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2022 (3) TMI 927 - HC - Indian LawsWillful defaulter under the RBI Master Circular dated July 1, 2014 or not - petitioner contends that the impugned notice was drawn in the form of a demand notice instead of a proper showcause notice - contravention of Clause 3, sub-clauses (a) and (b) of the RBI Master Circular - HELD THAT:- It is observed that in MAHESWARY ISPAT LTD & ORS. VERSUS STATE BANK OF PATIALA & ORS. [2013 (10) TMI 1560 - CALCUTTA HIGH COURT], the writ petition had been preferred against a final decision branding the writ petitioners as “willful defaulters” and upon their names having been brandished on the CIBIL and other websites without following the procedure laid down under the RBI Master Circular. As distinguished from the said case, the present writ petition has thrown a challenge at the stage of showcause itself. In the present case the petitioner has a remedy to approach with a representation before the Willful Defaulter Committee. Moreover, even if the petitioner is branded as a Willful Defaulter by the WD Committee, there is scope of further review by the Review Committee headed by the Chairman/Chairman and Managing Director or the Managing Director and Chief Executive Officer/C.E.O.s and two independent Directors/Non-Executive Directors of the bank before the order becomes final upon confirmation by the Review Committee. Hence, at the nascent stage of mere issuance of a show cause notice, the petitioner’s challenge is premature. The only requirement as per Clause 3(a) of the RBI Master Circular is that the First Committee has to examine the evidence of willful default to conclude prima facie whether the accused is a Wilful Defaulter for the purpose of issuance of a show cause notice to that effect. Although the petitioner has raised an arguable question as to whether the show-cause notice itself was sufficient, since the documents on which the First Committee came to such conclusion were not disclosed therewith, such requirement is not a mandate of the RBI Master Circular, but a mere technicality to enable the petitioner to make a proper representation on all the allegations before the WD Committee. Since all the documents on which the respondents allegedly relied on have been disclosed in the respondents’ affidavit-in-opposition and disclosed in the present writ petition, there is nothing to prevent the petitioner from making a complete representation on all facets of the allegations of Willful Defaulter, including the question of validity of the show-cause notice. The show cause notice in the present case was sufficient to pass muster, insofar as adherence to the RBI Master Circular is concerned - the petitioner is granted liberty to approach the Willful Defaulter Committee with his representation on the show-cause notice impugned in the present writ petition, within 15 (fifteen) days hence - petition dismissed.
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