Delhi High Court - Orders
Sh S N Jhunjhunwala & Ors vs Reserve Bank Of India & Ors on 5 April, 2023
Author: Prateek Jalan
Bench: Prateek Jalan
$~1(Appellate Side)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 4050/2020
SH S N JHUNJHUNWALA & ORS. ..... Petitioner
Through: Ms. Neeha Nagpal, Mr. Malak M.
Bhatt, Mr. Vishvendra Tomar, Ms.
Supriya Tulka, Mr. Mohit
Chaudhary, Mr. Kunal Sachdeva,
Ms. Srishti Bajpai, Advocates.
versus
RESERVE BANK OF INDIA & ORS. ..... Respondent
Through: Mr. Ramesh Babu M.R., Ms.
Manisha Singh, Ms. Nisha Sharma,
Advocates for R-1.
Mr. Akshit Kapur, Mr. Tushar
Bagga, Advocates for R-3.
Mr. Arun Aggarwal, Mr. Shivam
Saini, Mr. Lovelash, Advocates for
R-5.
Mr. Rajesh Kumar Gautam, Mr.
Anant Gautam, Mr. Vipin Kumar,
Advocates for R-6.
Mr. Vivek Jain, Ms. Aastha
Tiwari, Advocates for R-10.
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
ORDER
% 05.04.2023 W.P.(C) 4050/2020 & CM.APPL. 4983/2021
1. The petitioners have filed CM.APPL. 4983/2021 for amendment of the petition by deletion of prayer clause "E", whereby the petitioners W.P.(C) 4050/2020 Page 1 of 5 sought to challenge the Forensic Audit Report ["FAR"], issued by forensic auditors appointed by the State Bank of India [respondent No. 3 herein].
2. The prayers in the writ petition are as follows: -
"A. Issue a Writ, Order or Direction in the nature of a Certiorari or any other appropriate Writ, Order or Direction quashing and setting aside the RBI Master Directions on Frauds - Classification and Reporting by commercial banks and FI's dated 03.07.2017 (as updated from time to time) bearing no DBS.CO.
CFMC.BC.No.1/23.04.001/2016-17; AND B. Pass a Writ, Order or direction in the nature of a mandamus or any other appropriate Writ, Order or direction directing the Respondents 3 to 12 to provide a copy of the Forensic Audit Report dated 27.02.2019 prepared by M/s T.R. Chadha & Co LLP to the Petitioners alongwith all its annexures [if any]; AND C. Issue a Writ, Order or Direction in the nature of a Certiorari or any other appropriate Writ, Order or Direction quashing and setting aside the declaration of Fraud, passed by the Respondent No. 3-12 against/impacting the Petitioners in capacity of Directors/Suspended Directors/Ex-Directors of M/s JVL Agro Industries Limited; and D. Issue a Writ, Order or Direction in the nature of a Certiorari or any other appropriate Writ, Order or Direction quashing and setting aside all consequential actions taken by the Respondent No. 3-12 against the Petitioners pursuant to the declaration of M/s JVL Agro Industries Limited's account as Fraud in terms of the RBI Master Directions on Frauds - Classification and Reporting by commercial banks and FI's dated 03.07.2017 (as updated from time to time) bearing no DBS.CO. CFMC.BC.No.1/23.04.001/2016-17; and/or E. Pass a Writ, Order or direction in the nature of a certiorari or any other appropriate Writ, Order or direction quashing and setting aside the Forensic Audit Report dated 27.02.2019 prepared by M/s T.R. Chadha & Co LLP and submitted to the Respondent Banks No 3 to 12 upon which the Respondent Bank[s] have taken action against M/s JVL Agro Industries Limited and resultantly impacting the Petitioners; and/or F. Pass any other order this Hon'ble Court may deem fit and necessary, in the interest of justice and good faith."
[Emphasis Supplied.] W.P.(C) 4050/2020 Page 2 of 5
3. By order dated 15.03.2023, the Court expressed a prima facie view that the petitioners were seeking to dissect the cause of action by challenging the FAR before a civil court while maintaining the challenge to the consequential action of declaration of their accounts as fraud accounts before this Court. Paragraph Nos. 2, 3 and 4 of the order dated 15.03.2023 read as follows: -
"xxxx xxxx xxxx
2. It prima facie appears that petitioners are seeking to dissect the cause of action by challenging the FAR before a civil court, while maintaining the challenge to the consequential action [declaring their accounts as fraud accounts], before this Court. In such a situation, grant of liberty, as sought by the petitioners, would, in fact, lead to multiplicity of litigation on the same cause of action.
3. Learned counsel for the petitioners seeks time to take instructions.
4. Petitioners are also directed to file an affidavit within three days stating as to whether any proceedings challenging the FAR have, in fact, been filed by them and if so, when.
xxxx xxxx xxxx"
4. Pursuant to the said order, the petitioner No. 1 has filed an affidavit dated 22.03.2023 from which it appears that he and petitioner No. 2 have already filed a civil suit [CS No. 113/2021] before the learned District Judge, North East District, Karkardooma Court, New Delhi challenging the FAR. A copy of the plaint has been placed on record in which the relief claimed is as follows: -
"a) Pass a decree of Cancellation of the Forensic Audit Report dated 27.02.2019 of the Defendant No. 1 as void ab-initio;
b) Pass a decree of Declaration to the effect that the Forensic Audit Report dated 27.02.2019 of Defendant No. 1 and all consequential actions thereafter are invalid, void, non-est, illegal and not binding on the Plaintiff(s) and all other concerns;
c) Pass an order of Injunction in favour of the Plaintiff(s) and against the Defendant No. 2, restraining it and its agents, employees, representative etc. from taking any action against the Plaintiff(s) on W.P.(C) 4050/2020 Page 3 of 5 the basis of the Impugned Report dated 27.02.2019 which has been prepared/submitted by Defendant No: 1;
d) Pass an order of Permanent & Mandatory Injunction in favour of the Plaintiff(s) and against the Defendant No. 2, commanding it and its agents, employees, representatives etc. to take back all actions against the Plaintiff(s) on the basis of the Impugned Report dated 27.02.2019 which has been prepared/submitted by Defendant No. 1;
e) Award Damages [as indicated in Paragraph 25] in favour of the Plaintiffs and against the Defendants.
f) Any other order this Hon'ble Court may deem fit in the facts and circumstances of the present case."
[Emphasis Supplied.]
5. It appears from the above that during the pendency of the writ petition and the pendency of the petitioners' application [CM APPL. 4983/2021] the petitioner Nos. 1 and 2 have, in fact, filed a suit challenging the FAR and all consequential action. Suffice it to say that the suit has been filed without the leave of this Court to delete prayer "E", as sought in the application. In any event, it is clear from the reliefs in both the proceedings that they are substantially overlapping and the petitioner Nos. 1 and 2 have instituted multiple proceedings on the same cause of action. In the writ petition, the petitioners have challenged the Master Directions on frauds issued by the Reserve Bank of India and the action taken against them thereunder, including the FAR and the declaration of their accounts as fraud accounts. In the suit, on the other hand, petitioner Nos. 1 and 2 have challenged the FAR and consequential actions, which would include the action taken against them under the Master Directions.
6. It may also be mentioned that in an application for early hearing [CM APPL. 12334/2023], filed on 13.03.2023, the petitioners did not W.P.(C) 4050/2020 Page 4 of 5 disclose that they have already filed the suit. An impression was instead sought to be given that, they proposed to file the suit after disposal of the application. Paragraphs 7 and 8 of CM APPL. 12334/2023 read as follows:-
"7. In this regard, the Petitioners have sought legal advice and thus seeking to avail their legal remedies as available in law against the said arbitrary report, inter-alia, challenging the said report before a Civil Court.
8. The finding in the Transactional-cum-Forensic Audit Report has serious ramifications on the Petitioners, and therefore, the Petitioners are seeking to take immediate legal recourse against the findings of the said report as soon as possible."
(Emphasis supplied.)
7. In view of the above, Ms. Neha Nagpal, learned counsel for the petitioners, seeks permission to withdraw this writ petition.
8. The writ petition, alongwith the pending application, is dismissed as withdrawn. In view of the conduct enumerated above, the petitioners will pay costs of ₹50,000/- to the Delhi High Court Legal Services Committee [UCO Bank, Delhi High Court, Shershah Road, New Delhi, Account No. 15530110008386, IFSC Code-UCBA0001553]. Costs be deposited within two weeks from today. Proof of payment of costs be filed in the Registry within one week thereafter, failing which the matter be placed before the Court.
9. A copy of this order be sent by the Registry to the learned Member Secretary, DHCLSC.
PRATEEK JALAN, J APRIL 5, 2023 "Bhupi"/ W.P.(C) 4050/2020 Page 5 of 5