Kanchan Motors Vs Bank of India (Bombay High Court)
The Bombay High Court allowed the writ petition filed by Kanchan Motors challenging the orders of the Identification Committee and Review Committee of Bank of India, which had declared the petitioners as wilful defaulters. The petitioners had availed credit facilities from the bank but were unable to repay the outstanding dues due to unavoidable circumstances. After issuing a demand notice for Rs. 2,62,28,830, the bank initiated recovery proceedings before the Debt Recovery Tribunal. During the pendency of those proceedings, the bank issued a show cause notice proposing to classify the petitioners as wilful defaulters. The petitioners submitted a detailed reply and requested a personal hearing. However, the Identification Committee declared them wilful defaulters, and the Review Committee confirmed the decision.
The petitioners contended that both committees acted in violation of the Reserve Bank of India Master Circular governing identification of wilful defaulters. They argued that their reply had not been considered, no opportunity of personal hearing had been granted, the Identification Committee’s order was never supplied despite a written request, and the Review Committee passed a non-speaking order without recording reasons. The bank defended its action, contending that supplying the Review Committee’s order was sufficient and that the Identification Committee’s order was merely an internal document.
