Delhi High Court - Orders
Sumit Nanda vs Bank Of India & Anr on 25 July, 2025
$~93
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 10828/2025 and CM APPL. 44778/2025
SUMIT NANDA .....Petitioner
Through: Mr. Ravi Prakash, Senior Advocate
with Mr. Yasharth Shukla, Mr. Taha Yasin, Ms.
Mehal Kharyual and Ms. Ashi Khandelwal,
Advocates.
versus
BANK OF INDIA & ANR. .....Respondents
Through: Ms. Santosh Kumar Rout, Standing
Counsel for R1.
CORAM:
HON'BLE MR. JUSTICE VIKAS MAHAJAN
ORDER
% 25.07.2025 CM APPL. 44779/2025
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
W.P.(C) 10828/2025
3. The present petition has been filed by petitioner assailing show-cause notice dated 09.04.2025 issued by respondent no.1/Bank of India.
4. The grievance ventilated in the present petition is that petitioner, who was director of M/s. Satnam Cars Private Limited [SCPL] (principal borrower), has been informed vide impugned SCN dated 09.04.2025 about re-examination of an account previously classified as 'fraud' by respondent no.1/Bank.
5. Mr. Ravi Prakash, learned Senior Counsel appearing on behalf 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 30/07/2025 at 21:48:59 petitioner submits that from perusal of impugned show-cause notice, it appears that earlier respondent no.1/bank had classified the account of the company SCPL as fraud but petitioner was never made aware about the account having been classified as fraud.
6. He submits that at no point of time, any notice was issued to petitioner before the account was classified as fraud, and even the present impugned SCN speaks of re-examining the issue with regard to classification of account as fraud, but it is not accompanied with a complete forensic audit report and other relevant documents.
7. To buttress his contention, Mr. Prakash invites attention of the Court to Para 2 of the impugned show-cause notice to submit that in the show- cause notice only gist of the observations/findings/conclusions of the forensic audit report has been reproduced, but copy of complete forensic audit report along with its annexures, has not been supplied.
8. He places reliance on the decision of the Hon'ble Supreme Court in State Bank of India vs. Rajesh Agarwal & Ors., (2023) 6 SCC 1, to contend that the mandate of the said judgment is that principles of natural justice have to be complied with, inasmuch complete set of documents on which show-cause notice is premised should be supplied to the notice.
9. He further contends that Hon'ble Supreme Court in T. Takano vs. Securities and Exchange Board of India and Another, (2022) 8 SCC 162 has also held that apart from the documents which have been mentioned in the show-cause notice, all other documents which are relevant to controversy are also to be supplied.
10. He also places reliance on the decision of Division Bench of the High Court of Bombay in Milind Patel v. Union Bank of India and Others, 2024 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 30/07/2025 at 21:48:59 SCC OnLine Bom 745, wherein the Bombay High Court relying upon the decision in T. Takano (supra) observed as under:
"25. A plain reading of Takano [T. Takano v. Securities and Exchange Board of India, (2022) 232 Comp Cas 136 (SC); (2022) 8 SCC 162; (2022) 3 SCC (Cri) 306; (2022) 4 SCC (Civ) 248.] would throw light on how the Master Circular must be construed. The Master Circular consciously enables inflicting "penal"
consequences, and underlines the "imperative" need to adhere to a "transparent mechanism". The avoidance of information asymmetry and the means of ensuring transparency as outlined by the hon'ble Supreme Court in Takano [T. Takano v. Securities and Exchange Board of India, (2022) 8 SCC 162 would necessarily mean that principles of natural justice, including the need to provide the underlying material, are inherent and implicit in the process stipulated under the Master Circular. The material and information in question for disclosure to the noticee would be all "relevant" material and not just information that is "relied upon" or "referred to" in the show-cause notice.
26. Not only must information that is referred to and relied on in the show-cause notice be supplied but also information that may undermine the allegations contained in the show-cause notice (which may therefore not be referred to or relied on) must be supplied only to ensure that everything relevant to arrive at the truth is available to both parties. The objective of the proceedings initiated by issuance of a show-cause notice is not to somehow find the noticee guilty of wilful default on the same terms as alleged. Instead, the objective is to arrive at the truth as to whether or not an individual in question is to be subjected to "penal" (in the Reserve Bank of India's words) consequences.
Therefore, if the bank has conducted a forensic investigation into alleged diversion and siphoning off of funds, and specific roles played by specific individuals is brought out in the investigation, and such a probe would point to plausible interpretation that certain individuals did not play any role in the diversion and siphoning, the material underlying such plausible inference would undermine the allegations. Therefore, fair 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 30/07/2025 at 21:48:59 transparent symmetrical access to information, as stipulated by the hon'ble Supreme Court in Takano would mean providing access to not only incriminating material but also exculpatory material, since all such information would be relevant for arriving at the truth. Therefore, access to the record is a vital element of complying with principles of natural justice. In the instant case, not only has no material been supplied, but also Union Bank has actually asserted on oath that it was not required to provide any material whatsoever, and that it is for the noticee to prove his innocence."
(emphasis supplied)
11. In view of above, issue notice.
12. Mr. S.K. Rout, learned counsel appearing on behalf of respondent no.1/bank accepts notice.
13. Let counter-affidavit be filed within a period of four weeks. Rejoinder thereto be filed within two weeks thereafter.
14. Re-notify on 17.11.2025.
15. In the meanwhile, having regard to the submissions made by Mr. Prakash, which prima facie appears to have substance, the proceedings pursuant to the show-cause notice are stayed till the next date of hearing.
VIKAS MAHAJAN, J JULY 25, 2025/jg 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 30/07/2025 at 21:48:59