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2022 (7) TMI 245 - HC - Companies LawWilful Defaulters - Validity of action of the respondent No.2-Bank classifying the petitioners as willful defaulters and publishing their names in the CIBIL list of Willful Defaulters - violation of Section 2(60) of Companies Act, 2013 contrary to the terms of RBI Circular 2015-16/100/DBR No.CID.bc.22/ 20.16.003/2015-16 dt.1.7.2015 - HELD THAT:- Admittedly, no show cause notice was served on the petitioners. The Respondent No. 2 was acknowledging the fact that the notices were undelivered though he was contending that he issued notices to the addresses available with them and throwing the blame on the petitioners that it was the petitioners who were required to update their communication address with respondent No.2 from time to time. The learned counsel for the petitioners contended that the respondent banks were regularly in touch with the petitioners and they had the petitioners contact numbers and email addresses but they chose not to resort to any other option in serving the notices and trying to shift the blame on to the petitioners for their non compliance - In order to comply principles of Natural Justice, it was proposed to provide a final opportunity to submit their further representation, if any on the classification as Willful Defaulter and asked them to send their further submission/representation in writing, if any, for consideration by the Review Committee on Willful Defaulters within the 15 days from the date of the letter. Thus it was a notice of information that the matter was sent to the Review Committee but not an opportunity for personal hearing before the Identification Committee. The Hon’ble Apex Court in State Bank of India Vs. M/s Jah Developers Private Limited and others [2019 (5) TMI 862 - SUPREME COURT] stated the necessity to follow the procedure mandatorily as per the Master Circular dated 1-7-2013 which was revised by the Circular dated 1-7-2015 and that the order of the first Committee after para 3(b) of the revised circular 1-7-2015 must be given to the borrower as soon as it was made so that the borrower could then represent against such order within a period of 15 days to the Review Committee and the Review Committee must then pass a reasoned order on such representation and it should be served on the borrower. The above procedure as mandated under the RBI guidelines as well as the Hon’ble Apex Court in Jah Developers case was not followed by the respondent No.2. As per the respondent No.2, the petitioners shared their updated communication address during the lenders meeting held on 7-2-2020. But subsequent to that day also, the previous communications were not shared with the petitioners and the respondent No.2 had not sought any reply/action on the previous actions. Instead of choosing to do so, the respondent No.2 directly jumped on to declare the petitioners as Willful Defaulters without there being any reply from the petitioners - Hence it is considered fit to set aside the action of respondent No. 2 in classifying the petitioners as Willful Defaulters and publishing their names in CIBIL dated 30-9-2020 as violative of Section 2(60) of Companies Act, 2013, contrary to the terms of RBI Circular dated 1-7-2015 and against the law laid down by the Hon’ble Apex in State Bank of India Vs. M/s Jah Developers Private Limited and others, and in violation of Principles of Natural Justice and directed to follow the Circular instructions afresh from the beginning. Writ petition disposed off.
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