Home Case Index All Cases Companies Law Companies Law + HC Companies Law - 2021 (7) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 1309 - CALCUTTA HIGH COURTWilful Defaulter - Default in meeting payment/repayment obligations to the Bank, even though they had the capacity - diversion of funds - petitioners have siphoned off funds without using the same for the purpose of which funds were availed - HELD THAT:- A Writ Court cannot go into weigh the sufficiency of reasons given by an administrative or quasi judicial authority. What is seen, is whether there are some reasons, however small, in support of the findings. This is so as it is only a bank and the lender, given their special relations that can assess whether any default on the part of a borrower is wilful or not. A writ Court does not possess such expertise. The writ petitioners have not been able to demonstrate as to how they have been prejudiced by any of the alleged acts or omissions on the part of the respondent. Assuming for the sake of argument that there is some infraction of procedure on the part of the bank (although the Court does not find any) it is now well settled that every infraction of the principle of natural justice would not ipso facto vitiate proceedings. The petitioner must be able to demonstrate clearly the prejudice suffered by the reason of such infraction. Hence even if one accepts the submission of Mr. Saha that there has been some minor infractions of natural justice or procedure, no prejudice appears to have been caused to the petitioners, by such infraction - Although not pressed in course of arguments it has been pleaded in the writ petition that the bank has instituted proceedings under Section 7 of the IBC, 2016. It is submitted that declaring the writ petitioners as Wilful Defaulters would deprive the petitioners of Rights under Section 32 A of the IBC. It is argued that the impugned orders under Master Circular, 2015 would entail penal consequence on the petitioners and are in derogation of the proceedings under and the provisions of the IBC, 2016. The petitioners even otherwise are not entitled to benefit of Section 32A, since no resolution plan has been sanctioned as yet by the NCLT and even if a resolution plan was approved, the petitioners cannot avail the benefits of Section 32A for being promoters and consequently being persons in default under Section 32 A read with Section 2(60) of the Companies Act, 2013. Clause 4.3 of the Master Circular states is that there is scope even under the exiting legislations to initiate criminal action against wilful defaulters depending upon the facts and circumstances of the case under the provisions of Sections 403 and 415 of the Penal Code, 1860 and the banks and financial institutions are strictly advised to seriously and promptly consider initiating criminal action based on the facts and circumstances of each case under the provisions of IPC. Thus, the Master Circular by itself does not have penal consequences, whereas Sections 403 and 415 IPC have penal consequences. The writ petition must fail and is hereby dismissed.
|