Bombay High Court
Rajesh G. Poddar vs Reserve Bank Of India on 8 August, 2024
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2024:BHC-OS:12025-DB
11.wp.1943.2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1943 OF 2024
Rajesh G. Poddar & Ors. .. Petitioners
Versus
Reserver Bank of India & Anr. .. Respondents
Digitally
Ms.Radhika Nair a/w Keertana Nair i/b Anchal Garg,
signed by
UTKARSH
UTKARSH
KAKASAHEB
Advocates for the Petitioners.
KAKASAHEB BHALERAO
BHALERAO Date:
2024.08.09
18:07:11
+0530 Mr.Shyam Kapadia a/w Abdullah Qureshi, Shradha
Patil i/b India Law LLP, Advocates for Respondent No.2.
CORAM :B. P. COLABAWALLA &
FIRDOSH P. POONIWALLA, JJ.
DATE : AUGUST 08, 2024
P. C.
1. The above Writ Petition is filed challenging the impugned
declaration of fraud of the Petitioners' account under the RBI circular
dated 1st July 2016.
2. It is the case of the Petitioners that the copy of such
declaration has not been served on the Petitioners. This apart, one of the
main grounds to challenge the said declaration is that no hearing was
given before the Petitioners' account was declared as 'Fraud'. Further no
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documents were also furnished. In such circumstances, the argument is
that the entire action of the 2 nd Respondent Bank in declaring the
Petitioners account as fraud, runs in the teeth of the decision of the
Hon'ble Supreme Court in the case of State Bank of India & Ors.
V/S Rajesh Agarwal & Ors. [2023 (6) SCC 1].
3. Mr.Kapadia, the learned counsel appearing on behalf of
Respondent No.2, fairly conceded that the declaration of the account of
the Petitioners as a fraud account is in fact contrary to the judgment of
the Hon'ble Supreme Court in the case of Rajesh Agarwal (supra).
He however submitted that no malafides can be attached to the actions
taken by the 2nd Respondent Bank because the declaration of fraud was
done prior to the decision rendered by the Hon'ble Supreme Court in
Rajesh Agarwal.
4. Having heard the learned counsel appearing for the parties
we are of the view that since the declaration of the Petitioners' account
as fraud is contrary to the decision of the Hon'ble Supreme Court in
Rajesh Agarwal, the above Petition deserves to be allowed. It makes
little difference whether the action taken by the 2 nd Respondent Bank is
before or after the decision of the Hon'ble Supreme Court in Rajesh
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Agarwal. It is not as if the judgment in Rajesh Agarwal applies only
prospectively. In the said decision, the Hon'ble Supreme Court only
declared what the law always was and would apply even to actions taken
prior to passing of the said judgment.
5. In these circumstances, the declaration of fraud of the
Petitioners' account by the 2nd Respondent Bank is hereby quashed and
set aside. We however make it clear that criminal proceedings that have
been initiated by the 2nd Respondent Bank against the Petitioners shall
proceed on its own merits but de-hors the Petitioners' account being
declared as a fraud account under the Master Circular dated 1 st July
2016.
6. We further clarify that since now a new Master Circular has
been issued by RBI [regarding fraud declarations] dated 15 th July 2024,
the 2nd Respondent Bank shall be entitled to initiate fresh proceedings
for declaring the Petitioners account as a fraud by strictly following the
RBI circular dated 15th July 2024 and the decision of the Hon'ble
Supreme Court in the case of Rajesh Agarwal. In the event the
account of the Petitioners is once again declared as fraud [by following
the due procedure], the 2nd Respondent Bank will not have to file a fresh
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criminal complaint as contemplated in clause 5 of the RBI circular dated
15th July 2024 and the complaint already filed and pending shall be
taken to its logical conclusion.
7. The Writ Petition is disposed of in the aforesaid terms.
However, there shall be no order as to costs.
8. This order will be digitally signed by the Private Secretary/
Personal Assistant of this Court. All concerned will act on production by
fax or email of a digitally signed copy of this order.
[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]
AUGUST 08, 2024
Utkarsh
