Bombay High Court
Ajay Kumar Bhuwalka vs Idbi Bank Limited on 14 October, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-OS:18772-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 1117 OF 2025
Ajay Kumar Bhuwalka ... Petitioner
V/s.
IDBI Bank Limited and Ors. ... Respondents
_______________________________________
Mr. Simil Purohit, Senior Counsel with Ms. Nikita Vardhan, Mr. Akshay
Dhayalkar, Ms. Stuti Menon and Mr. Rutwij Bapat i/b. Kanga & Co. for the
Petitioner
Mr. Harsh Sheth with Ms. Niyati Merchant i/b. MDP Legal for Respondent
No.1
Mr. Mohamedali M. Chunawala i/b. Mr. A.A. Ansari for Respondent No.2
Mr. V. Mannadiar i/b. Mannadiar & Co. for Respondent No.4
_______________________________________
CORAM : R.I. CHAGLA AND
FARHAN P. DUBASH, JJ.
RESERVED ON : 7th OCTOBER 2025
PRONOUNCED ON : 14th OCTOBER 2025
ORDER (Per Farhan P. Dubash, J.) :
1. By the present Writ Petition, Ajay Kumar Bhuwalka - Petitioner
herein, has invoked the extraordinary writ jurisdiction of this Court seeking
to quash and set aside the following: (i) order dated 13 th June 2024 passed
by the Wilful Defaulter Identification Committee of IDBI Bank - Respondent
No 2 herein; (ii) order dated 25 th October 2024 passed by the Wilful
Defaulter Review Committee of IDBI Bank - Respondent No. 3 herein
(collectively, the "impugned two orders") and (iii) Show Cause Notice dated
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5th April 2023 ("impugned SCN") issued by IDBI Bank Limited - Respondent
No.1 herein.
2. A perusal of the impugned two orders and the impugned SCN
would reveal that the same have been issued by the concerned Respondent
jointly on two parties viz. (1) Ajay Bhuwalka - the Petitioner herein and (2 )
Ankit Bhuwalka, both of whom are stated to be the Promoters/Directors of
Bhuwalka Steel Industries Ltd.(BSIL). Ajay Bhuwalka and Ankit Bhuwalka
are brothers.
3. A perusal of the documents would reveal that pursuant to the
impugned SCN, Wilful Defaulter Identification Committee of IDBI Bank -
Respondent No 2 herein passed the order dated 13 th June 2024 concluding
that BSIL had defaulted in meeting its payment/repayment obligations to its
lenders. That the Promoters/Directors viz. Ajay Kumar Bhuwalka and Ankit
Bhuwalka have committed 'wilful default', as per the RBI's Master Circular on
Wilful Defaulters dated 1st July 2015 and accordingly, both the said persons
were declared as 'Wilful Defaulters' and their names were directed to be
submitted to the Wilful Defaulter Review Committee of IDBI Bank -
Respondent No. 3 herein, for confirmation and thereafter, if confirmed, for
reporting to the Credit Information Companies (CICs), as specified in the
said RBI Master Circular.
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4. Pursuant thereto, it appears that an order dated 25 th October
2024 came to be passed by Wilful Defaulter Review Committee of IDBI Bank
- Respondent No. 3 herein, confirming the earlier order dated 13 th June 2024
and directing that both the said persons viz. Ajay Kumar Bhuwalka and Ankit
Bhuwalka be declared as 'Wilful Defaulters' and their names be forwarded to
the CICs and action be initiated against them, as per the said RBI Master
Circular.
5. A perusal of the present Writ Petition reveals that it contains
various grounds on which the impugned SCN and the impugned two orders
have been challenged by the Petitioner including interalia that the same
came to be issued/passed in violation of the guidelines prescribed in the said
Master Circular for Wilful Defaulters, in contravention of the principles of
natural justice and without providing the necessary documents to the
Petitioner, by relying on a Transaction Audit Report dated 5 th March 2020
(prepared by M/s. G. D. Apte & Co.) which had already been held by the
NCLT to be inconclusive, etc.
6. At the outset, Mr. Simil Purohit, learned Senior Counsel
appearing on behalf of the Petitioner invites our attention to a Judgment
dated 16th January 2025 ("said Judgment") passed by this Court in Writ
Petition No. 12 of 2025 that was preferred by Ankit Bhuwalka, the other
Promoter/Director of BSIL and the Petitioner's brother, impugning the very
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same Show Cause Notice dated 5 th April 2023 and the two orders dated 13 th
June 2024 and 25th October 2024, that are impugned in the present Writ
Petition. By the said Judgment, this Court has already set aside impugned
Show Cause Notice dated 5th April 2023 and the impugned two orders dated
13th June 2024 and 25th October 2024, albeit to the extent that they relate to
the other brother, Ankit Bhuwalka, on the ground of procedural infirmities
committed by IDBI Bank Limited - Respondent No. 1 herein.
7. The said Judgment, has dealt with all the grounds that are
raised in the present Writ Petition inasmuch as, the very same/similar
grounds were also raised in the said Writ Petition by the other brother, Ankit
Bhuwalka, who is also a Promoter/Director of BSIL. The said Judgment has,
after doing a thorough analysis of the Master Circular for Wilful Defaulters
dated 1st July 2015, duly considered the observations made by the Supreme
Court in State Bank of India vs. Jah Developers Pvt. Ltd & Ors. 1 and State
Bank of India vs. Rajesh Agarwal & Ors. 2 The Supreme Court had observed
that the classification of a borrowers' account as ' fraud' or 'wilful default' not
only affects the business and goodwill of the borrower but also his right to
reputation and besides penal consequences, it also has civil consequences as
it jeopardises the future of his business thereby necessitating strict
compliance with the principles of natural justice, and the violation of which,
1 (2019) 6 SCC 787
2 (2023) 6 SCC 1
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would bear the scrutiny of judicial review.
8. In the said Judgment, this Court has reiterated the principle that
Graver the consequences, higher is the degree of proof required and
observed that the impugned SCN was based entirely on the findings recorded
in the Transaction Audit Report dated 5th March 2020 (TAR) which report
was considered by the National Company Law Tribunal (NCLT) in
proceedings filed under the Insolvency and Bankruptcy Code, 2016 (IBC)
and held to be inconclusive inasmuch as, the said TAR merely assumed the
transactions to be fraudulent and the conclusions recorded therein that funds
were siphoned away, were reached in a summary manner, vide the order
dated 10th March 2021 passed by the NCLT. Thus, it was concluded that the
degree of proof relied upon by the Respondents was much higher and not
simply based on a TAR which itself, was unacceptable to the NCLT.
9. After considering all the facts of the case, the said Judgment has
further noted that despite repeated requests of the two brothers citing lack of
access to the relevant documents, the Respondents failed to provide the same
to them, on the ground that they were shareholders of the company and as
such, should make their own efforts to procure the documents themselves. In
such circumstances, by relying on an earlier decision of this Court in Milind
Patel vs. Union Bank of India & Ors. 3, in which, it was held that not only
3 2024 SCC Online Bom 745
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information that is referred to and relied upon in the show cause notice must
be supplied to the Noticee but even information that may undermine the
allegations contained therein, must be supplied to the Noticee, so as to
ensure that everything relating to the truth is available to both parties since
the objective of the proceedings initiated by the issuance of the show cause
notice is not to somehow find the Noticee guilty of wilful default on the
terms as alleged but instead, to arrive at the truth as to whether or not, such
individual is to be subjected to the 'penal' consequences. Applying these
yardsticks, the said Judgment unequivocally quashed and set aside the
impugned SCN dated 5th April 2023 and the impugned two orders dated 13 th
June 2024 and 25th October 2024.
10. Upon our enquiry, Mr. Harsh Sheth, learned Counsel appearing
on behalf of Respondent No. 1 - Bank fairly submits that the Respondents
have no further and/or additional grounds of defence to urge in the present
Writ Petition that have not already been taken and considered by the co-
ordinate Bench of this Court in the said Judgment dated 16th January 2025.
11. Keeping this factual position in mind, and after having gone
through the said Judgment and independently applying our minds thereto,
we concur with all the observations and findings recorded therein qua the
impugned SCN dated 5th April 2023 and the impugned two orders dated 13 th
June 2024 and 25th October 2024, insofar as they relate to the Petitioner
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herein. In the circumstances, we are inclined to quash and set aside the
impugned SCN and the impugned two orders, insofar as they relate to the
Petitioner herein.
12. Since the impugned SCN and the impugned two orders are set
aside on account of procedural infirmities committed by the Respondents, we
grant liberty to Respondent No.1 Bank to issue a fresh show cause notice to
the Petitioner herein, by making a proper disclosure of the material and
information on which such show cause notice is based and thereafter, pass a
reasoned order thereon, after hearing the Petitioner.
13. All consequential action that may have been taken by
Respondent Nos. 1, 2 and 3 pursuant to the impugned SCN and the
impugned two orders, also stand set aside.
14. Accordingly, the present Writ Petition is allowed in terms of the
following order :-
ORDER
(A) (i) Show Cause Notice dated 5th April 2023 issued by
Respondent No.1; (ii) Order dated 13th June 2024 passed by
Respondent No.2 and (iii) Order dated 25 th October 2024 passed
by Respondent No.3 are hereby quashed and set-aside, insofar
as, they relate to the Petitioner herein.
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(B) All consequential action that may have been taken by
Respondent Nos. 1, 2 and 3 pursuant to the impugned SCN and
the impugned two orders, also stand set aside.
(C) There shall be no order as to costs.
(D) All parties to act on an authenticated copy of this Judgment,
digitally signed by the P.S./P.A. of this Court.
( FARHAN P. DUBASH, J. ) ( R.I. CHAGLA J. )
JYOTI by JYOTI
PRAKASH
PRAKASH PAWAR
PAWAR Date: 2025.10.14
13:10:08 +0530
