In the case of Kejriwal Mining Pvt. Ltd. and others Vs. Allahabad Bank and another, the petitioners filed a case against the WDIC. The Wilful Defaulters Identification Committee had declared the petitioners as ‘Wilful Defaulters’. The decision is on behalf of the Allahabad Bank i.e. Respondent no. 1 dated 3rd July 2019.
Brief Facts of the Case
The Petitioners Kejriwal Mining Pvt. Ltd. took a loan from Allahabad Bank. The petitioners did not repay despite many notices. Unable to recover any money, the bank went to the Wilful Defaulters Identification Committee for clarifications.
WDIC issued a show-cause notice to the petitioner on 6th April 2019 on behalf of the bank. It advised the petitioners to reply within 15 days. The petitioners asked for various documents from the WDIC, these were promptly supplied by the commission. The petitioners also asked for repeated extensions in the process. After multiple extensions, it fixed a personal hearing with the petitioners on 3rd July 2019.
The petitioner did not show up for the hearing but sent a letter demanding further extension.
Later, the WDIC declared the petitioners as wilful defaulters. According to WDIC, they received a reply to their notice on 3rd July 2019. At this point, the meeting had already begun.
Arguments of the Petitioner
The counsel questioned the validity of the process. He argued that the Assistant Manager of Allahabad Bank was not qualified to be a member of WDIC. He referred to Clause 3 (a) of the Master Circular issued by the RRBI- The Head of WDIC should be an Executive. Thus, the notice declaring the petitioners as Wilful defaulters is unlawful.
He stated that WDIC refused to consider the reply the petitioners sent. But they still declared them wilful defaulters on the grounds of filing the reply late. He questioned the delay in communication by the respondents. He also stated that the petitioners had approached them for settlement. They even made payments from time to time. Petitioner no. 1 accepted to abide by an OTS offer of 16th March 2015. Hence, the classification of the petitioners as wilful defaulters is not credible.
The petitioners submitted that they had purchased assets worth Rs 5, 15, 68, 541 during 2015-2016. For this, they submitted a purported schedule indicating such assets.
He did not agree with the classification on a mere contention of vagueness in reply. He argued that the petitioners gave adequate replies to the Bank’s questions. The petitioners submitted that they did not give fake title deeds. The concerned title deeds dated 29th July were genuine and above suspicion. The parties to the deeds and/or any third party has not disputed the authenticity of the documents.
He agreed that they failed to keep the bank informed of changing the company’s name. But that does not constitute an event of wilful default as per the RBI’s Master Circular.
Arguments of the Respondents
The arguments on behalf of the respondents objected to the credibility of the petition. The learned Counsel made the following arguments:
- The said order of the identification committee is not yet final. The petitioners still have the right to representation. If they were aggrieved, they can appeal to the Wilful Defaulter Review Committee (WDRC). WRDC has the power to review the order of the first committee. Instead, the petitioners approached this Court which was unnecessary.
- The petitioner has not submitted any bills of buy to substantiate the creation of any asset.
- On 16th January 2018, the international branch of Allahabad Bank sent a letter to the petitioners. The letter asked information to clarify the said irregularities. In this context, the petitioners gave a vague reply. The reply could not address the issue of difference in receivables in the cash credit.
- The petitioner/borrower defrauded the bank by submitting fake title deeds. This shows malafide intention on behalf of the petitioners.
- The petitioners had several opportunities to make their case. They had documents to file written objections as well as a personal hearing. That was all as per the guidelines issued by RBI.
- The present writ petition is a part of the delaying tactics of the petitioners. It was because their loan account turned Non-Performing Assets (NPA) on 27th June 2011.
- The company had an office mortgaged with the bank to secure the loan-in-question. Yet, the bank realized that the office was already mortgaged. According to the bank, the petitioners did this to secure another credit facility. This allegation was not dealt with in the reply to the referred letter, dated 12th February 2018. The above conduct of the petitioners shows their motive to delay. Due to this, WDIC gave them an extension to reply twice. Despite this, they did not attend the personal hearing on 3rd July.
Observations of the Court
The Court stated that the basic issue before the Court is of Writ Jurisdiction. As any arbitrariness or discrepancy in assigning status could be against Fundamental Rights. It could also be a threat to the principles of natural justice. In furtherance of this view, it kept the decision open for a secondary review by the WDRC. But, it did not find any arbitrariness or malafide in the decision of the WDIC. The Court stated that the commission followed proper procedures. They also provided adequate extensions for filing replies. The court observed that the petitioners failed to communicate within the given time frame.
The Decision of the Court
The Court did not find any discrepancy in the assigning of status. The Court refused to interfere under Art. 226 as there was no miscarriage to justice. It stated that the case is well within the domain of the review committee and not the Court.
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