of the First Committee decision was a Transaction Audit Report (TAR) authored by M/s. Deloitte Touche Tohmatsu India, LLP, an Auditor which purportedly carried out a forensic audit of the borrower-Company. A bare perusal of the First Committee decision substantiates the fact that the entire decision is based on allegations levelled in the said TAR. No independent evidence apart from the TAR has been relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of its partners, Directors or employees undertake no responsibility in anyway whatsoever to any user in respect of errors or omissions in the Report including those which may arise from incorrect or incomplete information provided by the Corporate Debtor/Resolution Professional including the representatives. 11. Findings and observations, as noted in paragraph 13 of the Report, may change based on additional information and clarifications provided subsequently to the Auditor. It is reiterated in Paragraph 14 that no warranties or representations with respect to the Report to any user are made and the Report is neither a recommendation nor a professional advice. 12. Importantly, in paragraph 15 it is stated that the findings of the Report are not binding on any person, entity, authority or court and hence, no assurance is given that a position contrary to that expressed therein will not be asserted by any person, entity, authority, etc. The results of the work, it was stated, with respect to review of information provided should be considered only as a guide and not as a definitive pronunciation on an individual, entity, etc. 13. Paragraph 17 boldly asserts that the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissal of the TAR by the NCLT, as affirmed by the NCLAT, the PNB held that the petitioners are not willful defaulters, leaving it open for the Bank to proceed in future on the basis of independent material, if the same comes forth. However, till date, nothing has come forward by way of independent material to substantiate the stand of the respondents. 20. Thus, the reliance on the TAR in the decisions of the First Committee and the RC are entirely de hors the law and perverse. 21. Moreover, in the TAR itself, as reflected in the quoted portions thereof in the Show-cause Notice and the decision of the First Committee, no allegation has been made against the petitioners vis-à-vis the Central Bank, which is the respondent no. 1 in the present writ petitions. Hence, the Central Bank cannot have an additional or independent cause of action beyond that of the lead Bank or the subject-matter of the NCLT proceeding. 22. Even from the averments recorded in the Show-cause Notice and the Willful Defaulter Decision, it is found that the sole allegation, under Clause 2.1.3(b) of the Master Circular, was not substantiated. The said Clause, read with Clause 2.2.1(c), makes it mandato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lead Bank, the PUNJAB NATIONAL BANK, to drop the charges of willful defaulter in terms of the NCLT Order refuting the TAR. 29. On a stand-alone footing, on the other hand, the Central Bank of India has no charges to fall back upon vis-à-vis any transaction done by the petitioners in respect of the Central Bank. Thus, seen from both perspectives, the respondent no. 1-Bank does not have a cause action against the writ petitioners at all. 30. Insofar as the RC decision is concerned, the less said the better. 31. A gross mechanical approach has been adopted by the RC in passing the said order. As many as twenty-one individual entities were clubbed together for the purpose of review of declaration of willful defaulters in a single meeting. The borrower-Company was one of the said entities. In the column "Details of Personal hearing, if any [Stage-(II)]", the Bank has only narrated about the fact that a hearing was given and of the filing of the writ petitions. 32. In Item 21, containing the reasons for willful default, the sole reliance was on the TAR, some of the observations of which were merely quoted. In a cryptic one-liner following such quotation, the RC held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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