Zusak Agro Pvt Ltd Vs State Bank of India (Bombay High Court)
Summary: The Bombay High Court allowed the writ petition filed by Zusak Agro Pvt Ltd and set aside the order dated 13 January 2026 by which State Bank of India had declared the petitioner company’s account as fraud and proposed reporting its name to the Reserve Bank of India. The dispute arose from a cash credit facility of Rs.9.50 crores sanctioned on 13 July 2018. According to the Bank, the property offered as collateral had been valued at Rs.9.52 crores in a valuation report dated 7 April 2018, whereas a subsequent valuation report dated 19 November 2020 assessed its value at Rs.4.73 crores, reflecting erosion of more than 50%. The Bank consequently initiated proceedings under the RBI framework for fraud classification.
A show cause notice dated 22 October 2024 was served on the petitioner. Shri Vivek Kumar Mathur, Director of the petitioner company, submitted a response by letter dated 8 November 2024. Thereafter, following the Review Committee meeting held on 29 December 2025, the impugned fraud-classification order was passed on 13 January 2026. The petitioner relied upon the Master Directions on Fraud Risk Management, issued by RBI on 15th July 2024, particularly provision 2.1.1.4, which required the Bank to serve a reasoned order containing the relevant facts and circumstances relied upon, the submissions made against the show cause notice and the reasons for classification as fraud or otherwise.
