Narendra Seoomal Sabnani Vs State Bank of India (Bombay High Court)
The Bombay High Court examined a writ petition challenging the orders of the Wilful Defaulter Identification Committee (WDIC) and the Review Committee declaring the petitioners, who were directors of a company, as wilful defaulters. The challenge was confined to the declaration against the petitioners individually and did not extend to the company, which had not questioned the impugned orders. The petitioners contended that the proceedings violated the Reserve Bank of India’s Master Circular dated 01.07.2015 as the show cause notice had been issued without jurisdiction, relevant material such as a valuation report had not been supplied, the orders were non-speaking, and there were no findings that the alleged default was intentional, deliberate and calculated.
The Court examined the RBI Master Circular governing identification of wilful defaulters. It noted that the Master Circular requires the Wilful Defaulter Identification Committee to examine evidence, issue a show cause notice, consider the borrower’s submissions, and thereafter record both the fact of wilful default and the reasons supporting such conclusion. The Review Committee is then required to independently review the decision before it attains finality. The Court also observed that the Master Circular specifically provides that a default can be categorised as wilful only if it is intentional, deliberate and calculated, and that the process incorporates principles of natural justice.
