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Tv Vision Limited vs Punjab National Bank & Anr on 3 June, 2022

Author: Sanjeev Narula

Bench: Sanjeev Narula

                          $~46
                          *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +    W.P.(C) 9302/2022
                               TV VISION LIMITED                                ..... Petitioner
                                                Through: Mr. J. Sai Deepak, Mr. Varun Garg,
                                                         Mr. Prashant Jain, Mr. Shubham
                                                         Paliwal, Mr. Pranav Krishna and Mr.
                                                         Adhish Bayena, Advocates.

                                                   versus

                                PUNJAB NATIONAL BANK & ANR.               ..... Respondents
                                             Through: Mr. S. K. Sharma, Advocate for R-1.
                                CORAM:
                                HON'BLE MR. JUSTICE SANJEEV NARULA
                                             ORDER

% 03.06.2022 CM APPL. 27877/2022 (u/ Section 151 of the Code of Civil Procedure, 1908 [hereinafter "CPC"] seeking exemption from original/ certified/ fair typed copies)

1. Exemption is granted, subject to all just exceptions.

2. The Petitioner shall file legible and clearer copies of exempted documents, compliant with practice rules, before the next date of hearing.

3. Accordingly, the application stands disposed of.

CM APPL. 27878/2022 (u/ Section 151 of CPC seeking permission to file synopsis and list of dates exceeding five pages)

4. Exemptions allowed, subject to all just exceptions.

5. Accordingly, the application stands disposed of.

W.P.(C) 9302/2022

6. The Petitioner impugns a circular dated 01st July, 2016, bearing Signature Not Verified Digitally Signed W.P.(C) 9302/2022 Page 1 of 4 By:SAPNA SETHI Signing Date:04.06.2022 12:11:48 number RBI/DBS/2016-17/28 DBS.CO.CFMC.BC.NO.l/23.04.001/2016-17 updated on 30th July, 2017 [hereinafter "RBI Circular/ Impugned Circular"] issued by Respondent No. 2 [Reserve Bank of India] which pertains to declaration of fraud accounts - as well as consequential action of Respondent No. 1 [Punjab National Bank] declaring the account of Petitioners-Company as a 'fraud' account.

7. Issue notice to the Respondents. Mr. S. K. Sharma, Advocate accepts notice on behalf of Respondent No. 1. Let counter affidavit be filed within a period of two weeks from today. Rejoinder thereto, if any, be filed within a period of two weeks thereafter.

8. Upon filing of process fee, issue notice to the remaining Respondents, by all permissible modes, returnable on 20th July, 2022.

CM APPL. 27876/2022 (u/ Section 151 of CPC seeking interim directions)

9. Mr. J. Sai Deepak, counsel for the Petitioner, argues that the Petitioner had earlier impugned the action of Respondent No. 2-Bank whereby the Petitioner was identified as a 'wilful defaulter'. In the said challenge, vide Order dated 03rd March, 2022 [in W.P.(C) 3653/2022 and connected matters] a co-ordinate Bench of this Court, while disposing of the petitions, found prima facie merit in the Petitioners' contention that the impugned order was passed without furnishing a copy of the forensic auditor's report. The Petitioner was given a liberty to make additional representations before the concerned review committee and pursuant thereto, fresh representations have already been submitted but no decision has been taken as yet.

10. Additionally, Mr. Sai Deepak submits that the forensic auditor's Signature Not Verified Digitally Signed W.P.(C) 9302/2022 Page 2 of 4 By:SAPNA SETHI Signing Date:04.06.2022 12:11:48 report has still not been furnished to the Petitioner and further, he submits the Petitioner has been declared as a 'fraud' account without affording an opportunity to defend himself.

11. This Court notes that the legality of the RBI Circular is being examined in a batch of part-heard petitions before Hon'ble Mr. Justice Prateek Jalan which are next coming up for hearing on 13th July, 2022.1 The Court vide Order dated 15th February, 2019, passed in the same case, formed a prima facie view that declaration of an account as 'fraud' means more than the account being a 'wilful defaulter'. In that light, it has been observed that if the account itself has not been declared to be a 'wilful defaulter', the declaration of an account as 'fraud' cannot sustain. Several orders have been passed by other co-ordinate benches, wherein the Court has deliberated upon the Impugned Circular and granted interim protection. Reliance has also been placed upon the dicta of the Court in State Bank of India v. Jah Developers.2

12. For the fore-going reasons, Petitioner has established a prima facie case, and considering the orders referred above, the Court is inclined to grant interim protection. Accordingly, till the next date of hearing, Respondent No. 1-Bank is restrained from taking any further steps or actions prejudicial to the Petitioner in furtherance of the order declaring the bank account of Petitioner as 'fraud'.

13. It is clarified that Respondents are free to issue a show cause notice, and give necessary hearing to the Petitioner, if they are inclined to do so. If such a measure is taken, a reasoned order shall be passed as per law, which 1 W.P.(C) 306/2019 titled - Apple Sponge and Power Ltd and Ors v. Reserve Bank of India and Anr.

2019 SCC OnLine SC 787.

shall be communicated to the Petitioner. It is also clarified that the Respondents are free to continue/ initiate/ file any complaint/ proceedings against the Petitioner, as per law, independent of the impugned order declaring the account of Petitioner as a fraud account, and this would include the action initiated for declaring Petitioner to be a 'wilful defaulter'.

14. Accordingly, the application stands disposed of.

SANJEEV NARULA, J JUNE 3, 2022 d.negi Signature Not Verified Digitally Signed W.P.(C) 9302/2022 Page 4 of 4 By:SAPNA SETHI Signing Date:04.06.2022 12:11:48