Writ interference in wilful-defaulter cases is limited to exceptional illegality, bias or mala fides where review remedies exist.

Under the RBI wilful-defaulter framework, the availability of a built-in review mechanism does not create an absolute bar to writ jurisdiction, but Article 226 interference at the initial identification stage is confined to exceptional cases of patent illegality, bias, mala fides or gross miscarriage of justice. Where the show cause notice is clear, the borrower is given inspection, extension and hearing opportunities, and the decision is reasoned, the Court will ordinarily leave factual disputes to the review committee. Applying that approach, the challenge failed because no jurisdictional defect, natural justice breach or arbitrariness was shown, and the wilful-defaulter declaration was not disturbed in writ scrutiny.

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Issues: (i) whether the writ petition was maintainable in view of the review mechanism under the RBI wilful-defaulter framework and the availability of an alternative remedy; (ii) whether the declaration of the petitioners as wilful defaulters suffered from such violation of natural justice, jurisdictional error, arbitrariness or mala fides as to warrant interference under Article 226 of the Constitution of India.

Issue (i): whether the writ petition was maintainable in view of the review mechanism under the RBI wilful-defaulter framework and the availability of an alternative remedy.

Analysis: The governing circular contemplated a two-stage process, with the initial identification by the first committee followed by review by the second committee. The availability of review did not, by itself, create an absolute bar to writ jurisdiction, but interference at the first stage was justified only in exceptional cases such as patent illegality, bias, mala fides or gross miscarriage of justice. The Court held that the first decision must be a legally tenable decision before review can meaningfully operate, yet the case disclosed no such exceptional jurisdictional defect.

Conclusion: The writ petition was not barred in principle, but no ground for immediate writ interference was made out; the objection to maintainability failed.

Issue (ii): whether the declaration of the petitioners as wilful defaulters suffered from such violation of natural justice, jurisdictional error, arbitrariness or mala fides as to warrant interference under Article 226 of the Constitution of India.

Analysis: The show cause notice was held to be sufficiently clear and consistent with the RBI guidelines. The petitioners were granted inspection, extensions of time and an opportunity of hearing, but they chose not to avail the opportunities in a timely manner and instead adopted delaying tactics. The Court found no patent mala fides, no gross arbitrariness and no jurisdictional infirmity of the kind that would justify judicial review. The impugned decision was supported by reasons and involved factual controversies better suited to the review committee than to writ adjudication.

Conclusion: The declaration of the petitioners as wilful defaulters was upheld for purposes of writ scrutiny and no interference was called for.

Final Conclusion: The writ petition was dismissed, costs were imposed, and the petitioners were left to pursue the contractual and regulatory review remedy before the competent review committee within the time granted.

Ratio Decidendi: In the wilful-defaulter framework under the RBI circular, writ interference at the initial identification stage is confined to exceptional cases of patent illegality, bias, mala fides or gross miscarriage of justice, and where the borrower has been afforded notice, opportunity and a reasoned decision, factual disputes should ordinarily be left to the review mechanism.

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