Punjab & Haryana High Court Quashes Wilful Defaulter Declaration for Petitioners; Finds Violation of Natural Justice and Non-Consideration of Representation
Case Name: Sandeep Jindal and Others vs. Bank of Baroda and Others
Date of Judgment: 12 November 2025
Citation: CWP-365-2022
Bench: Hon’ble Mr. Justice Sheel Nagu, Chief Justice and Hon’ble Mr. Justice Sanjiv Berry
Held: The Punjab and Haryana High Court quashed the orders declaring petitioners No.5 and 6 as wilful defaulters, holding that their written responses and objections were not considered by either the Committee of Executives or the Review Committee before passing the impugned decisions. The Court held that failure to consider their reply, coupled with inadequate opportunity of personal hearing, resulted in breach of the RBI guidelines and violation of the principles of natural justice. It further observed that given the serious consequences of wilful defaulter classification, including restrictions on business and financing under Article 19(1)(g), strict adherence to procedural safeguards mandated in SBI vs. Jah Developers was required.
Summary: The petitioners were directors of M/s Jindal Medicot Ltd. and were issued a show-cause notice on 19.11.2020 proposing action under the RBI framework for wilful defaulters. Only petitioners No.5 and 6 submitted replies asserting that they were neither promoter-directors nor signatories to loan documents at the time the borrowing was undertaken. A personal hearing was fixed for 09.02.2021, but as reflected from page 6 of the order, the communication was dispatched on 06.02.2021 and was received after the scheduled date, preventing their appearance. The bank thereafter declared them wilful defaulters on 16.02.2021, and the Review Committee subsequently upheld the decision on 20.10.2021. The petitioners argued that their replies were ignored and that the decision-making process failed to comply with mandatory procedural steps under RBI circulars. The Bank argued that the decisions were lawful and that appointment records from the Ministry of Corporate Affairs showed the petitioners as directors.
Decision: The writ petition was partly allowed. The Court held that the representations dated 02.12.2020 and 18.02.2021 submitted by petitioners No.5 and 6 were required to be duly evaluated before declaring them wilful defaulters. Finding that neither order addressed their defence or objections, the Court concluded that the process was procedurally deficient. The orders dated 16.02.2021 and 20.10.2021 were therefore quashed only in respect of petitioners No.5 and 6. The matter was remanded to the authorities for reconsideration, with directions to grant sufficient opportunity of hearing and decide the matter afresh as per RBI circulars and law.