- (1.) The appellant in the AST is questioning a decision of a single Judge dated 10 July, 2014 [Kingfisher Airlines Ltd. and others v. Union of India and others, 2015 1 CompLJ 160], dismissing its WP No. 19247(W) of 2014 under Article 226 of the Constitution of India dated 4 July, 2014. Under a scheme framed by the Reserve Bank of India (in short RBI), with effect from 1 April, 1999, the banks, etc., incurred an obligation to submit to the RBI the details of the wilful defaulters and the banks, etc., were reporting all cases of wilful defaults that occurred or were detected after 31 March, 1999, on a quarterly basis. On 1 July, 2013, the RBI issued a Master Circular (in short MC) on Willful Defaulters for putting in place a system to disseminate credit information pertaining to wilful defaulters for cautioning the banks, etc. so as to ensure that further bank finance was not made available to them.
(2.) Paragraph 3 of the MC is quoted below: "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- -vis RBI guidelines. (iii) The borrower should thereafter be suitably advised about the proposal to classify him as willful 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."
(3.) United Bank of India sanctioning the appellant a Rs. 398.22 crore credit limit wrote a letter dated 28 May, 2014, to the appellant that the committee of the bank on identification of wilful defaulters classified it as a wilful defaulter on the grounds that it was in default on the loan that it did not utilize for the specific purpose for which it had been made available, but diverted for other purposes.;