Prabhat Kumar Shrivastava vs Reserve Bank Of India And Anr on 21 January, 2026

[Cites 3, Cited by 0]

Delhi High Court - Orders

Prabhat Kumar Shrivastava vs Reserve Bank Of India And Anr on 21 January, 2026

Bench: Jasmeet Singh

                          $~76
                          *         IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +         W.P.(C) 328/2026 & CM APPL. 1584/2026
                                    PRABHAT KUMAR SHRIVASTAVA
                                                                                                            .....Petitioner
                                                                  Through:            Mr. Sajan Poovayya, Sr. Adv. with
                                                                                      Ms. Shruti Kanodia, Ms. Ishita Jain,
                                                                                      Mr. kshitij Ujala, Mr. Palash
                                                                                      Maheshwari, Advs.

                                                                  versus

                                    RESERVE BANK OF INDIA AND ANR
                                                                                                             .....Respondent
                                                                  Through:            Ms. Nisha Sharma, Ms Manisha,
                                                                                      Singh, Advs. for R-1
                                                                                      Mr. Santosh Kumar Rout Standing
                                                                                      counsel    with      Mr.      Siddhant
                                                                                      Sharma(law officer) for R-2

                                    CORAM:
                                    HON'BLE MR. JUSTICE JASMEET SINGH
                                                        ORDER

% 21.01.2026

1. This is a petition filed under Article 226 of the Constitution of India seeking quashing/ setting aside of the order dated 17.12.2025.

2. The facts are that the petitioner was a director of Isolux Corsan India Engineering and Construction Private Limited. The issue whether the petitioner was key managerial personnel (KMP) or only a managing director is contentious and is not being adjudicated in the present petition.

3. The petitioner has been declared fraud, based on the impugned order This is a digitally signed order.

4. Learned senior counsel for the petitioner, challenges the same on the ground that the impugned order is cryptic and merely illusory, and that none of the defences raised by the petitioner have been considered by the Fraud Examination Committee.

5. The findings against the petitioner in the impugned order are as under:

"Gist of Reply of Prabhat Kumar Shrivastava Dt 29.11.2024:

- SCN has been issued without providing with relevant documents/ evidence.

- He is not a director in lsolux Corsan India

- He was only appointed as a professional director neither did he possess any signing authority on any loan transactions nor was authorized through a power of attorney to act on behalf of the company with respect to any financial matter or financial transactions whatsoever.

- Bank failed to provide a copy of forensic audit report.

- Further, having resigned from the company almost 7 years ago, he is having no records of the company to enable him to verify the statement by PNB.

- The averments made in the show cause notice are also vague and not supported by any evidence, nor does it reveal any specific wrongdoing on his part.

- There were other directors of the company at the time of account becoming NPA. SCN has been issued to some of them.

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42

- During personal hearing of willful defaulter, identification committee has accepted his submission having limited role in the company.

- Sought forensic audit report and some other documents.

- He will need 4 weeks' time.

Views of the committee Sh. Prabhat Kumar Shrivastava has not provided pointwise reply on the factors of fraud. Fraud has been perceived on the basis of Forensic Audit Report and the same has already been provided to him. Sh. Prabhat Kumar Shrivastava stated that he is not a director in M/s lsolux Corsan India Engineering & Construction Private Limited. As per DIR-11, his appointment in the company was as a professional director.

It has been observed that as per Annual Return filed on 30.09.2016 in the Form No. MGT- 7, Sh. Prabhat Kumar Shrivastava DIN No 07242081 have been mentioned non-independent director and key managerial personnel of the borrower company. Hence, statement of Sh. Prabhat Kumar Shrivastava in the representation is incorrect."

6. Based on the two findings, the petitioner has been declared fraud.

7. Mr. Rout, learned standing counsel for respondent No. 2, states that the petitioner was duly given personal hearing and the representations were considered and thereafter, a speaking and well-reasoned order has been passed.

8. In the present case, 2 replies have been given by the petitioner.

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42

9. One, dated 29.11.2024 (prior to the receiving of Forensic Audit Report) and second dated 06.10.2025, (after receiving the Forensic Audit Report).

10. The representation of the petitioner on 06.10.2025 is relevant and the entire representation is reproduced hereunder:

"1. I write to you, Punjab National Bank ("You" / "PNB") in reference to the letter referred at Sr. No. (i) issued by You to me, Mr. Prabhat Kumar Shrivastava, where in You are seeking to declare my account as 'Fraud' based on the factors such as diversion of the funds and related party transactions and in furtherance to the letter referred at Sr. No. (iii) wherein the bank has provided copy of Forensic Audit Report dated 08.12.2020 ("FAR") prepared by Grant Thornton ("GT" / "Auditor") and certain loan documents to me.

2. At the very outset, I submit that from the contents of the Show Cause Notice dated 04.09.2024 ("SCN"), it appears that the proceedings pertain to alleged diversion and/or siphoning of funds, related party transactions, vendor payments, improper accounting practices, and non-compliance with the provisions of the Companies Act, 2013 ("Companies Act"). It is also evident from the SCN that the proposed categorization and reporting of the account as "Fraud" have been initiated against Isolux Corsan India Engineering & Construction Private Limited ("ICI" / "Company") and its purported directors. However, I wish to This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 clarify that I am not a director of ICI.

3. Further, I submit that the SCN issued to me by You is mechanical, arbitrary, and in clear derogation of the mandatory requirements prescribed under Clause 2.1.1.1 of the Reserve Bank of India (Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions) Directions, 2024 ("2024 Master Directions").

4. That the said Clause of the 2024 Master Direction explicitly mandates that a detailed SCN must be issued to the concerned person(s), containing complete particulars of the transactions, actions, or events on the basis of which classification and reporting of an account as fraud is contemplated. In the instant case, the SCN suffers from a fundamental infirmity inasmuch as it has been issued without providing the complete particulars of the transactions, actions and without annexing or enclosing any documentary material or evidentiary support and merely provides extracts of the transactions. Such omission not only vitiates the SCN but also renders it non-compliant with the mandatory requirements of the 2024 Master Directions and the Principles of Natural Justice. In addition, the SCN neither contained the requisite particulars nor connect or establish any direct relationship with me or my roles and responsibilities as a Professional Director in the Company. This fact alone is sufficient to appreciate that I am not a This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 relevant person for these proceedings.

5. Without prejudice to the foregoing, I had, in good faith, replied to the SCN vide my letter dated 29.11.2024 ("Response"). The contents of said Response are reiterated herein. In the said Response, I had specifically requested for copy of the requisite supporting documentation. Vide your letter dated 14.08.2025 i.e., after 258 days since my response, you provided copy of FAR and certain loan documents to me. However, kindly note that the copy of FAR was incomplete as Annexure 4 of the FAR was missing and the Annexure 2 containing the Details of Qualified Comments in the unsigned Statutory Audit Report for FY 2017-18 is wholly illegible. You are requested to provide complete and legible copy of the FAR.

6. Furthermore, such an extraordinary lapse of time is not only unjustified but is also in direct contravention of Clause 4.1.5 of the 2024 Master Directions. The said Clause unequivocally mandates that, once an account has been red-flagged, the entire process of either classifying the account as fraud or removing the red-flagged status shall ordinarily be completed within 180 days from the date of its first reporting on the CRILC platform. Further, cases exceeding the 180-day threshold are required to be escalated to the SCBMF with adequate justification and remain subject to supervisory review by the Reserve Bank of India. Your failure to adhere to this statutory timeline vitiates the entire This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 proceedings, rendering any further action arbitrary, procedurally unsustainable, and liable to be set aside. I have neither been provided with any information nor any evidence indicating that the aforementioned process have been followed. To the best of my knowledge and understanding, I am not a relevant party to these proceedings, as I have no authority, control, or supervision over the day-to-day operations of the said foreign international company. Furthermore, I am neither a shareholder nor a stakeholder in the company and had only been briefly appointed in a limited capacity for a short duration.

7. That a perusal of the SCN and Your Letter dated 14.08.2025 reveals that the premise and basis for issuance of the SCN against me is the FAR. However, as detailed below (each justification/response being without prejudice to the other), the FAR does not disclose or reveal any fraudulent actions attributable to me or related to me in the report infact the FAR does not even utter my name in the entire report. The FAR merely records transactions undertaken at the Company level and does not attribute any role, responsibility, or complicity to me personally infact I was not even a signatory to any financial transaction during my tenure with the Company. Without prejudice a response table is given below:

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42

8. A perusal of the FAR shows that it is inconclusive and This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 nothing adverse could be determined against me. Moreover, most of the observations of the Auditor in FAR were subject to caveats and assumptions. It is a settled law that for initiation of proceedings under the 2024 Master Directions, a bank is required to have a separate and independent (from FAR) view. Further, the 2024 Master Directions in Clause 6.1 lists the events or acts that amounts to fraud, however, as mentioned above, the allegations stated in the SCN do not fall within any such act or event and do not amount to fraud under the 2024 Master Directions. Further, You have not identified what type of fraud, or the offence appears to have been committed by me.

9. It is reminded that the burden of proof to show that there is any basis or valid reason to initiate proceedings against me or declare my account as fraud, under the 2024 Master Directions lies with You. Further, in terms of Footnote 7 of Clause 2.1.1.1. of the 2024 Master Directions, even the degree of proof is higher in case of Non-Whole Time Director (like me) in the Company.

10. You may appreciate that while being promoted as Director on 23.07.2015, I was appointed as Director (Professional) (one of the many directors) and the same was just hierarchical promotion and I continued to serve as a Director (Professional-Legal) of the Company till my resignation on 15.06.2017. Moreso, during any Audit, I was never even interviewed or interacted with, (as recorded by This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 the Auditor @ Para 1.1 @ Pg. 10 of the FAR) which clearly establishes that I was not a relevant or key personnel or employee related to any financial or other transactions.

11. I was only 1 among over 1200+ employees of the Company. I was never responsible for the finances/loans of the Company. I never signed any loan agreement of the Company and was never authorised through a power of attorney to act on behalf of the Company with respect to any financial matters or transactions. I was never a signatory for any financial transactions or documents. Furthermore, I was never a shareholder or promoter of the Company. I always worked under the supervision of the Managing Director of the Company who was a Spanish/Expat person(s) and the Company was always controlled by its Spanish management within India or outside India.

12. As evident from my response above, the documents provided by You, till date, does not disclose any act(s) of fraud by me. On the perusal of the documents provided to me till now, it is clear that I am not involved in any transactional activity on behalf of the Company, neither was I instrumental or a signatory to the transactions which have been audited as per these documents. These documents do not even have a whisper of an allegation against me and are devoid of any finding which may affix my liability in the alleged fraudulent transactions. Even if after considering my present submissions, You still decide to continue the present This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 proceedings against me or declare my account as fraud under the 2024 Master Directions, I again request You to provide the relevant documents (other than the documents already provided as the same do not reveal anything against me) basis which such proceedings are being initiated/ continued against me and/or my account is being declared as "Fraud". Additionally, You are also requested to clearly communicate/ inform as to how You have drawn adverse inferences against me from such documents.

13. The conduct of the Bank is in complete abuse of process and the power provided by the Reserve Bank of India to You. It is a clear attempt to harass and cause a civil death to an innocent employee director. The Bank has been proceeding in complete violation of the 2024 Master Directions and the Principles of Natural Justice, (a) The SCN was issued to be after having resigned from the company for more than 7 years, (b) The SCN that was issued to me did not contain any relevant documents enclosed along with it neither did it set out any specific allegation against me; (c) According to Clause 4.1.5 of the 2024 Master Directions, the entire process of classification of the account as fraud shall be completed within 180 days. However, the said period had lapsed and the FAR and certain loan documents have been provided by you after almost a year since the issuance of SCN, (d) The documents provided by You till date, are inadequate to ascertain my liability in the alleged acts of This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 fraud as stated in the SCN, and (e) Inclusion of the observations from the report which does not and cannot amount to fraud shows that the You are conducting mechanical exercise without application of mind despite the severe consequences that I may face as a result of this negligence of bank.

14. The proceedings being initiated by Bank against me clearly show discrimination/ lack of application of mind, as the ultimate promoters of the Group Isolux as well as the last 2 Directors appointed by the shareholders of the Company and many other Whole Time Directors, Managing Directors and EPC Directors who worked in the Company during the period from 2013-2018 have not been issued the SCN clearly discriminating me from the powerful shareholders, promoters and Managing Director vis-à-vis a pure employee director having no interest in the Company or have any direct or indirect benefit in any manner.

15. The conduct of the Bank is in complete abuse of process and the power provided by the Reserve Bank of India to You. It is a clear attempt to harass and cause a civil death to an innocent employee director. It is needless to emphasis that in the event you continue to proceed against me without sufficient proof / evidences, I will be left with no option but proceed against the Bank and all the associated officials involved in this process. Further, Your failure to set out specific allegations against me is in violation of the This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42 Principles of Natural Justice in as much as severe prejudice is caused to me by such broad and vague allegations of instances of fraud. Inclusion of the observations from the report which does not and cannot tantamount to fraud, shows that the Bank is conducting mechanical exercise without application of mind despite the severe consequences that I may face as a result of this negligence of Bank.

16. Further, if You are dissatisfied with the present response and require any further clarifications, please let me know. The present representation is being issued without prejudice to my rights under extant statutory and regulatory framework."

11. A perusal of the impugned order reproduced above clearly shows that even though the respondent recognised that a representation dated 06.10.2025 has been received; the same has not been considered or adverted to.

12. None of the grounds mentioned in the representation dated 06.10.2025, namely that the petitioner was only a non-executive/professional director with no control over finances, no signing authority, and no role in the transactions under scrutiny have been considered, in the impugned order.

13. Additionally, the order declaring the petitioner as a wilful defaulter has been stayed by this Court in W.P. (C) 5850/2025 on 05.05.2025, the order which is still continuing.

14. Despite the same, the declaration of wilful defaulter of the petitioner has also been made one of the grounds for classifying the petitioner as a This is a digitally signed order.

15. The principles of natural justice requires that each and every representation of the petitioner made prior to the date of passing the impugned order should have been considered, due application of mind should have been accorded and thereafter, reasoned and detailed order should have been passed.

16. For the said reasons, the order cannot be sustained and is set aside as being violative of principles of natural justice.

17. However, the above observations do not prevent the respondents from taking any actions which is in accordance with law.

JASMEET SINGH, J JANUARY 21, 2026/sp This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/01/2026 at 20:40:42

Unlock Advanced Research with PRISMAI

Delhi High Court - Orders