Delhi High Court - Orders
Supertech Realtors Pvt Ltd vs Union Bank Of India And Another on 31 January, 2024
$~121
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 1360/2024 & CM APPL. 5598-5599/2024
SUPERTECH REALTORS PVT LTD ..... Petitioner
Through: Mr. Saurabh Kripal, Ms. Jayashree
Shukla Dasgupta and Ms. Rishika
Ahuja, Advocates.
Mob: 8800171055
versus
UNION BANK OF INDIA AND ANOTHER ..... Respondent
Through: Mr. O.P. Gaggar and Mr. Sachindra
Karn, Advocates for R-1.
Mob: 7503425020
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
ORDER
% 31.01.2024 CM APPL. 5599/2024 (For Exemption)
1. Exemption allowed, subject to just exceptions.
2. Application is disposed of.
W.P.(C) 1360/2024 & CM APPL. 5598/2024
3. The present petition has been filed seeking quashing of the order dated 05th January, 2024 passed by the respondent no. 1 classifying the petitioner's account as 'Fraud' under Reserve Bank of India ("RBI") 2016 Guidelines and revised bank Fraud Risk Management ("FRM") Policy 2023- 2024.
4. The petitioner is also challenging the Show Cause Notice dated 3rd 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 05/02/2024 at 21:20:56 August, 2023 issued by respondent no. 1 for alleged examination of irregularities in the loan account from alleged fraud angle.
5. It is submitted that respondent no. 1 issued Show Cause Notice dated 3rd August, 2023 to the petitioner for classifying the account of the petitioner as 'Fraud'. No grounds for such classification were mentioned in the Show Cause Notice and the same was a non-speaking notice.
6. Learned senior counsel appearing for the petitioner submits that the respondent no. 1 only relied upon the Forensic Audit Report of June, 2020 in the Show Cause Notice dated 3rd August, 2023. The petitioner company replied to the said Show Cause Notice immediately by its reply dated 5th August, 2023. Further, other relevant communications were also attached with the said reply to highlight the issue with respect to relooking of the Forensic Audit Report in view of the issues raised by the petitioner company.
7. It is submitted that while classifying the petitioner company as 'Fraud', the same has been done on the basis of a vague and ambiguous Show Cause Notice. Further, the impugned order dated 5th January, 2024 does not deal with the objections and responses made by the petitioner.
8. Attention of this court has been drawn to the Show Cause Notice dated 3rd August, 2023, wherein it has been stated that on the basis of the Forensic Audit Report, certain serious irregularities/ anomalies/ allegations/ commissions/omissions have been pointed out by the Auditors. Learned senior counsel for the petitioner submits that the specific irregularities and anomalies were never specified in the aforesaid Show Cause Notice issued by the respondents.
9. Learned counsel also relies upon Clause 2.2, 8.9.4 and 8.9.5 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 05/02/2024 at 21:20:56 Master Directions on Fraud-Classification and Reporting by Commercial Banks and Select Financial Institutions issued by the RBI dated 1st July, 2016. By reference to the aforesaid circular, it is submitted that the circular gives specific classification of the frauds, which are to be classified as per the provisions of the Indian Penal Code. He further submits that none of the aforesaid details were provided to the petitioner in the Show Cause Notice.
10. Learned senior counsel for the petitioner has also handed over a note showing the various grounds raised in the Forensic Audit Report against the petitioner, and the reply filed by the petitioner with respect thereto. By reference to the grounds raised in the Forensic Audit Report, it is submitted that none of the explanation/reply submitted by the petitioner in the reply dated 5th August, 2023 submitted by the petitioner to the Show Cause Notice of 3rd August, 2023, have been taken note of or considered while passing the impugned order dated 5th January, 2024.
11. Thus, it is submitted that issuance of a Show Cause Notice is not an empty formality. By issuing the aforesaid vague Show Cause Notice, the valuable rights of the petitioner with respect to having a proper consideration of his case, have not been followed.
12. Learned senior counsel also relies upon the Email dated 29th October, 2020 issued by the Union Bank of India, where the auditor was advised to relook into the said Forensic Audit Report, which was only a tentative report.
13. Learned counsel has also relied upon Email dated 15th January, 2021 issued by respondent no. 1, wherein again the issue of reopening of the Forensic Audit Report, has been discussed.
14. Issue notice.
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 05/02/2024 at 21:20:56
15. Notice is accepted by learned counsel appearing for the respondent no. 1-Union Bank of India.
16. None appears for respondent no. 2/Reserve Bank of India.
17. At this stage, learned senior counsel appearing for the petitioner submits that respondent no. 2 is not a necessary party in the present proceedings. Thus, he prays that respondent no. 2 be deleted from the array of parties.
18. Accordingly, at oral request of the petitioner, respondent no. 2 is deleted from the array of parties.
19. Let amended Memo of Parties be filed within a period of one week.
20. Learned counsel appearing for the respondent submits that as regards the issue for reopening the Forensic Audit Report, he needs time to seek instructions.
21. He further submits that the petitioner had full opportunity in accordance with Principles of Natural Justice, as a detailed reply was submitted by the petitioner.
22. Let reply be filed by the respondent within a period of four weeks. Rejoinder thereto, if any, be filed within a period of two weeks thereafter.
23. This Court has considered the submissions made by learned counsel for the parties.
24. At the outset, this Court notes that by Email dated 29th October, 2020 the Union Bank of India had advised the Forensic Auditors to relook into the matter and give a final finding.
25. The Email dated 29th October, 2020 written by the respondent-bank reads as under:
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 05/02/2024 at 21:20:56 "Supertech B K Jha [email protected] FW; M/s Supertech Realtors Pvt. Ltd.
29 October 2020 at 11:46 From: Delhi - Overseas Main Branch (CorpBank- 0006) [email protected] To: [email protected], [email protected] Cc: B.K.Jha <<[email protected]>, "[email protected]" <rks@supertechlimi ted.com>, Radhey Shyam Jhanwer [email protected] Dear Sir, We refer to the Final forensic audit report dated 20.05.2020 of Supertech Realtors Pvt. Ltd. which was shared by you with Union Bank of India IFB Branch, M-11, Connaught Place, New Delhi.
During the consortium meetings held (which were attended by your personnel), the company had certain reservations about the observation made in the Forensic audit report & requested to relook into the report. Subsequently the company has filed a writ petition in Hon'ble High Court, Delhi (copy of the Writ petition is enclosed) and our Bank's counsel had informed the court that the Forensic audit report will be shared with the borrower company. Accordingly, we have shared the forensic audit report with the borrower company on 14.10.2020. In reply to the same, the company has now requested again to relook into the report vide their letter dated 15.10.2020 (copy enclosed).
In view of above, we advise you to relook into the matter based on submissions of the company and come out with your final findings on the points put forth by the company.
Thanks & Regards, Union Bank of India SAMV- Delhi M -93, Connaught Circus, Delhi"
26. This Court also notes the Email dated 15th January, 2021 issued by the respondent-bank, wherein again the respondent-bank has stated with respect to reopening of the Forensic Audit Report in view of the various issues 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 05/02/2024 at 21:20:56 raised by the petitioner.
27. The Email dated 15th January, 2021 issued by the respondent-bank reads as under:
"From: Delhi-Overseas Main Branch (CorpBank-0606) Sent: Friday, January 15, 2021 18:15 To: [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected] Cc: Crld Fgmo Delhi; Nancy Agrawal; Kuldeep Khandelwal; Lekh Raj Sidhu; Kuldeep Khandelwal; HO-Stressed Asset Management Vertical (CorpBank); Reveesha Bayak BO; Rajesh Kumar 4, Rajesh M K Subject: SUPERTECH REALTORS PVT. LTD. - REOPENING OF FORENSIC AUDIT Dear Sir, We refer to the discussions in the JLM meeting conducted on 10.09.2020 in the captioned account wherein the issue of reopening of the forensic audit was discussed as the company informed that they would like to submit certain clarification on the forensic audit that was conducted in respect of the account and subsequent declaration of fraud by the lenders. The company differ on some of the points/issues that were reported in the forensic audit. The forensic audit team informed that they may relook into the reported provided the company submit them information/data and after receiving mandate from the banks.
In this connection, we request you to provide the status of mandate from your Banks and whether the Forensic audit report can be reopened at this stage.
An early reply is solicited in this regard as the company officials are following up for reopening of the Forensic audit reported based on reasons cited above.
Thanks & Regards;
SAMV- Delhi M-93, Connaught Circus, Delhi"
28. Perusal of the aforesaid clearly shows that the respondent-bank itself 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 05/02/2024 at 21:20:56 has been considering the issue with respect to reopening and relooking at the Forensic Audit Report, which seems to be a tentative Report and not a final Report in terms of the aforesaid Emails of the respondent-bank.
29. This Court also notes the impugned order dated 5th January, 2024, wherein, though findings have been given, however, the specific contentions and submissions made on behalf of the petitioner in its reply dated 5th August, 2023, do not seem to have been considered and taken into account, as there is no discussion regarding the same.
30. In view thereof, this Court is of the considered opinion that the petitioner has been able to make a prima facie case in its favour.
31. Accordingly, the operation of the impugned order dated 5th January, 2024 issued by the respondent-bank is stayed till the next date of hearing.
32. Re-notify on 16th July, 2024.
MINI PUSHKARNA, J JANUARY 31, 2024 ak 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 05/02/2024 at 21:20:57