Atul Kumar Jain v. IDBI Bank Limited & Anr

1. The petitioner is invoking the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India, 1950 seeking the following reliefs: “a. Issue a writ of Certiorari or any other writ/order/direction in the nature thereof quashing the entire proceedings initiated by the IDBI bank to classify and/or declare the Petitioner as „fraud‟ including the Show Cause Notice Dated 07.02.2024 issued by IDBI Bank bearing Ref. No. IDBI BANK/NMG/PLL/2495 and the Order dated 05.07.2024 bearing Ref. No. IDBI Bank/NMG/PLL/2024-25/272 issued by IDBI Bank and any consequent action related thereto under the RBI`s circular no DBS.CO.CFMC.BC.No.1/23.04.001/2016-17 titled as „Master Directions on Frauds – Classification and Reporting by commercial banks and select FIs‟; and/or b. Pass any other/further order(s) or direction(s) as this Hon‟ble Court may deem fit and necessary in the interest of justice.”

2. Mr. Dayanan Krishnan, learned Senior Counsel for the petitioner has urged that although the loan transaction in question had been taken when the petitioner was one of the whole time Director of the company viz., Punj Lloyd Limited, he had resigned on 29.05.2018 in accordance with the law.

3. Alluding to the Show Cause Notice [“SCN”] dated 05.07.2024, it is pointed out that the same is alleging certain financial irregularities, for which reliance has been placed on two forensic audit reports carried out at the behest of the consortium of banks viz., M/s. Choksi and Choksi for the review period from April, 2014 to June, 2017 and M/s. Ernst & Young (E&Y) for the review period from July 01, 2017 to March 07, 2019. It is vehemently urged that SCN is not accompanied with any documents and despite repeated requests to the respondent No.1/IDBI Bank Limited to supply copies of the forensic audit reports, the same have not been supplied.

4. During the course of the arguments, learned Senior Counsel for the petitioner also alluded to the minutes of the consortium meeting convened on 22.03.2018, which was evidently attended by the Authorized Representative of the respondent No.1/IDBI Bank Limited and no action was proposed so as to declare or classify the account of the company in question as „fraud‟.

5. Learned Senior Counsel for the petitioner has further alluded to the reply dated 29.02.2024 to the SCN and it was pointed out that vide paragraph (4) to (9), he had sought certain documents including the copies of the forensic reports, which has not been supplied to him.

6. Per contra, learned counsel for the respondent No.1/IDBI Bank Limited has urged that extracts of the audit reports have been supplied, but they are ready and willing to afford an opportunity to the petitioner to come to the bank and inspect the records and the petitioner would also be provided with complete set of audit reports.

7. However, at the same time, it was also pointed out by the learned counsel for the respondent No.1/IDBI Bank Limited that they have reported the matter to the RBI[1] in terms of the “RBI Master Directions on Fraud-Classification and Reporting by Commercial Banks and select FIs”, dated July 01, 2016.

8. Learned Senior Counsel for the petitioner has requested that RBI may be notified about the pendency of this case. I am afraid there is no such requirement on the part of this Court to intimate the RBI about pendency of this case, particularly when the respondent IDBI can independently pursue other remedies in terms of the Master Guidelines

9. After giving thoughtful consideration to the submissions advanced by the learned counsels for the parties at the Bar and having regard to the decision by the Calcutta High Court in Hemant Kanoria v. Bank of India[2] and decision by the Supreme Court in the case of 1 Reserve Bank of India 2024 SCC OnLine Cal 1012 Jaskaran Singh Chawla v. UOI[3], the present petition is disposed of with the following directions:

(i) The SCN dated 07.02.2024 shall stand, however, the respondent No.1/IDBI Bank Limited shall maintain status quo and shall not declare or classify the account of the petitioner as „fraud‟;

(ii) In the meanwhile, the petitioner shall be afforded an opportunity to inspect the relevant record from 02:00 p.m. to 05:00 p.m. at IDBI Bank Ltd., 9th Floor, Plate B, Block 2, NBCC Office Complex, East Kidwai Nagar, New Delhi- 110023 on meeting Ms. Kaveri Krishnamurthy, DGM, IDBI Bank Ltd. (Mobile No. 9820252268) on 29.07.2024 and 30.07.2024 and if need be on 31.07.2024;

(iii) The petitioner may be accompanied with his Chartered

Accountant or any financial expert who shall be supplied with the copies of the forensic audit reports, at the costs of the petitioner;

(iv) On conducting such inquiry, the petitioner shall file his reply to the SCN within a period of 10 days i.e. on or before 12.08.2024;

(v) The respondent No.1/IDBI Bank Limited may afford an opportunity of hearing to the petitioner on any working day, and, thereafter may take a decision thereupon in accordance with law within 21 days of the filing of the reply to the SCN.