SANJIB BANERJEE,J. - (1.) THE petitioners question the propriety of a decision rendered by the Grievance Redressal Committee of the respondent bank while rejecting the petitioners' representation against a preliminary opinion of the bank that the petitioners should be labelled as wilful defaulters under a master circular of the Reserve Bank of India issued on July 1, 2011. The reliefs claimed in the petition essentially seek the annulment of the notices issued by the respondent bank on February 7, 2013 and March 4, 2013 informing the petitioners that the names of the petitioners had been included in the list of wilful defaulters and circulated to credit information companies. The notice dated February 7, 2013, in its second paragraph, curtly informed the addressees that the Grievance Redressal Committee of the bank had rejected the appeal carried by the petitioners against the decision of an appropriate committee of the bank to include the names of the petitioners in the list of wilful defaulters maintained by the Reserve Bank of India and by a credit information company. In course of the present proceedings, the petitioners have been furnished a single-page order of the Grievance Redressal Committee passed on December 1, 2012 that does not appear to have been previously communicated to the petitioners. Such decision was rendered on the petitioners' appeal against the bank's proposal to classify the petitioners as wilful defaulters and the discussion and decision are tersely reflected in the following lines: "We furnish hereunder the decision of the Committee after deliberations with DGM of SAMB, Kolkata, and considering personal written representations of the grievances of the guarantors to the Committee along with rejoinders, views of the branch and personal hearing of the legal representatives of the ex-director and guarantor hereto." Immediately below the above decision there is the signature of the Chief Zonal Manager (SAMG) and at the foot of the page, below the names of the persons who had preferred the appeal, the signatures of the other members of the Grievance Redressal Committee are appended. The petitioners have also been furnished, in course of the present proceedings, a four-page recording of what appears to be the minutes of the proceedings of the Grievance Redressal Committee at its meeting of November 19, 2012. The minutes do not bear any signature and have now been sought to be passed off by the bank as the reasons in support of the rejection of the petitioners' appeal. Only one of those who had complained of the bank's proposal to classify several persons connected with the credit facilities obtained by Global Automobiles Limited as wilful defaulters appears to have succeeded. This petition has been filed by an individual and the three companies whose appeals stood rejected. All the petitioners had guaranteed due repayment of the credit facilities obtained from the bank by Global Automobiles Limited.
(2.) THE master circular pertaining to wilful defaulters issued by the Reserve Bank of India, in its relevant clause, mandates as follows: " 3. Grievances Redressal Mechanism Banks/FIs should take the following measures in identifying and reporting instances of wilful default: (i) With a view to imparting more objectivity in identifying cases of wilful default, decisions to classify the borrower as wilful defaulter should be entrusted to a Committee of higher functionaries headed by the Executive Director and consisting of two GMs/DGMs as decided by the Board of the concerned bank/FI. (ii) The decision taken on classification of wilful defaulters should be well documented and supported by requisite evidence. The decision should clearly spell out the reasons for which the borrower has been declared as wilful defaulter vis-a-vis RBI Guidelines. (iii) The borrower should thereafter be suitably advised about the proposal to classify him as wilful defaulter along with the reasons therefor. The concerned borrower should be provided reasonable time (say 15 days) for making representation against such decision, if he so desires, to a Grievance Redressal Committee headed by the Chairman and Managing Director and consisting of two other senior officials. (iv) Further, the above Grievance Redressal Committee should also give a hearing to the borrower if he represents that he has been wrongly classified as wilful defaulter. (v) A final declaration as 'wilful defaulter' should be made after a view is taken by the Committee on the representation and the borrower should be suitably advised." It is evident that a committee of higher functionaries of a bank headed by an executive director and consisting of two zonal managers or deputy general managers, as may be decided by the board of the concerned bank, has to be constituted by a bank to identify cases of wilful default and take a preliminary decision to classify a borrower as a wilful defaulter. Upon the decision taken by such committee, which is required to be documented and supported by evidence, the same should be communicated to the person sought to be declared as a wilful defaulter and the person afforded reasonable time for making a representation against the preliminary decision to a Grievance Redressal Committee of the bank headed by the Chairman and Managing Director of the bank and comprising two other senior officials. From the scheme of Clause 3 of the Reserve Bank master circular on wilful defaulters, it is evident that the decision taken by the preliminary committee is only a proposal and it attains finality upon a person proposed to be classified as a wilful defaulter not making a representation to the Grievance Redressal Committee within reasonable time of being intimated of the proposal to classify him as a wilful defaulter or upon the representation being rejected by the Grievance Redressal Committee. The would- be wilful defaulter is given an opportunity to question the basis of the opinion arrived at by the preliminary committee; and, the material and evidence relied upon by the preliminary committee to form its opinion are required to be assessed by the Grievance Redressal Committee in the light of the representation made by the would-be defaulter. It is, thus, apparent that the Grievance Redressal Committee undertakes a full-scale adjudication as to whether a person proposed to be classified as a wilful defaulter meets the conditions for being so labelled under the relevant Reserve Bank master circular.
(3.) THE consequence of a person being classified as a wilful defaulter is grave and the individual or the company would scarcely qualify thereafter to be able to obtain credit facilities from banks and financial institutions. The master circular, in such circumstances, makes a two-fold procedure to be adopted with every opportunity to be afforded to a person sought to be branded as a wilful defaulter to question the basis for the formation of the opinion prior to such person being so condemned. In view of the serious consequences that visit a person being labelled as a wilful defaulter, the adjudication undertaken by the Grievance Redressal Committee and its decision have to reflect the defence of the would-be wilful defaulter against the opinion of the preliminary committee and the evidence relied upon by the preliminary committee. In this case, a detailed written representation was submitted by the petitioners to the Grievance Redressal Committee. It was incumbent on such committee to discuss the defence of the petitioners, weigh the arguments proffered against the opinion rendered by the preliminary committee in the backdrop of the evidence relied upon by the preliminary committee and, only thereafter, render an opinion as to whether the petitioners met the relevant conditions under the Reserve Bank master circular to be classified as wilful defaulters.;