Samapti Chatterjee, J. - (1.) The petitioners' case in a nutshell is as follows :- The petitioner no.1 is a company incorporated under the Companies Act, 1956 having its registered office at 174/C, Jamunalal Bajaj Street, Kolkata-700007. The petitioner nos. 2 and 8 are directors of the petitioner no.1 and are working for gain at 174/C, Jamunalal Bajaj Street, Kolkata-700007. The majority shareholders of the petitionerno.1 are citizens of India. It is also stated that the petitioner no.1 from time to time obtained cash credit facility from the respondent no.2 and 3 by way of taking financial assistance from the respondent no.1. The petitioner nos.2 to 7 and 9 stood as guarantors of the credit facility provided to the petitioner no.1. The petitioner no.1 had also been granted separate bill discounting facility by the respondent no.2 . Further case of the petitioner no.1 is that from time to time the limit of the above Credit Facilities were extended. With regard to the Bill Discounting Facility, certain amount became due owing to the failure of the buyers to make payment to the petitioner no.1. However payments were assured to the respondent no.2. On 8th March, 2014 and 27th March, 2014 towards the dues in the Bill Discounting Facility account securities were created in favour of the respondent no.2 and the said respondent no.2 was duly intimated by a letter dated 8th March, 2014, and 27th March, 2014. It is also stated that although the securities were furnished as above stated the petitioners were shocked to receive two separate letters on 8th May, 2014 respectively dated 2nd April, 2014 and 7th May, 2014 from the respondent no.2 wherein the respondent no.2 had sought to club the two distinct accounts unilaterally although the securities provided for each of the account were different. By this letter for the first time after receiving a security towards the dues of the bill discounting facility the respondent no.2 sought to convert such security for the cash credit facility by illegally clubbing the two accounts. Aggrieved by the aforesaid unilateral act of the respondents as communicated in the letters dated 2nd April, 2014 and 7th May, 2014 the petitioner no.1 through its advocate made representations on 9th May, 2014 and 2nd August, 2014 to the respondent no.2 but all in vain. All on a sudden on 5th September, 2014 the petitioner no.1 received a notice under Section 13 (2) of the SARFAESI Act whereby the petitioner no.1 was informed by the respondent bank that the petitioner's operation and financial assistance in cash credit had become irregular and the debt was classified as non-performing assets (NPA) with effect from 5th March, 2014. It was also contended in the said letter of the respondent no.2 that there was an outstanding liability of Rs. 27.77 crores as on 14th July, 2014 with interest. Immediately thereafter the petitioners made representation to the respondent no.2. Since the respondent bank was sitting tight over the matter the petitioner left with no alternative filed a writ petition being no. W.P 29865 (W) of 2014 against the respondent authorities. In the said writ petition on 7th January, 2015 the Hon'ble Court directed the respondents to file their affidavit-in-opposition. . While the said writ petition was pending all on a sudden the respondent no.2 issued the impugned letter dated 19th December, 2014 inter alia calling upon the petitioners to explain as to why their names should not be included in the list of the Reserve Bank of India's Credit Information Companies list of Wilful Defaulters. Thereafter on 6th June, 2016 after a lapse of one and a half years the respondent authorities directed the petitioners to appear in person and to further explain why the petitioners name should not be included in the list of Reserve Bank of India's Credit Information Companies Wilful Defaulters . Aggrieved by the said action the petitioners filed the present writ petition praying for the following reliefs : (a) A Writ of Mandamus do issue commanding the respondent authorities to recall and/or rescind and/or cancel the purported notices dated 19th December, 2014, 6th June, 2016, 18th June, 2016, 30th June, 2016 and 1st July 2016; (b) A Writ of Mandamus do issue commanding the respondent authorities and/or its men and servants directing them to withdraw the 19th December, 2014, 6th June, 2016, 18th June, 2016, 30th June, 2016 and 1st July 2016; (c) A Writ of Certiorari do issue commanding the respondent authorities and its men and servants to transmit all records pertaining to the instant case and particularly the letter dated 19th December, 2014, 6th June, 2016, 18th June, 2016, 30th June, 2016 and 1st July 2016 that the same may be quashed and conscionable justice be done. (d) Rule NISI in terms of prayers above; (e) Injunction do issue restraining the respondents from giving any effect or further effect to the letters dated 19th December, 2014, 6th June, 2016, 18th June, 2016, 30th June, 2016 and 1st July 2016 and/or from taking any steps or further steps pursuant thereto; (f) Ad-interim order in terms of prayers above; (g) Such further or other orders as Your Lordship may deem fit and proper. In the backdrop of the above facts and circumstances the following issues needs to be determined in this case:- (i)Whether the respondent bank is justified to issue the impugned notice to initiate proceedings to declare the petitioner company as wilful defaulter without giving any opportunity of reasonable hearing after furnishing report of the identification committee ? (ii)Whether the impugned notices were issued contrary to the provision of Master Circular posted under Section 35 (A) of the Banking Regulation Act ?
(2.) Mr. Anirban Ray, learned Advocate appearing for the petitioners strongly argued that without following the existing rules the respondent bank vindictively with ulterior motive issued notices dated 19th December, 2014 as well as dated 6th June, 2016, 18th June, 2016, 30th June, 2016 and 1st July 2016. In support of his contention Mr. Ray referred Paragraph-V of Modifications to Master Circular on Wilful Defaulters which is quoted below :- "(V)-Paragraph-3 on 'Grievances Redressal Mechanism' would now be titled 'Mechanism for identification of Wilful Defaulters' and read as below: The transparent mechanism referred to in Paragraph 2.5 (d) above should generally include the following : (a) The evidence of wilful default on the part of the borrowing company and its promoter/whole-time director at the relevant time should be examined by a Committee headed by an Executive Director and consisting of two other senior officers of the rank of GM/DGM. (b) If the Committee concludes that an event of wilful default has occurred, it shall issue a Show Cause Notice to the concerned borrower and the promoter/whole-time director and call for their submissions and after considering their submissions issue an order recording the fact of wilful default and the reasons for the same. An opportunity should be given to the borrower and the promoter/whole-time director for a personal hearing if the Committee feels such an opportunity is necessary." Mr. Ray further relied upon the Master Circular of Wilful Defaulters which is quoted below : "3. Mechanism for identification of Wilful Defaulters The transparent mechanism referred to in paragraph 2.5 (d) above should generally include the following : (a) The evidence of wilful default on the part of the borrowing company and its promoter/whole-time director at the relevant time should be examined by a Committee headed by an Executive Director and consisting of two other senior officers of the rank of GM/DGM. (b) If the Committee concludes that an event of wilful default has occurred, it shall issue a Show Cause Notice to the concerned borrower and the promoter/whole-time director and call for their submissions and after considering their submissions issue an order recording the fact of wilful default and the reasons for the same. An opportunity should be given to the borrower and the promoter/whole-time director for a personal hearing if the Committee feels such an opportunity is necessary."
(3.) It is further submitted by Mr. Ray that without forming any committee the impugned notice dated 6th June, 2016 was arbitrarily issued by the respondent bank. Mr. Ray also stated that without furnishing the documents the impugned notice dated 6th June, 2016 was issued. Mr. Ray further vehemently urged that the Committee which issued the earlier notice dated 19th December, 2014 is not the committee which issued the impugned notice dated 6th June, 2016 but a different committee issued the same. He submitted that the records show that no committee was formed earlier . Mr. Ray further strongly argued that the proposal was signed by the GM and not by or any members of the said committee. It is also stated by Mr. Ray that the General Manager sits at Kolkata and also in other two cities. It is also submitted by Mr. Ray that though the respondent bank from time to time asked the petitioners for One Time Settlement by deposit of 25 per cent of the dues. In support of his contention Mr. Ray relied on a decision reported in ( Maheshwary Ispat Ltd vs Central Bank of India, 2014 1 CalHN 116 (CAL)), an unreported decision of Hon'ble Delhi High Court dated April 17, 2018 passed in W.P . ( C ) 3764/2018 & CM Nos. 14933-34/2018 paragraphs-5.3, 5.4, 5.6 and 9 (Gaurav Dalmia vs Reserve Bank of India & Others) and also the decisions reported in Paragraphs-47 & 48 (Kingfisher Airlines Limited And Others vs Union of India And Others, 2015 1 CompLJ 165 (Cal)) , (Santanu Ghosh And Others vs The State Bank Of India And Others, 2015 1 CompLJ 197 (Cal)) and Para-6 (State of Punjab vs Bhag Singh, 2004 1 SCC 547).;