1. VIDYASAGAR PARCHURI v. STATE BANK OF lNDlA, Rep. b

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 vacate the lnterim order dated.07.05.2025 passed in wP No. 11743 o',f 2025. Counsel for the Petitioner: SMT. KANUMURT KALYANI Counsel forthe Respondent No.1: SRI AJGAL RAVI BABU, S'C' FOR SBI Counsel for the Respondents No.2 & 3: -- The Co0rt made the following: ORDER IN THE HIGH COURT FOR THE STATE OF TEL! NGANA AT HYDERABAD HON'BLE SRI JUSTICE NAGESH BHEEM!.] 'AKA WRIT PETITION No. 11743 OF 2025 oL.t2.2025 Betwee n: Vidyasagar Parchuri & another And State Bank of Inclia, Rep. by its Authorised Representative SAM Branch Secunderabad & two others F'( t i roncrs Rcsr: r nclt:n ts ORDER: Petitioners state thal Rcspondent Nl 1, a public sector bank forming part r>f a consortittrn r,l lenders tr'r Respondent No.2 compan.lr, hzrs unjustll, iltr( unlawfully classihed both the Petitioncrs and Respondcnt I\ r .2 as willfu I defaulters in violatior-r of the RBI Master Circr-rl r s on u'illful default. It is stated, Respondent No.2 company r 'r ; engagcrl in the manufacture of hybricl seeds, an activity hea\ i v dr:pendent on ciimatic condit ions. The unprccedented drotrq-r ol 2012-13 severely affected agricultural output across mtt iple States, resulting in crop failure and czr.rsing severc disr r ption to the :r ! ) company's sced production, re\'onLtcs and liquidity. They assert that this natural calamit5z rvas Lhe primary cause of financial disLress, lcading to temporilll, inability lo service loan obligations, and that there tvas no deliberate or intentional delault on their part. It is zrlso stated, during this critical period, the consortium banks, including Respondent No 1, failed to releasc sanctioned u,orking capital, failed to disburse the approved Pre-CDR Priority Debt, delayed approval ol CDR package, delayed execution ol Master Restructuring Agreement, and made only partial disburscment of funds. They also allege that lcnders failed to release thc required Rs.15 crores lor seed packing operations during 20 13 and 2014, thereby causing inabitity to place stock in time, leading to sales returns, invcntory accumulation, operational delays, and severe liquidity stral n 1 .2. I t is their case thzlt Lhe company had consistently serviced loan obligations prior to drought; they made several representations to government offrcials, consortium members, and JLM; and that letters and communications were issued requesting financial assistance. They contend that their distress was genuine, documented and acknowledged by the lenders on various occasions. Petitioners assert that willful default I t^&* '.."*-, :,.:t ) J proceedings of Respondent No.I suffer from I rrld:rmental procedural delects. 11. is contendcd that show causc otict: dated

20.O8.2O16 was issued $'ithout supplying essenliit loc'tttlrents' inciuding the lorensic audit report, thereby deprivir:r t lrcrn of an effective opportunity to reply. Thel state that thev I tvcrtheless filec1 a detailed reply on 20.09.201{r- They further )rrLcnd that " the notice dated 12.03.20 l8 fixing a personal tc:tring on 26.O3.2O18 u'as issued without lurnishing full rr rtcrial, and that the order classi$,ing them as u'illful defaulter-r; !\'as passed on the very same day as thc hearing, indicat'r P, that the personal hearing was a mcre formality witll I rr qenuine consideration. Petitioners statc that orders of both the 1.3. Identification Committee and tlie Revieu' Ctlrl t rittc e were received only on 25.03.2019 anrl that those or c crs do not constitute reasoned orders. Thcv irllege that Revie u Committee also passed its order without affording them an 'l )ortullity to appeal or make a representation. 'lhey contend t[.ri the orders are mechanical, lacking any analytical considel-z I on of' their replies, and rnerely reiterate the allcgations of thc show cause notice. The forensic audit report rr/its not furnishe<i t r thr:m until directed by this Court in Writ Petition No. 6544 rt 2O21, by 4 order dated 16.O4 .2021 . They state that even after such disclosure, the bank did nol give them any meaningful opportunity or he aring and lhey were pursuing remedies diligently and that the delay in filing the present Writ Petition occurred due to tegal advice and the pendency of parallel matters before Lhis Court and thc NCLT.

1.4. Petitioners describe, in detail, the operational difficuitres cncountered by the company, including the seasonal nature of hybrid seeds, perishabiliff, storage requirements, regulatory inspections, seizure of substandard seeds by agricultural authorities, deterioration of inventory due to disconnection of electricity in cold storage, and legal proceedings initiated by agricultural departments. They submit ihat these factors caused non-recovery of receivables, deterioration of stock, and inability to generate cash flows. They also address the allegations of drversion of funds. It is stated, no land was purchased during 2Ol4-75, amount reflected in the balance sheet represented earlier capital expenditure funded by a term loan from L&T Finance, and that short-term working capital was never diverted for long-term purposes. They further state that routing of funds through Bank of Baroda alrd RBL Bank occurred solely because the Income Tax Department .I I k"E ) attached all consortium accounts in 2O13 under oroceedings rejecting the benefit under Section 10(1) of the Inc: All statements of such accounts were luruisrl le 'lax Act- cd to thc consortium, including through e mail dated 22.09' l01a and in the JLM held on 26.09.2014 whe re SBI acknou'lcdge l receipt.

1.5. Petitioners further state that procedur: safeguards under the Master Circular as well as principle : of natural justice, require issuance of a speaking orcler, supplr of material, meaningful opportunity of hearing and an indept t clent revieu, b1' the Review Committee. They contend that n< nc of thesc mandatory requirements were complied u'ith lhe Review Committee's order is a four-page document crl;'l aining only signatures and agenda items and is bereft of reas<r Ls. 'l'hey rely on the principles enunciated in the Master ( ircular and interpretation in S:tate Bank o;f India u. Jah Det elopers Put. Ltd.1 to contend that the Review Committec r Lrst pass a reasoned order. Petitioners assert that the declar: I .on of willful default has severe civil and reputational consequ(lll :es, affecting their right to conduct business, right to ar:r't facilities, and their eligibility to participate n CIRP of ss financial Respondent No.2, an MSME, under lhe ar tcnded IBC '(20r9) 6 scc 787 t- 6 framework pcrmitting promoters of MSMEs to submit resolution plans. They contend tl-rat thcy are the most suitable persons to revive rhe companv zrtrd that thel' |16u" submitted a resolution plan ol Rs.347 r'rores.

1.6. Petitioncrs state that only three banks, namely SBI, IDBI and PNB, have dcclared them as rvillful defaulters, and that no other consortium mcmber has done so. They contend that serial, uncoordinated declarations without considering the factual contcxt violate Articles 14 and 2 1 . It is stated, Writ Petition No. 27759 of 20'24 w'as withdrawn on technical grounds to file separate petitions agalnst different banks, and that the present petition is hled accordingly. Cause of action is a gontinuing one because the classification operates as a continuing tort, affecting their nghts, reputation, and liveiihood, and that Section 22 ol tlre Limitation Act applies.

2. In the counter, Respondent No. 1, State Bank of India, denies all allegations except those specifically and expressly admitted. At the outset, it is stated, Writ Petition is not maintainable in view of suppression of material facts by petilioners. It is assertcd, Petitioners have deliberately failed to disclose pendency of O.S. No. 82 of 2O2O on the file of the Court ) 1 of Senior Civil Judge, Hyderabad, wherein thev I tve :rlready challenged declaration of rvillful default. It is t:o'r i ndecl that subject matter and cause ol action in thc presen \ /rit l)etition are substantially the same as those in the pencili 3 civil srtil, therefore, this Writ Petition is liable to be disnr I sccl on the ground of suppression of facts and also on th(' rouncl that parallel proceedings on the same issuc arc impcrtni..;rblt in lau''

2.1. It is also stated, Petitioners had carlic challengcd related proceedings in Writ Petition No. 6544 of 2 . I1, rvherein thrs Court directed the Bank or-rly to furnish the f r-r'nsic audit report and granted liberty to Petitioners to apper t l>c tbre the Committee. It is emphasized that this Court did r rt set aside any proceedings, nor did it express any view on the ncrits of the u,illful defaulter classification. Accordin€( to the t i nk, despite the Court's direction, Petitioners did not appe e I lrctore the Committee, thus, failed to avail the opportunit'' alforded to them. It is argued that Petitioners, having failed to ' ( l Llpon the liberty grantcd, cannot now complain of violatrr I ol- natural justice. Respondent No. 1 submits that r:la s ;ification o[ 2.2. Petitioners as willful defaulters was made strictly jt ,lccordance with the RBI Master Circular dated O 1.07.20 L i Thc Bank 8 i asserts that ai1 the mandatory procedural requirements were duly complied u'ith. It is statcd, show cause notice was issued to Petilioncrs on 2O.0il.2O 16, to which thcy submitted a reply dated 20.O9.20 16. Thereafter, a personal hearing notice dated l2.O3.2}la was issued, calling upon them to appear before the Willful Defaulter Identification Committee A personal hearing was duly conclucted on 26.O3-2018, following which the Iden[ification CommiLtec, upon evaluating the material placed before it, passed its order classifying Petitioners as u'illful defaulters on the same date- The Review Committee subsequently considered Petitioners' representation and confirmed the decision of the Identihcation Committee in its order dated la.O7 -2018.

2.5. The Bank states that Pedtioners had deliberately defaulted on their repayment obligations notwithstanding their apparent financial capacity to repay. The account had been classified as a Non-Performing Asset on 3O.O4.2O13 due to persistent defaults. Respondent No. 1 asserts that Petitioners misappropriated and diverted funds, failed to route sale proceeds through the TRA and consortium accounts, and violated the norms governing utilization of working capital. The Bank relies on the findings recorded during the lending 9 relationship, including alleged diversion of fun c s to group entities, alleged deployment of short-term funds l, r lc't-tg-tcrn-t purposes, and alleged non-routing o[ proceccisr hrough thc' designated accounts. Respondcnt No. I furrht r stalL-s thzlt Petitioners have been declared as willful defaulter; not only tx' the State Bank of India but also by IDBI Bank and Punjzrtr National Bank. Multiplicity of willful default dc: arar ions lrv different consortium lenders, according to Respor Cent No. 1, reinforces the conclusion that the Petitioners : rnduct lr'zrs deliberatc, intentional, and in violation of their olrli latiot'ts- [t is also submitted that the Petitioners did not avai thc rcvieu' mechanism contemplated under Lhe RBI Maste r I ircular, ztnd therefore cannot now be permitted to assail the lrders aftt:r seleraI years.

2.4 . The Bank states that the corpora t : de btor is presently undergoing Corporate Insolvency Resolrr ion Process (CIRP), and Petitioners, who form part of th: suspeurlcrl management, have repeatedly attempted to obstrtr rt alld d( lal the CIRP and recovery efforts. Several One Tirr.r Settlemerlt (OTS) proposals were submitted by Petitioners but I one of them contained demonstrable proof of funding sourco [t is erlso asserted that resolution plans submitted by Pt:ti ioncrs u erc r! l0 defective for want of proof of firlancial capability. Petitioners are ineligible to submit a Resolution Plan under Section 29A(b) of the Insolvenc), and BankrupLcl Code, 2016, by reason of their classification as willful defaulters by three member banks of the consortium. The Bank points out that Scction 24OA of the IBC grants cxemptions only in respcct of clauses (c) and (h) of Section 29A, and that no exemption is available where the disqualification arises by virtuc o[ clause (b). It is stated that this Writ Petition is zr dcvice to circumvent the ineligibiliry and gain an advantage in the CIRP, rvhich cannot be perrnittcd

2.5. Respondent No. l also states that explanations offered by Petitioners, including reliance on drought conditions and difhculties in operations, Ltavc-' no bearing on the hndings of ;illful default. It is contended that declaration of willful default is based on Petitioners' conduct in relation to diversion and misuse of funds, and is not negated by operational or climatic difficulties. The Bank maintains that hndings of Identilrcation Committee and Review Committec are reasoned, based on materials available on record and passed in compliance with the RBI Master Circuiar. Writ Petition is hopelessly barred by delay and laches. Petitioners were informed of the decision of the Review Committee through letter dated 25'03'2019 ' Despite having knou,ledge of the classihcaLion as earlS r s in 2O 19. Pel itioners approached this Court only in 2O25 r'"'i t 1 out olferrng anv satisfactorv explanation for the delay. Finalli Respondr:nt No. 1 asserts that the present Writ Petition ; frivolou s. vexatious and clearly intended to delay the CIRI' anci Lhwarl recovery efforts. It is also stated, Petitioners have l:r :n cngaging in piecemeal litigation with the object of thwarting .l e legitimate rights of lenders, hence, prays for dismissal of Writ I e litr o n.

3. Lleard Smt. Kanumuri Kalyani, leanre I coLrnsel lor pctitioners ancl Sri Ajgal Ravi Babu, learned StanJ ng Counscl for Respondent No. 1 bank.

4. This Court has carefullv examined U.r : pleadings, material placed on record and the submissions : Cvanced br' both the sides. The undisputed factual posi rn is that procr-'edings lcading to declaration of Petitioncr': as g'illluL dcfaulters culminated in the order of the Will I lDeiaultcr Ide nt ification Committee dated 26.O3.2018. i,hicl-r was confirmed bv the Willful Defaulter Revieu. Cr r nmittee on

18.07.2078. These orders were communicated tc Pe titioners under the letter daLed 25.03.2019. Petitioners he-, e, horvever. approached this Court by way of this Writ Petition : rly irr 2025, ? i I I I I I I I I I I I I i I i I t i 12 f. after a lapse of nearly six years from the date of communication and more than seven years lrom the date of the Committee proceedings.

5. Petitioners seek to explain the delay by contending that cause of action is continurng, they pursued multiple remedies during this period, including CIRP proceedings before the NCLT, and that they have acted with due diligence. They submit that the impact of u'illful defaulter classihcation continues to operate on a daily basis, thereby extending the cause of action. Respondent No. 1, on the other hand, asserts that Petitioners have been aware of the orders since 2019, and that pendency of other litigations, including corporate insolvency proceedings or earlier writ petitions, cannot justify fhe prolonged inaction. The Bank submits that Petitioners conduct reveals a pattern of delay designed to obstruct recovery and CIRP proceedings, and that the writ petition suffers from gross delay and laches.

6. As regards maintainability and the scope of judicial review, this Court is conscious of the principle afhrmed in Scrrdcr Associates u. Punjab & Sind Bank, that where a bank acts purslrant to binding directions issued by the Reserve Bank of India, such actions may be amenable to judicial review to the :4 limited extent of ensuring compliance with mandatory regulatory requirements. Judicial review in thi context is supervisory in nature; it does not entail re-apprec: tion of facts, nor substitution of Court's vier,l,s for the commercia . or financial assessments of expert committees. Interferenct' s u,arranted only when there is a jurisdictional error, a substar tiaI violation of the procedure prescribed under the RBI Mastcr I irculars, or perversity in Lhe decision-making process.

7. Petitioners allege that show causc notice rvas issued without enclosing relevant documentl; orders of Identihcation Committee and Review Committee verc passed mechanically, hearing on 26.03.2018 was mert:, / an empty formality, and that Review Committee did not z [1ord proper opportunity or consider their representation. Pet tioners also assert that orders are unreasoned and do not d,: LI with their explanations relating to drought conditions, failure of banks to release funds, deterioration of stock, attachment of accounts by the Income Tax Department, and tJne alleged bontt I de nature of group-company transactions.

8. Respondent No. 1, however, placec on record contemporaneous documents including show causr: notice dated

20.08.2016, Petitioners' reply dated 20.O9.2Ot( , notice of t4 t. personal hearing dated 12.03.2018 and proceedings of the hcaring held on 26.O3.2O1a. The Bank has also placed on record the orders of both the Committces dated 26.03.2018 and

18.07.2018, vvhich record the basis for the hnding of wilful default. The Bank emphasizes that Petitioners did not avail the statutorv remedy of review under the Master Circular, nor did they pursue the opportunit5r given b5' this Court in Writ Petition No. 6544 <tf 2O2l to appear before the Committee after receiving the forensic audit report. The Bank also points out that Petitioners have already challenged the declaration of willful dcfault in O.S. No. 82 of 2020, and present Writ Petition amounts to parallel proceedings. On the merits of the challenge, this Court notes 9 that Petitioners' explanations predominantly relate to external or operational difficulties, including drought conditions in 2Ol2- 2013, non release of sanctioned funds and Pre-CDR PD amounts by consortium lenders, delay in CDR process, deterioration of stock and agricultural output, attachment of operating accounts by the Income Tax Department, and difhculties in mobilizing working capital. These explanations pertain to commerciai viability and operational challenges of the l5 a company. However, the willful dcfaulter frameu'r r < under the Milster Circlrlar is concerned primarily with the cr'rduct of tht: borrorver, inctuding diversion ol lttnds, non-roul.it'l I clf procec'ds, misutrlisation of credit facilities, zrnd breach of 1in rcing tcrms PctiLioners havc not demonstrated that the Comnr 1 ees faile<l Lo consider their explanations or considered irrek:r i nt malerial The record does not indicatc that the Comrnittecs . rted without jurisdiction or proceeded on assumptions tll)ri rpported b1' evidence.

10. On the issue of procedural compliatr,: , Petitioncrs assert that orders were passed on the same day o- leanng, and that the Review Committee clid not afforci ln effectivc opportunity. Respondent No. 1, hoq'ever, has prrrri rced records shorving that notices u'ere issued, replies were r:ceived, and hearing was conducted. Petitioners have not placed contemporaneous evidence of seeking adjournmt:t L , demancling additional documents prior to the Committee orders, or indicating that they \l,ere prevented from placing t t- :ir case. The orders of the Committees, though not elaboratc, indicate the grounds on rvhich conclusions u'ere drawn. Petiticr ers have not shown that any mandatory step under the RBI Me ster Circular was omitted. t6 I 1 l. As to delay, Petitioners rely on the pendency ol Writ Petition No- 6544 of 2O2l and olher proceedings to justily the Iate ctralienge. Horvever, the record indicates that the said Writ Petition n as disposed of on 16.04.202 t with limited directions, and nothing prevented Petitioners from challenging the underlving classihcation thereafter. The plea of continuing cause ol action does not apply rvhere the underlying decision attained linality vears earlier and its consequences were known to Pctitioners. The lapse of nearly six years without a reasonable explarratron is significant and cannot be ignored in u'rit jurisdiction.

12. Ori a cumulative assessment, Petitioners have not cstablishcd an1, jurisdictional error or procedural violation of such magnitude as to vitiate the proceedings. The delay in approaching this Court is substantial, and Petitioners have not shorvn sufficient cause to warrant condonation. In the light of the above, this Court does not hnd any ground to exercise its cxtr:rordinary jurisdiction under Article 226 of tl:.e Constitution. i3. For the reasons stated hereinabove and upon a comprehensive evaluation of the material on record and the submissions advanced, this Court is of the considered view that no case has been made out for interference with the orders 1l passed by the Willful Defaulter Identification I f mmlttec on

26.03.2018 and the Willful Dclaulter Revieu, .. lmmittcc on

18.O7.2O18. Pctitioners havr: not dcmor., trated zrny jurisdictional infrrmiq', substantial procedural ir egularity, or perversity \\,arrant ing exercise of judicial rt.r i , t,. The Writ Petition is also barred by gross delay and laches lor which no satisfactory explan:rtion has bcen lurnished.

14. costs. i 5. Accordingly, the Writ Petition is r I ;missed. No Consequently, thc rniscellaneous l\:triications, if any shall stand closed. S (.BHAVANI SWAMY I;TANT REGISTRAR ,7 //TRUE COPY// SECTION OFFICER To One CC to SMT. KANUMURI KALYANI, Advocate [OP[J )l One CC to SRI AJGAL RAVI BABU, S.C FOR SBI [OPt Cl 1 2 Two CD CoPies N/ MP BS t t t t HIGH COURT DA-r ID:01 11212025 , ,l( ,R lHE Siq ,€ L) O \ 0_, \, \-',.. 3, 0E[ ?ffi * sPArc --=: ORDER WP.No.11743 of 2025 DISMISSING THE W'IIIT PETITION WITIIOUT COSTS ,... j\ \)