Wilful defaulter proceedings upheld where disclosure, written representation, and recorded reasons were held sufficient without shown prejudice.

In wilful defaulter proceedings, disclosure of the materials actually relied upon, a meaningful opportunity to submit a written representation, and recorded reasons by the original decision-maker were treated as sufficient where no prejudice was shown. The Court found no vitiation from non-supply of documents because only the borrowers' balance sheets were relied upon, and it held that a personal hearing was not mandatory under the governing circular. It further held that a confirming authority need not repeat detailed reasons, and that writ jurisdiction cannot be used to reappreciate the bank's factual findings or to extend Section 32A protection on the facts noted. The wilful defaulter declaration was upheld.

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Issues: (i) whether non-supply of documents relied upon for declaring the borrowers wilful defaulters vitiated the proceedings; (ii) whether denial of a personal hearing and alleged procedural lapses caused prejudice warranting interference under Article 226; (iii) whether the Review Committee's order was invalid for want of reasons; and (iv) whether the Court could reappreciate the merits of the wilful default findings or grant relief on the basis of Section 32A of the Insolvency and Bankruptcy Code, 2016.

Issue (i): whether non-supply of documents relied upon for declaring the borrowers wilful defaulters vitiated the proceedings.

Analysis: The only materials relied upon by the Identification Committee were the audited balance sheets of the principal debtor for the relevant years. Those balance sheets were treated as public documents and/or the petitioners' own documents. Since the show-cause itself referred to those balance sheets and no other material was relied upon, the Court found no failure of disclosure warranting interference.

Conclusion: The challenge on the ground of non-supply of documents failed.

Issue (ii): whether denial of a personal hearing and alleged procedural lapses caused prejudice warranting interference under Article 226.

Analysis: The governing circular required an opportunity to represent against the show-cause, not a mandatory personal hearing. The petitioners had made written representations, were offered a hearing at the bank premises, and did not avail it. Applying the prejudice-based approach to natural justice, the Court held that no material prejudice had been shown.

Conclusion: The challenge based on denial of hearing and procedural infraction failed.

Issue (iii): whether the Review Committee's order was invalid for want of reasons.

Analysis: The Court held that the first committee had given reasons and dealt with the points raised in the show-cause. A confirming authority need not repeat detailed reasons when it agrees with the findings below. On that basis, the alleged absence of independent reasons in the Review Committee's order did not vitiate the decision.

Conclusion: The order was not invalid for want of reasons.

Issue (iv): whether the Court could reappreciate the merits of the wilful default findings or grant relief on the basis of Section 32A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Court held that it could not sit in appeal over the bank's factual findings on diversion of funds or related matters in writ jurisdiction. It further held that the petitioners could not derive assistance from Section 32A because the statutory protection did not extend to them on the facts noted, including their position as promoters and the absence of an approved resolution plan.

Conclusion: The merits challenge and the Section 32A-based plea both failed.

Final Conclusion: The declaration of the petitioners as wilful defaulters was upheld, and the writ petition was dismissed without costs.

Ratio Decidendi: In wilful defaulter proceedings, disclosure of the materials actually relied upon, a meaningful opportunity to submit a written representation, and recorded reasons by the original decision-maker are sufficient where no prejudice is shown; writ courts will not reappreciate the merits of the bank's factual findings.

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