Calcutta High Court
Murlidhar Ratanlal Exports Ltd. & Anr vs Punjab National Bank & Anr on 9 January, 2020
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
OD-7
W.P. No. 603 of 2019
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
MURLIDHAR RATANLAL EXPORTS LTD. & ANR.
Versus
PUNJAB NATIONAL BANK & ANR.
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 9th January, 2020.
Appearance :
Mr. Abhrajit Mitra, Adv.
Ms. R. Kajaria, Adv.
Mr. Swatadeep Bhattacharya, Adv.
...for the petitioners
Ms. Sreemoyee Mitra, Adv.
...for the respondents
The Court : The present challenge has been directed against a purported notice given by the 'Centralized Loan Processing Centre', Punjab National Bank dated October 21, 2019. The subject of the said communication was mentioned to be identification of default in the loan account of the petitioner as "wilful". It was further mentioned in the said communication, inter alia, that the petitioner was informed that it was proposed to classify the petitioner (borrower) and Guarantor/Directors etc. as a "wilful defaulter". It was also warned therein that if the default (s) is/are not rectified within 10 days from receipt of this notice, the bank intends to disclose or publish the name or the names of the company/firm/unit and the Directors/Guarantors/Partners/Proprietors as wilful defaulter in such manner and through such medium as the bank or RBI in their 2 absolute discretion may think fit. Further, there is warning issued in the communication as to what such steps would eventually result in.
It is submitted by learned Counsel appearing for the petitioner, on the strength of the Master Circular on wilful defaulter issued by the Reserve Bank of India governing the field, particularly on Clause 3 (a), (b) and (c) of the said Clause, that the said circular envisages a specific Committee for deciding the issue as to whether a borrower is a wilful defaulter, that too upon giving a show cause notice to the concerned borrower and a further review of the order of the said Committee by another Committee.
Learned Senior Counsel further relies on a judgment of a Coordinate Bench of this Court reported in 2019 SCC OnLine Cal 611 (Atlantic Projects Ltd. and Others v. Allahabad Bank and Others) wherein it was decided, inter alia, that the Identification Committee acting under the Master Circular for wilful defaulters would not delegate its power to issue a show cause notice.
Learned Counsel appearing for the respondents submits that the notice in question was not issued at all within the purview of Clause 3 of the Master Circular but was a warning issued to the petitioner to rectify their defaults in order to give a prior intimation to the petitioner and a chance to rectify such defaults. As such, the rigours of the Master Circular do not apply to the impugned notice at all.
However, there is no law and/or circular which empowers any 'Centralized Loan Process Centre' or a particular bank to issue a notice of the nature as impugned in the present writ petition. It is evident from the notice dated October 21, 2019 that the same was not a mere prior warning to the borrower but a 3 threat that it was proposed to classify the borrower as a wilful defaulter and for identification of the default as "wilful", even without giving an opportunity to show cause being afforded to the petitioner. Such a communication, as such, is patently de hors the law as well as the Master Circular of the Reserve Bank of India, having the force of law.
In such view of the matter, the notice/communication dated October 21, 2019 (Annexure - P1 at page 25 of the instant writ petition) cannot stand a moment's scrutiny and is patently illegal.
Accordingly, W.P. No. 603 of 2019 is allowed on contest, thereby setting aside and quashing the notice dated October 21, 2019, annexed as P-1 to the instant writ petition, and negating all consequences thereof.
It is, however, made clear that this order will not prevent the respondent no. 1 bank from proceeding in due course of law in the event the bank is required to identify the petitioner as a wilful defaulter, but only in terms of the Master Circular as issued by the Reserve Bank of India.
There will be no order as to costs.
(SABYASACHI BHATTACHARYYA, J.) TO