Madras High Court
Dharani Sugars And Chemicals Limited vs Central Bank Of India on 25 July, 2025
Author: N.Anand Venkatesh
Bench: N. Anand Venkatesh
1/8 WP No. 11287 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 25-07-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
WP No. 11287 of 2025
and WMP No. 12730 of 2025
1. Dharani Sugars and Chemicals Limited
CIN.L15421TN1987PLC014454
Rep By its Director A.Sennimalai,
PGP House 57, Sterling Road,
Nungambakkam, Chennai,
Tamil Nadu , India- 600 034
2.Dr.Palani G.Periasamy
3.Visalakshi Periasamy
4.M.Ramalingam
5.A.Sennimalai
Petitioner(s)
Vs
Central Bank of India
Rep by its Assistant General Manager
Stressed Assets Management Branch,
Ground Floor, Zonal Office Building,
No.48/49, Red Cross Road,
Egmore, Chennai-08.
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2/8 WP No. 11287 of 2025
Respondent(s)
PRAYER Writ Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Certiorarified Mandamus, calling for the records of the
respondent No.1 issued the impugned order dated 17.06.2021 against the
petitioners and the same to be quash, which was relevant to i.e. Borrower
Company, its Directors and Guarantors are illegal, arbitrary, contra to the
guidelines issued in RBI Circular 2015-16/100/DBR.No.CID.BC.22/ 20.16.003/
2015-16 dated 01.07.2015 and against the law laid down by the Hon'ble
Supreme Court in the case of State bank of India Vs M/s.Jaw Developers
Private Limited and others in Civil Appeal No.4776/2019 reported in 2019
(6) SCC 787, in violation of Article 19 (1)(g) of the Constitution of India and
against the principles of natural justice and consequently to quash the
impugned proceedings.
For Petitioner(s): J.Manivannan
For Respondent(s): Mr.M.L.Ganesh
ORDER
This writ petition has been filed challenging the impugned proceedings of the 1st respondent dated 17.06.2021, declaring the petitioners as 'Wilful Defaulters'.
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2.Heard Mr.J.Manivannan, learned counsel appearing on behalf of the petitioners and Mr.M.L.Ganesh, learned counsel appearing on behalf of the respondent.
3.The case of the petitioners is the 1st petitioner obtained credit facilities with Consortium of Banks including the respondent Bank. Due to financial challenges, the loan account of the 1st petitioner was classified as 'NPA'.
Thereafter, the Consortium Lenders Meeting was held on 14.02.2020. A Forensic Auditor was appointed and the audit was completed and report was shared with the lenders. In the meantime, Corporate Insolvency Resolution Process was initiated against the 1st petitioner Company. Subsequently, the Consortium Banks transferred the loan amount to the National Asset Reconstruction Company Limited.
4.The petitioners were trying to find out the solution with potential investors to revive the Company. At that point of time, they became aware of https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/07/2025 02:16:50 pm ) 4/8 WP No. 11287 of 2025 the fact that they have been classified as 'Wilful Defaulters' by the respondent Bank. Aggrieved by the same, the present writ petition has been filed before this Court.
5.The main ground that has been taken by the petitioners is that the respondent Bank failed to follow the mandate under the Master Circular dated 01.07.2015 and also the judgement of the Apex Court in State Bank of India vs. Jah Developers Private Limited and others reported in 2019 6 SCC 787.
6.The Apex Court after considering the Master Circular issued by the Reserve Bank of India rendered the following findings at Paragraph No.24 of the judgement which is extracted hereunder:
Given these drastic consequences, it is clear that the Revised Circular, being in public interest, must be construed reasonably. This being so, and given the fact that Para 3 of the Master Circular dated 1-7-2013 permitted the borrower to make a representation within 15 days of the preliminary decision of the https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/07/2025 02:16:50 pm ) 5/8 WP No. 11287 of 2025 First Committee, we are of the view that first and foremost, the Committee comprising of the Executive Director and two other senior officials, being the First Committee, after following Para 3(b) of the Revised Circular dated 1-7-2015, must give its order to the borrower as soon as it is made. The borrower can then represent against such order within a period of 15 days to the Review Committee. Such written representation can be a full representation on facts and law (if any). The Review Committee must then pass a reasoned order on such representation which must then be served on the borrower. Given the fact that the earlier Master Circular dated 1-7-2013 itself considered such steps to be reasonable, we incorporate all these steps into the Revised Circular dated 1-7-2015. The impugned judgment is, therefore, set aside, and the appeals are allowed in terms of our judgment. We thank the learned Amicus Curiae Shri Parag Tripathi, for his valuable assistance to this Court.
7.In the case in hand, the procedure as contemplated under the Master Circular dated 01.07.2015 has not been followed. The petitioners themselves came to know that they have been classified as 'Wilful Defaulters' only at a later point of time. Therefore, the impugned order dated 17.06.2021, is liable to be https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/07/2025 02:16:50 pm ) 6/8 WP No. 11287 of 2025 interfered by this Court and the same is hereby, set aside. If ultimately, the respondent Bank wants to classify the petitioners as 'Wilful Defaulters', they have to follow the mandate under the Master Circular dated 01.07.2015 and also take note of the judgement of the Apex Court which mandated providing opportunity to the concerned persons.
8.In the result, this writ petition stands allowed in the above terms. No Costs. Consequently, connected miscellaneous petition is closed.
25-07-2025 (2/2) Index:Yes/No Speaking/Non-speaking order Internet:Yes Neutral Citation:Yes/No ssr https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/07/2025 02:16:50 pm ) 7/8 WP No. 11287 of 2025 To The Assistant General Manager Central Bank Of India Stressed Assets Management Branch, Ground Floor, Zonal Office Building, No.48/49, Red Cross Road, Egmore, Chennai-08.
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ssr WP No. 11287 of 2025 25-07-2025 (2/2) https://www.mhc.tn.gov.in/judis ( Uploaded on: 29/07/2025 02:16:50 pm )