Telangana High Court
Mrs. Rita B Parikh vs State Bank Of India on 19 June, 2025
HONOURABLE SRI JUSTICE N.V.SHRAVAN KUMAR
Writ Petition No.25226 of 2024
ORDER:
This writ petition is filed in the nature of writ of certiorari calling for the records and quashing the proceedings of Fraud Identification Committee of respondent No.1 dated 12.08.2024 and Order No.2024-25/14 dated 12.08.2024 issued by respondent No.1.
2. Heard Mr.Vikram Pooserla, learned senior counsel for the petitioners and Mr.Chithari Prabhakar, learned standing counsel for respondent No.1. With their consent, this writ petition is taken up for disposal.
3. The facts of the case in brief are that the petitioners were Directors of M/s.Parikh Fabrics Private Limited incorporated under Companies Act, 1956 for the purpose of manufacturing and exporting of socks. The petitioners were directors of the said Company from June 2002 to February 2019. The manufacturing facilities are located in APIIC Industrial Park, Nellore District, Andhra Pradesh. The Company entered into a four (4) term loan agreements with respondent No.1/Bank for an amount of Rs.53,22,00,000/- which was ::2::
sanctioned on 17.03.2010. It appears that thereafter the company could not repay the loan and has come forward to settle dues in One Time Settlement (OTS) sanctioned by respondent No.1 on 31.10.2016. Thereafter, the company made initial payment of Rs.10.56 Crores and in view of some delay, respondent No.1 cancelled OTS on 14.05.2018. Thereafter, respondent No.1 appointed Forensic Auditor to conduct audit of the company. On 10.05.2019, the Forensic Audit report was submitted by Auditor and on 19.09.2019 respondent No.1 declared the account of the company as 'fraud' under the RBI guidelines dated 01.06.2017. The petitioner submits that he was not informed about the said declaration and was not provided with a copy of Forensic report.
4. On 08.03.2021, FIR was registered by Central Bureau of Investigation, ACB, Hyderabad against the Company basing on declaration of 'fraud'. Thereafter, petitioner No.1 has filed Crl.P.No.2481 of 2021 before this Court to quash the proceedings, and the same is pending for adjudication. Thereafter, the Fraud Investigation Committee based on the judgment rendered by Hon'ble Supreme Court in the case of ::3::
State Bank of India v. Rajesh Agarwal 1 decided to reverse the 1st declaration of fraud which came to notice of the petitioner on 22.03.2024. Thereafter, a show cause notice dated 22.03.2024 was issued along with selective pages of the forensic audit report.
5. Mr.Vikram Pooserla, learned senior counsel for the petitioner would submit that only 4 pages of forensic report has been supplied to the petitioner, to which the petitioner replied on 12.04.2024 seeking a stock audit report and forensic audit report. Thereafter, on 31.05.2024 respondent No.1/Bank replied to the letter dated 12.04.2024 and has supplied stock audit report. On 17.06.2024, through correspondence, the petitioner sought copies of the forensic audit report in its entirety and on 17.08.2024 respondent No.1/Bank issued a letter enclosing the impugned order dated 12.08.2024 which was received by the petitioner on 22.08.2024.
6. Learned senior counsel further submits that the Company was admitted into Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 on 08.02.2019 and subsequently liquidation order was passed on 1 2023 6 SCC 1 pg.80 ::4::
21.01.2020. Learned senior counsel in support of his case would rely on judgments of the Hon'ble Supreme Court in State Bank of India v. Rajesh Agarwal 2 and Milind Patel v. Union of India and others 3. He would further submit that RBI introduced Master Directions on Fraud Risk Management on 15.07.2024 which mandate, must be strictly adhered prior to declaration of 'fraud'. Learned senior counsel further drawn attention of this Court to the copies of forensic report issued to the petitioner along with show cause notice dated 22.03.2024. It is further submitted that the said information furnished is not sufficient to submit reply and unless entire forensic report is available to the petitioner, the petitioner would not be in a position to answer the reasons stated in the audit report.
7. Today, when the matter is taken up for hearing, learned standing counsel for respondent No.1/Bank placed the entire copy of forensic report and same was also served on learned senior counsel for the petitioner. Learned senior counsel for the petitioner would submit that the Forensic Audit Report is for the period covering from April, 2010 to March, 2018 and would submit that sometime may be granted for the petitioner to go 2 2023 SCC OnLine SC 342 3 2024 SCC OnLine Bom 745 ::5::
through the report and put forward their submissions and reply accordingly.
8. In view of all the observations made above, the proceedings of the Fraud Identification Committee of Respondent No.1 dated 12.08.2024 and Order No.2024-25/14 dated 12.08.2024 issued by respondent No.1/Bank is hereby set aside and the petitioner is granted time to put forward their submissions to the extent of Forensic Audit Report is concerned.
Respondent No.1 is also granted liberty to issue fresh notice and call for the objections from the petitioner and after giving a fair opportunity of hearing to the petitioner, pass appropriate orders by following due process of law.
9. Accordingly, this writ petition is disposed of. There shall be no order as to costs.
Miscellaneous petitions, if any, pending in this writ petition shall stand closed.
_____________________________ N.V.SHRAVAN KUMAR., J 19.06.2025 mrm