Andhra Pradesh High Court - Amravati
Manepalli Suryamanikyam vs Reserve Bank Of India on 8 February, 2024
[ 5446 ]
IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI
(Special Original Jurisdiction)
THURSDAY ,THE EIGHTH DAY OF FEBRUARY
TWO THOUSAND AND TWENTY FOUR
PRESENT
HONOURABLE THE CHIEF JUSTICE DHIRAJ SINGH THAKUR
AND
THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO
WRIT PETITION NO: 5177 OF 2024
Between:
1. MANEPALLI SURYAMANIKYAM, S/o.Sri.
Late.M.Seshavataram, Aged 71 Years, Occ Business,
R/o.H.No.PLot No-304L, Road No. 78, Film Nagar, Jubileehills,
Near Padmalaya Studio, Hyderabad. PIN.500033, mail id
[email protected].
..PETITIONER(S)
AND
l. RESERVE BANK OF INDIA, Having its Office at b.Sansad
Marg, New Delhi-110001, India, Represented by its
Authorised Representative/ Officer.
&. IDBI Bank Limited, , Regional Office, Represented by its
Authorised Representative/ Officer, Visakhapatnam, First
Floor, Pydah Chambers, VIP Road, Siripuram,
Visakhapatnam, PIN 530003.
3. Central Bureau of Investigation, Rep. By its Authorised
Representative/ Officer, Plot No-5-B, CGO Complex, Lodhi
Road, New Delhi-110003. Also at 1-83-21/4, MVP Double
Road, Sector8, MVP Colony, Visakhapatnam, A.P. PIN 530017
4. Directorate of Enforcement, Ministry of Finance, Department
of Revenue, D.No. 39-33-93/2, Plot No-MIG-230,
Madhavadhara VUDA Lay out, Visakhapatnam-530033. Rep.
By its Authorised Representative /Officer
... RESPONDENTS
Petition under Article 226 of the Constitution of India
praying that in the circumstances stated in the affidavit filed
therewith, the High Court may be pleased to Prayed that, (A). To
Declare that the Reserve Bank of India (Frauds Classification
and Reporting by Commercial Banks and Select Financial
Institutions) Directions, 2016, dated 01.07.2016 are arbitrary,
illegal, unconstitutional and ultra-vires the power of the
Respondent No.I under Section 355A of the Banking Regulation
Act, 1949. (B).To Declare the action of Respondent No-2 in
declaring the account of the Petitioner as Fraud in terms of the
Impugned Circular Dated 01-07- 2016 of Respondent No-1, i.e
Fraud Classification and reporting by commercial Banks and
Select Financial Institutions Directions 2016 Arbitrary,
irrational and Violative Principles of natural Justice and
consequently set aside the same. For Quashing the Criminal
Proceedings initiated by Respondent No.2 registered as FIR
No.02(A)/2018, CBI/ACB/VSKP, Dated 27-03-2018, which was
Numbered as C.C.No. 10 of 2026 on the File of Hon'ble Principal
Special Judge for CBI Cases at Visakhapatnam, as the same is
entirely based on arbitrary classification and declaration of Bank
account as fraud. (D).To Direct the Respondent No.2 (IDBI
Bank), to forbear from taking civil/criminal proceedings against
the Petitioner on the basis of declaring the Petitioners loan-
account as fraud account in terms of the impugned Circular
dated 01.07.2016 i.e., Fraud Classification and reporting by
commercial banks and select financial institutions Directions
2016 (E).To Quash the Proceedings registered as 0.A.No. 10935 of
20235, Dated 09-01-2024, pending before the 4th Respondent
(Directorate of Enforcement, Visakhapatnam Zonal Office) as the
same are entirely based on arbitrary classification and
declaration of Petitioners Loan account as fraud account in terms
of the impugned Circular dated 01.07.2016 i. Fraud
Classification and reporting by commercial banks and select
financial institutions Directions 2016. (F).To pass
IA NO: 1 OF 2024
Petition under Section 151 CPC praying that in the
circumstances stated in the affidavit filed in support of the
petition, the High Court may be pleased to direct the
Respondents not to take any coercive action/steps of whatsoever
nature against the Petitioner, and pass
Counsel for the Petitioner(s) :SRI. 5S SATYANARAYANA MOORTHY
Counsel for Respondent No.3: Mr. JUPUDI V. K. YAGNADUTT,
In-charge DEPUTY SOLICITOR
GENERAL OF INDIA.
Counsel for Respondent No.4: Mr. JOSYULA BHASKARA RAO
The Court made the following:
Mr. Jupudi V.K. Yagnadutt, learned in-charge Deputy
Solicitor General, waives notice for respondent No.3.
Mr. Josyula Bhaskara Rao, learned Standing Counsel, waives
notice for respondent No.4.
Notices be issued for service upon respondent Nos.1 & 2.
Personal notice to respondent Nos.1 & 2 is permitted.
The petitioner challenges the action of the IDBI Bank -
respondent No.2 herein in declaring the account of the petitioner as
fraud, in terms of the impugned Circular, dated 01.07.2016, issued
by the Reserve Bank of India.
Apart from this, the petitioner also seeks quashment of the
criminal proceedings initiated by IDBI Bank in regard to
FIR.No.RCO2(A)/2018-CBI,ACB, VSKP, dated 27.05.2018,
numbered as C.C.No.10 of 20235 on the file of the Principal Special
Judge for CBI Cases at Visakhapatnam; the petitioner also
challenges the proceedings being OA.No.1093 of 20235, dated
09.01.2024, pending before the 4% respondent - Directorate of
Enforcement of Visakhapatnam Zonal Office as it is stated the same
were based entirely on the arbitrary classification and declaration
of loan account of the petitioner as fraud.
Counsel for the petitioner would submit that the entire
registration of an FIR as also initiation of the proceedings by the
Enforcement Directorate were based upon the arbitrary exercise of
power by respondent No.2 Bank in declaring the loan account of the
petitioner as fraud as being in violation of the principles of natural
justice. It is stated that no opportunity of being heard was given to
the petitioner before respondent No.2 Bank declared the loan
account of the petitioner as fraud.
Reliance in this regard is placed upon the judgment of the
Apex Court rendered in State Bank of India and others vs. Rajesh
Agarwal and others [(20235) 6 SCC 1] to state that the Apex Court
has reiterated the adherence by the Bank to the principles of
natural justice and that the principles of natural justice were not
excluded in the action before declaring the account as a fraud
account.
Reliance is also placed upon an interim order passed by a
Division Bench of this Court in WP.No.8388 of 20235, dated
04.04.2023, in which it was directed that no coercive steps be
taken against the petitioner.
We have heard learned counsel for the petitioner as also gone
through the facts of the case on record and the order, dated
04.04.2023.
It can be seen that in WP.No.15994 of 2088, the directions
were issued in the peculiar facts of the case inasmuch as the
petitioners in that case were said to have deposited with the Bank
the entire loan amount of Rs.86.75 Crores.
In the present case it appears from the charge sheet
submitted by the Central Bureau of Investigation against the
petitioner and other account holders with the IDBI Bank that in
respect of the petitioner's loan account, an amount of
Rs.6,51,29,941/- was due and outstanding as on 28.02.2018. The
said amount would certainly have entailed further interest at the
Bank rates which were applicable from time to time.
Keeping in view of all the aforementioned facts, we direct that
no coercive steps shall be taken against the petitioner by
respondent No.4, in case the entire outstanding amount of
Rs.6,51,29,941/- as also the interest it has accrued thereupon till
today, at the applicable bank rates, is deposited with the IDBI Bank
- respondent No.2, within ten days from today. We make it clear
that all other proceedings initiated against the petitioner by
respondent No.4 shall go on in the normal course.
List on 28.02.2024 along with W.P.No.8388 of 2025 & batch.
DHIRAJ SINGH THAKUR, CJ R. RAGHUNANDAN RAO, J
Note: Issue CC today
B/O
Vil
