High Court · 2025

Petition under Article 226 of the Cpnstitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to pass an order or orders, direction or writ more particularly one in the nature of Writ of Certiorari, by calling for qecords and quashing the proceedings of the Fraud ldentification Committee of the Respondent No- I dated '12. 08. 2024 and Order No. 2024- 25114 dated 12, 08.2024 issued by Respondent No. 1 as the same is arbitrary, illegal, in violation of the Principles of Natural Justice and contrary to the directions of the Hon'blB Supreme Court of lndia. lA NO: 2 OF 2024 Petition under Section 151 CPC prqying that in the circumstances stated in the affidavit filed in support of the petitipn, the High Court may be pleased to / suspend the operation and effect of Order No. 2024- 25114 dated 12- 08.2024 issued by Respondent No. 1- lA NO: 3 OF 2025 Petition under Section 'l 51 CPC praying that in the: circumstances stated in the affidavit filed in support of the petition, the High Cc urt may be pleased to extend the interim order dated 12.09.2024 passed in W.P No. 25226 ot 2024' pending disposal of the writ petition. Counsel for the Petitioners: SRI VIKARAM POOSERLA, M/S SIVA PRANEETHA SREE:R,AMULA Counsel for the Respondent No.1: CHITHARI PRABHAKA'R The Court made the following: ORDER HONOURABLE SRI JUSTIOE N.V.SHRAVAN KUMAR Writ Petitio n No. 5226 of 2024 ORDER: This writ petition is filed in the nature of writ of certiorari calling for the records and quaslfing the proceedings of Fraud Identification Committee of respoprdent No. I dated 12.Og.2O24 and Order No.2O24-25/14 Aa]rea D.o8.2o24 issued by respondent No.1. j

2. Heard Mr.Vikram. pooserlp, learned the petitioners and Mr.Chithari p:abhakar, counsel for respondent No. 1 . With their consent, petition is taken rI for disposal. senror counsel for learned standing this writ

3. The facts of the case i, ilt.f are that the petitioners were Directors of M/s.parikh Fabrics private Limited incorporated under Companies Act, 1956 for the purpose of manufacturing and exporting of spcks. The petitioners were directors of the said Company frofn June 2OO2 to Februaqz 2079. The manufacturing facitities are located in APIIC Industrial Park, Nellore District, Andhra pradesh. The Company entered into a four (4) term loan agreements with respondent No.l/Bank for an amount of Rs.S3,22,OO,OOO/_ which was ( -E\ -*.1 :22l.z sanctioned on 17.03.20 iO' 11. appears that thereafter the company could not repay the loan and has come forward to settleduesinoneTimeSettlement(o!iS)sanctionedby respondent No.1 on 31.10.2016' Thereafter' the compaly made initial payment of Rs.10.56 Crores and in view of some delay' respondent No'1 cancelled OTS on 14'OIi''1018' Therea-fter' respondent No.1 appointed Forensic Auditor tc' conduct audit of the company. On 10.05.2019, the Forensi': Audit report was submitted by Auditor and on L!'O9'2O19 respondent No 1 declared the account of the compary as fr al-id' under the RBI guidelines dated O 1 .06. 2017 . The petitioner r;ubmits that he was not informed about the said declaration and was not provided with a copy of Forensic report.

4. On 08.03.2021, FIR was registered try Central Bureau of Investigation, ACB, Hyderabad against the Company basing on declaration of fraud'. Thereafter, petitiorler No' 1 has hled Crl.P.No.24B 1 of 2O2l before this Corrrt to quash the proceedings, and the sarne is pendin5l for adjudication' Thereafter, the Fraud Investigation Comnrittee based on the judgment rendered by Hon'lcle Supreme C)otrrt in the case of / II - ::3:t State Bank of India a. Rajesh Agarualt decided to reverse the l"t declaration of fraud wfrich came to notice of the petitioner on 22.03.2024. Thereafter, a show cause notice dated

22.03.2024 was issued along with selective pages of the forensic audit report

5. Mr.Vikram Pooserla, lealrned senior counsel for the petitioner would submit that only 4 pages of forensic report has been supplied to the petitioner, tS which the petitioner replied on 72.04.2024 seeking a itock ar,[dit report and forensic audit report. Thereafter, on 31.05.2024 {espondent No.1/Bank replied to the letter dated 12.04.2024 agd has supplied stock audit report. On 17.06.2024, through cf,rrespondence, the petitioner sought copies of the forensic audit report in its entirety and on

17.O8.2O24 respondent No.1/Ban\ issued a letter enclosing the impugned order dated L2.O8.2O24 which was received by the petitioner on 22.O8.2024.

6. l,earned senior counsel further submits that the Company was admitted into Cor$orate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 on Oa.O2.2Olg ald subsequently Iiquldation order was passed on '2023'6€CC r pg.ao i:4il 2l .Ol .2O2O. Learned senior counsel in support of his case would rely on judgments of the Hon'lcle Suprt:rrte Court in State Bank of India a. Rajesh Agarualz and Milind Patel v. Union of Indirr qnd otherss. He would further submit that RBI introduced Master Directions on Fraud Risk Management on

75.07.2024 which mandate, must be strictly adhered prior to declaration of fraud'. Learned senior coun sel further drawn attention of this Court to the copies of forens;ic report issued to the petitioner along with show cause notice d*ed 22.03.2024.lt is further submitted that the said informatic,n furnished is not sufhcient to submit reply and unless entire forensic report is available to the petitioner, the petitioner vrorrld not be in a position to answer the reasons stated in the auclit report \ \)

7. Today, when the matter is taken up fcr hearing, learned standing counsel for respondent No.l/Bank placed the entire copy of forensic report and szune was also served on learned senior counsel for the petitioner. Learned sen.ior counsel for the petitioner would submit that the Forensic Auclit Report is for the period covering from April, 2010 to March, jlo18 and would submit that sometime may be granted for the petitioner to go '? 2023 SCC Online SC 342 t 2024 SCC Online Bom 745 7 ::5:: through the report and put forwa,r-d their submissions and reply accordingly.

8. In view of all the observations made above, the proceedings of the Fraud [dentification Committee of Respondent No.1 dated 12.O8.2Q24 and Order No.2O24-25/14 dated 12.08.2024 issued by respondent No.1/Bank is hereby set aside and the petitioner is granted time to put forward their submissions to the extent of Forensic Audit Report is concerned. Respondent No.1 is also granted liberty to issue fresh notice and call for the objections frorn the petitioner and after giving a fair opportunity of hearing to the peti(ioner, pass appropriate orders by following due process of law.

9. Accordingly, this writ petif.ion is disposed of. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this writ petition shall stand closed. /irRUE COPY// SD/. V.KAVITHA PUTY REGISTRAR ECTION OFFICER \ o '1 . State Bank of lndia, Stressed Assets Resolution Group, Corporate Centre, 21st Floor, Maker Tower E Cuffe Parade, Mumbai - 400005'

2. Reserve Bank of lndia' office at 6, Sanoad Marg, Sandsad Marg Area' New Delhi - 1 1000'l ' Represented by Regiorlal Director'

3. One CC to M/s Siva Praneetha Sreerapula, Advocate [OPUC] 4. One CC to Sri Chithari Prabhakar, Advocate [OPUC] Two CD Co @ 5 TJ TKS e: HIGH COURT I DATED:1910612025 ORDER WP.No.25226 of 2024 2 3 AUS 2ttr i ,i -:. i _) ., ,. -i \. DISPOSING OF THE WRIT PETITION WITHOUT COSTS