Madras High Court
N.Ramkhumar Narasimhan vs Ministry Of Finance on 4 October, 2023
WP No.17669 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.10.2023
CORAM
THE HON'BLE MR.SANJAY V.GANGAPURWALA , CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
WP No.17669 of 2020
and WMP Nos.21911, 21912 and 22063 of 2020
1. N.Ramkhumar Narasimhan
2. Poorani Nagarajan
(Former directors of M/s.Infinitas Energy
Solutions Pvt. Ltd., Erstwhile Known
as Trishe Developers Pvt. Ltd.) .. Petitioners
-vs-
1. Ministry of Finance,
Rep. by its Secretary,
Department of Financial Services,
Jeevan Deep Building,
Parliament Street, New Delhi 110001.
2. Reserve Bank of India,
Rep. by its Chief General Manager,
Department of Banking Operations &
Development, Central Office,
13th Floor, Central Office Building,
Shahid Bhagat Singh Road,
Mumbai 400 001.
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WP No.17669 of 2020
3. Punjab National Bank,
Rep. by its Branch Manager,
Large Corporate Branch, Rayala Towers,
Anna Salai, Chennai 600 002. .. Respondents
Prayer: Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Certiorarified Mandamus calling for the records
relating to the impugned Circular No.DBS.CO.CFMC.BC.No.1/
23.04.001/2016-17 dated 01.07.2016 passed by the 2nd respondent,
quash the same as illegal, incompetent and unconstitutional, and
consequently forbear the 3rd respondent from initiating any
consequential action categorizing the petitioners as 'fraud' as per the
Circular No.DBS.CO.CFMC.BC.No.1/23.04.001/2016-17 dated
01.07.2016.
For the Petitioners : Mr.P.H.Arvindh Pandian
Senior Counsel
for Mr.R.Mansoor Ilahi
For the Respondents : Dr.G.Babu for R-1
: Mr.C.Mohan
for M/s.King & Partridge for R-2
: Mr.F.B.Benjamin George for R-3
*****
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WP No.17669 of 2020
ORDER
(Made by the Hon'ble Chief Justice)
We have heard Mr.P.H.Arvindh Pandian, learned senior counsel
for the petitioners, Dr.G.Babu, learned counsel for respondent No.1,
Mr.C.Mohan, learned counsel for respondent No.2 and Mr.F.B.Benjamin
George, learned counsel for respondent No.3.
2. The petitioners' account is declared as a fraud account under
the impugned communication.
3. The learned senior counsel for the petitioners submits that no
notice was issued to the petitioners nor any reply was solicited from
the petitioners before declaring their account as fraud. The same is
illegal. Reliance is placed on the judgment of the Apex Court in a case
of State of Bank of India vs. Rajesh Agarwal reported in (2023)
6 SCC 1.
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WP No.17669 of 2020
4. The learned counsel for the third respondent bank, on
instructions, accepts that no show cause notice was issued to the
petitioners. He submits that the bank would now issue a show cause
notice to the petitioners.
5. The Apex Court in the case of State Bank of India (supra),
has observed that the application of audi alteram partem cannot be
impliedly excluded under the Master Directions on Frauds. The
principles of natural justice demand that the borrowers must be served
a notice, given an opportunity to explain the conclusions of the
forensic audit report and be allowed to represent by the bank before
their account is classified as fraud under the Master Directions on
Frauds. The judgment further requires that the decision classifying the
borrower's account as fraudulent must be made by a reasoned order.
6. In light of the above, the impugned order classifying the
account of the petitioners as fraud is set aside.
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WP No.17669 of 2020
7. It is open for the respondent bank to issue notice to the
petitioners, call for an explanation from the petitioners and then pass
fresh orders.
8. The writ petition is, accordingly, disposed of. There will be no
order as to costs. Consequently, W.M.P.Nos.21912 and 22063 of 2020
are closed.
W.M.P.No.21911 of 2020 filed by the petitioners seeking to
permit them to file a single writ petition is allowed and disposed of.
(S.V.G., CJ.) (D.B.C., J.)
04.10.2023
Index : Yes/No
Neutral Citation : Yes/No
sra
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WP No.17669 of 2020
THE HON'BLE CHIEF JUSTICE
AND
D.BHARATHA CHAKRAVARTHY, J.
(sra)
To
1. The Secretary,
Ministry of Finance,
Department of Financial Services,
Jeevan Deep Building,
Parliament Street, New Delhi 110001.
2. The Chief General Manager,
Reserve Bank of India, Department of Banking
Operations & Development, Central Office, 13th Floor,
Central Office Building, Shahid Bhagat Singh Road,
Mumbai 400 001.
3. The Branch Manager,
Punjab National Bank, Large Corporate Branch,
Rayala Towers, Anna Salai, Chennai 600 002.
WP No.17669 of 2020
04.10.2023
https://www.mhc.tn.gov.in/judis
