Bombay High Court
Vishal Shreyas Doshi vs Bank Of India on 1 October, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-OS:17023-DB
JPP 905. WPL 22936.2025.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 22936 OF 2025
Vishal Shreyas Doshi and Anr. ... Petitioners
V/s.
Bank of India ... Respondent
_______________________________________
Mr. Piyush Raheja with Ms. Nishka Shah and Mr. Pashin Icchaporia
i/b. ANB Legal for the Petitioners
Ms. Prashansa Agrawal with Mr. Kaustav Dev i/b. Nahush Shah Legal
for the Respondent
_______________________________________
CORAM : R.I. CHAGLA AND
FARHAN P. DUBASH, JJ.
RESERVED ON : 24TH SEPTEMBER 2025
PRONOUNCED ON : 01ST OCTOBER 2025
ORDER (Per FARHAN P. DUBASH, J.) :
1. By the present writ petition filed under Article 226 of the
Constitution of India, the Petitioners have sought the order setting
aside the Show Cause Notice dated 23 rd July 2024 (impugned SCN)
and the subsequent order dated 3rd July 2025 (impugned Order)
passed by the Respondent - Bank by which it has declared the
account of the Petitioners' erstwhile company, Shrenuj and Co.
(Company) as 'fraud'.
2. The Petition asserts that the Company was the flagship
entity of the Shrenuj Group dealing in cut and polished diamonds,
JPP 905. WPL 22936.2025.doc
jewellery manufacturing, branding and retailing and since 1982, it
had a banking relationship with a consortium of various banks (BOI
Consortium) with the Respondent as its lead member. Until the
Financial Year (FY) 2015-16, the Company was regularly servicing
the loans extended by the BOI Consortium and as on 31 st March
2016, a sum of about Rs. 1536 crores had been sanctioned from the
BOI Consortium to the Company with approximately Rs. 205 crores
therefrom, being sanctioned by the Respondent.
3. The Petition further asserts that on account of the
slowdown in the gem and jewellery industry, high inventory and
delayed payments from its customers, the Company suffered a loss
in FY 2015-16, as against a profit in the previous FY 2014-15 and
this led to a sharp fall in the financial condition of the Company
which ultimately resulted in it being unable to service its dues. This
resulted in the Company's account being classified as a Non-
Performing Asset (NPA) by the banks comprised in the BOI
Consortium in the year 2015. In or about September 2015, it is
asserted that the BOI Consortium constituted itself as a Joint
Lender's Forum (JLF) under the RBI guidelines applicable at the
relevant time and on 8th October 2018, the Respondent appointed
M/s. Kirtane & Pandit LLP (Forensic Auditors) on behalf of the JLF,
to conduct a forensic audit of the Company.
JPP 905. WPL 22936.2025.doc
4. Subsequently, in the year 2017, the Respondent along
with other banks of the BOI Consortium filed separate recovery
proceedings against the Company and its Guarantors (including the
Petitioners herein) before the Debt Recovery Tribunal (DRT) - I at
Mumbai. In these proceedings, ICICI Bank Limited is stated to have
obtained an order appointing a Receiver to take physical possession
of the stock and securities of the Company. On 12 th March 2019, the
Company was admitted into Corporate Insolvency Resolution
Process (CIRP) under the Insolvency and Bankruptcy Code (IBC),
2016, pursuant to a Petition filed by the Respondent and the
members of the Committee of Creditors (CoC), in their capacity as
JLF members, who as stated to have conducted a forensic audit of
the Company which resulted in the preparation of the final Forensic
Audit Report (FAR) dated 25th November 2019.
5. The Petition further asserts that in a meeting held on
18th December 2019, the JLF, including the Respondent, relying on
the FAR, took a decision to classify the Company's Account as 'fraud'
despite several requests from the Petitioners to provide them with a
complete copy of the FAR and its supporting materials, which was
not acceded to. In fact, the Petition points out that by a letter dated
14th February 2020, the Forensic Auditors have themselves admitted
to an error in data analysis that has led to an incorrect finding of
JPP 905. WPL 22936.2025.doc
funds diversion amounting to Rs. 28 crores in the FAR and
acknowledged that the same was required to be rectified in the FAR.
Additionally, it is asserted that neither was any Show Cause Notice
of granting personal hearing to the Petitioners, nor were they
furnished with any detailed data, documentation or specific
transactions records underlining the serious allegations raised in the
FAR which position is stated to continue even as on date, despite
several communications being exchanged between the Petitioners
and the Respondent during this period. The Petition also refers to a
communication dated 4th May 2023, by which the Registrar of
Companies, Ministry of Corporate Affairs (ROC) had already
dismissed a complaint made by Standard Chartered Bank relying on
the very same FAR and the ROC had also prima facie found that the
FAR was riddled with significant errors, some of which were even
admitted by the Forensic Auditors in their letter dated 14 th February
2020.
6. This occasioned the Petitioners to approach this Court
and file an earlier Writ Petition bearing No. 3171 of 2020 interalia
challenging the fraud classification done by the BOI Consortium. By
an order dated 19th June 2023 passed in the said Writ Petition and
several other Writ Petitions, that involved a common challenge,
assailing a similar action taken by various other banks under the
JPP 905. WPL 22936.2025.doc
Reserve Bank of India (Frauds classification and reporting by
commercial banks and select FIs) Directions, 2016 (Master
Directions - 2016) this Court issued directions to the banks on how
they were required to proceed if they intended to initiate steps
under the Master Directions - 2016 in light of the decision of the
Supreme Court in State Bank of India and Ors. v/s. Rajesh
Agarwal & Ors.1. By this judgment, the Supreme Court applied the
principle of audi alteram partem to the Master Directions - 2016 and
held that it was mandatory for lender banks to provide an
opportunity of a hearing to the borrowers, before classifying their
account as 'fraud' and further held that the decision of the Bank/JLF
in classifying the borrower's account as fraudulent, must be made
by a reasoned order.
7. Thus, liberty was expressly given to the Banks/JLF to
rescind, withdraw or cancel any prior orders that may already have
been passed under the Master Circular - 2016 which were
inconsistent with the judgment in Rajesh Agarwal (supra), and re-
initiate the process, consistent with the said decision whilst further
classifying that all actions which were already consistent with the
said judgment could proceed.
1 (2023) SCC OnLine SC 342
JPP 905. WPL 22936.2025.doc
8. The Petition asserts that notwithstanding this liberty
granted by this Court and considering the fact that the fraud
classification of the Company, already done by the Respondent (and
which was impugned by them in the said Writ Petition No. 3171 of
2020) was contrary to the decision in Rajesh Agarwal (supra), the
Respondent neither rescinded, withdrew nor cancelled the same but
instead, addressed the impugned SCN. In this background, it is
contended that the impugned SCN is contrary to law and in the
teeth of the earlier order passed by this Court inasmuch as, the
impugned SCN sought for submissions from the Petitioners on "re-
examination" of their account "consequent to classification of
account as fraud" by relying on the very same FAR dated 25 th
November 2019 which had already been the basis of the earlier
fraud classification by the Respondent.
9. In response to the impugned SCN, the Petitioners
addressed a response dated 9th August 2024 seeking various
clarifications including interalia as to whether the earlier fraud
classification of the Company had stood rescinded, withdrawn or
cancelled, in terms of the earlier order dated 19 th June 2023 passed
by this Court. The Petitioners also craved for and sought leave to file
a detailed reply to the impugned SCN on receipt of such
clarifications, but it is asserted that no reply was received from the
JPP 905. WPL 22936.2025.doc
Respondent to the Petitioner's said letter. Ultimately, almost a year
later on 3rd July 2025, it is asserted that the Respondent issued the
impugned order interalia classifying the account of the Company as
'fraud'.
10. Mr. Piyush Raheja, learned counsel for the Petitioners has
meticulously taken us through the record of this Writ Petition. He
submits that both, the impugned SCN and the impugned order are
bad in law and contrary to the earlier decision of this Court
inasmuch as, neither has the Respondent rescinded, withdrew nor
cancelled the earlier fraud classification, nor has it re-initiated the
process, as directed therein, but has instead, and cleverly sought to
circumvent the judicial process by merely attempting to 're-
examine' and 'review' the earlier fraud classification, which was
wholly impermissible. He further submits that the impugned order is
also contrary to the decision in Rajesh Agarwal (supra) inasmuch
as, no personal hearing was given to the Petitioners, prior to the
impugned order being passed. In fact, he submits that the
Respondent did not even reply to the letter dated 9 th August 2024
addressed by the Petitioners to the impugned SCN and clarify the
position sought therein.
11. After taking us through the impugned order, Mr. Raheja
submits that the same has been passed in a mechanical manner and
JPP 905. WPL 22936.2025.doc
without any application of mind. He points out that the alleged
reasoning, provided in the impugned order is nothing but a 'cut-
copy-paste' of the findings of the FAR that is already contained in the
earlier portion of the very same impugned order and therefore
displaying no reasoning and/or application of mind at all. He adds
that that impugned order is also bereft of any reasons explaining
and/or justifying the reason why the Company's account has been
classified as 'fraud' under the Master Circular - 2016. He further
points out that notwithstanding the fact that the Petitioners may not
have addressed a detailed response challenging the impugned SCN
on merits, since it (and the impugned order) are based entirely on
the same FAR, the Respondent was well aware of the detailed
grounds of challenge thereto, raised by the Petitioners since such
grounds have been extensively set out not only in the prior
correspondence exchanged between the said parties but the same
are also set out in detail in Writ Petition No. 3171 of 2022 filed by
the Petitioners in this Court which is still pending adjudication and in
which, the Petitioners have challenged the earlier fraud classification
which was based on this same FAR. He therefore submits that the
present Writ Petition be allowed.
12. Per contra, Ms. Prashansa Agarwal, learned counsel for
the Respondent invites our attention to the affidavit dated 3 rd
JPP 905. WPL 22936.2025.doc
September 2025 filed by the Respondent in reply to the present Writ
Petition and reiterates the grounds raised therein. She submits that
the Petitioners were provided ample opportunity by the Forensic
Auditor but despite repeated requests, they failed to provide all the
documents sought. Hence, she argues that it is wholly incorrect on
the part of the Petitioners to contend that the FAR was prepared
without considering the response of the Petitioners, as alleged. She
further submits that the Respondent has acted in compliance of the
earlier order dated 19th June 2023 passed by this Court since, it
ceased all actions in furtherance of the previous fraud classification
and the impugned SCN was towards re-initiation of the process
undertaken by it for classifying the account of the
Petitioners/borrowers, as fraud, in compliance of the directions
contained in Rajesh Agarwal (supra).
13. Ms. Agarwal further submits that despite receipt of the
impugned SCN, the Petitioners have neither addressed any response
on merits nor raised any grounds challenging the same and
therefore, the impugned order has been properly passed since the
same is also in compliance with the necessary requirements
prescribed in Rajesh Agarwal (supra). In the circumstances, she
submits that no reliefs ought to be granted in favour of the
Petitioners and the present Writ Petition requires to be dismissed.
JPP 905. WPL 22936.2025.doc
14. We have heard both the parties at length and with their
able assistance, perused the record before this Court. It is an
admitted position that the impugned SCN has been issued by the
Respondent, pursuant to the earlier FAR dated 8 th May 2019, which
was also the basis of the earlier fraud classification of the
Company's account on 14th February 2020, done by the Respondent.
The very fact that the Respondent contends that the impugned SCN
was issued by them in furtherance of re-initiation of the process of
fraud classification suggests that the Respondent has accepted the
position that the earlier fraud classification of the Company was
done contrary to the decision in Rajesh Agarwal (supra).
15. In these circumstances, the Respondent ought to have
exercised the liberty granted by this Court in the earlier order dated
19th June 2023 by either withdrawing, rescinding or cancelling the
earlier fraud classification and thereafter, re-initiating the process,
this time consistent with the decision in Rajesh Agarwal (supra).
Instead and curiously so, the Respondent appears to have chosen to
address the impugned SCN "re-examination" of the Company's
account "consequent to classification of the account as fraud". This
act is not in accordance with the earlier order of this Court inasmuch
as, the impugned SCN appears to have been issued on the
underlying basis that the account has already been classified as a
JPP 905. WPL 22936.2025.doc
fraud, and by the impugned SCN, the Respondent merely sought to
're-examine' as to whether this position was correct or not and
whether it should continue or not. This is wholly impermissible and
plainly reflects the close and one-sided approach adopted by the
Respondent.
16. Additionally, this Court is of the view that the impugned
order is contrary to the decision in Rajesh Agarwal (supra) since
admittedly, no opportunity of hearing was given to the Petitioner's
before it was passed. We are also inclined to agree with the
submission made by Mr. Raheja that the reasoning set out in the
paragraphs 7 (A) to 7 (E) of the impugned order is no reasoning at
all since the same is nothing but a mere reproduction of the same
observations/findings/conclusions of the FAR that have been set out
in the earlier paragraphs 5 (A) to 5 (E) of the impugned order. This
clearly reveals complete non-application of mind and resultantly, the
impugned order is liable to be set aside on this ground alone.
17. This Court does not agree with the submission of Ms.
Agarwal that the impugned order is not required to deal with any
ground on merits, other than those found in the said paragraphs 7
(A) to 7 (E) since no specific grounds of defence were taken by the
Petitioner's in response to the impugned SCN. This is for the reason
that the Respondent has based the impugned SCN and the
JPP 905. WPL 22936.2025.doc
impugned order entirely on the earlier FAR dated 25 th November
2019. It is an admitted position that not only has the Petitioner
expressly disputed and challenged the findings in the FAR in several
prior correspondences exchanged with the Respondent but the
Petitioners have also filed Writ Petition No. 3171 of 2022 in this
Court, which is still pending, in which petition, they have extensively
set out all the grounds of challenge to the earlier fraud classification
done by the Respondent which interalia includes the grounds taken
by them in challenging the said FAR. Hence, it was incumbent on the
Respondent to have considered these grounds of challenge to the
FAR whilst passing the impugned order. This has admittedly not
been done and on this ground also, the present Writ Petition
deserves to succeed.
18. Considering the above position, we are of the considered
view that the impugned SCN and the impugned order are required to
be set aside, which we hereby do.
19. In the circumstances, the present Writ Petition is disposed
of with the following order :
ORDER
(i) The impugned Show Cause Notice dated 23rd July 2024 and the
impugned order dated 3rd July 2025 classifying the account of M/s.
JPP 905. WPL 22936.2025.doc
Shrenuj and Co. Ltd. as 'fraud' is hereby quashed and set aside to
the extent that it relates to Vishal Shreyas Doshi and Shreyas K.
Doshi, the Petitioners herein, who are its erstwhile Promotors and
Directors.
(ii) The Respondent is hereby restrained from acting in pursuance
of the impugned order and/or taking any penal and/or coercive
action thereupon.
(iii) The present Writ Petition is disposed of in the above terms.
(iv) There shall be no order as to costs.
( FARHAN P. DUBASH, J. ) ( R.I. CHAGLA J. )
JYOTI by JYOTI
PRAKASH
PRAKASH PAWAR
PAWAR Date: 2025.10.01
13:11:20 +0530
