TaxTMI 
TaxTMI 
2026 (1) TMI 562
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....t, "the RC"), the petitioner claims to fall outside the ambit of the Master Circular. The present writ petition has been preferred against such declaration. 2. Learned senior counsel appearing for the petitioner submits that the RC, while adjudicating the petitioner to be a Wilful Defaulter, failed to decide on the jurisdictional objection raised by the petitioner. It is contended that under Clause 3 of the Master Circular, which provides for the mechanism for identification of Wilful Defaulters, the promoters and Whole Time Directors have been placed on a different footing than Non-Promoters/Non-Whole Time Directors. Clause 3(d) provides that, except in very rare cases, a Non-Whole Time Director should not be considered as a Wilful Defaulter unless it is conclusively established that he was aware of the fact of wilful default by the borrower by virtue of any proceedings recorded in the minutes of meeting of the Board or a Committee of the Board and has not recorded his objection to the same in the minutes or the wilful default had taken place with his consent or connivance. 3. Learned senior counsel places reliance on the representation made by the petitioner to the RC, wher....
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....Director of the borrower-Company standing on similar footing as the petitioner, was let off by the impugned order of the RC only on the ground that he was a Non-Executive Independent Director and as such his name shall not be included in the CIC list of Wilful Defaulters, despite Shri Bhargava being a member of the Audit Committee as reflected in the Annual Report of the borrower-Company, of which the petitioner was not a member. 11. It is pointed out by learned senior counsel for the petitioner that in the list of Directors shown in the Annual Report of 2013-2014, the said Shri Bhargava was shown as a Director along with the petitioner. Thus, the petitioner seeks parity with Shri Bhargava inasmuch as the outcome of the RC decision is concerned. 12. Learned counsel for the bank opposes the contentions of the petitioner and contends that from the IC decision dated February 26, 2021, it would be evident that the borrower-Company entered into a marketing-cum-management contract agreement with one Nagri Farm Tea Company Ltd. for the Marybong Tea Estate on July 5, 2013, much prior to the financial year 2015-16, when the petitioner was very much a director of the borrower-Company. ....
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...., inasmuch as the former is a professional appointed to act independently and, thus, falls outside the management ecosystem of the company. Hence, R.K. Bhargava, who was let off in the investigation by the IC and the RC, stood on a completely different footing than the petitioner, who was admittedly a Promoter as well as a Non-Executive Director. 17. Learned counsel appearing for the bank next takes the court through several documents, including balance sheets and profit and loss accounts of the borrower-Company, to show that the name of the petitioner appears as a Director therein, indicating that the petitioner had signed such documents for the relevant period, being the financial year 2013-2014, and thus had full knowledge of the fraudulent transactions-in-question. 18. It is shown from the Annual Report relied on by the petitioner himself that the petitioner had attended, unlike other directors, all five Board meetings held during the year, ending with September 30, 2014, and had even attended the last AGM held on December 30, 2013. From the materials on record, the bank points out that the petitioner used to draw remuneration from the company during the relevant period. ....
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....d Company during that period, was only a paltry sum and to the knowledge of Mr. G. P. Goenka and Mr. Srivardhan Goenka, the said account of the said company has been seized by the Chief Labour Commissioner on account of the outstanding Provident Fund Dues of the workers engaged at the said company (emphasis supplied). 24. Thus, from neither of the above paragraphs, relied on by the bank, does this Court find any admission on the part of the petitioner that he was a Promoter of the defaulter Company. In paragraph no. 35 of the self-same reply, it was stated on behalf of the petitioner that the Interim Resolution Professional accordingly took charge of the company on and from 5th March 2020 and Mr. G. P. Goenka and Srivardhan Goenka, who are members of the Board of said Company, stood suspended and ceased to have any control over the affairs of the Company from that date onwards and the bank accounts of the said Company were under the control of and operated by the said Interim Resolution Professional. As such, they had no means to settle the dues of the SBI. Isolated excerpts cannot be culled out from the rest of the reply out of context. The reply nowhere admits the petitioner t....
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....chanism for identification of equal defaulters to him under Section 3(d) of the Master Circular, such issue was not even adverted to in the impugned decision of the RC which, in law, is duty-bound to consider on merits the representation of the accused persons. 32. Going by the exception clause in sub-clause (d) of Clause 3, this Court does not find that the bank has referred to or brought on record any minutes of any meeting of the Board or a Committee of the Board by virtue of which the petitioner could be aware of the fact of wilful default by the borrower, let alone the petitioner having had to record his objection to the same in such minutes. Also, the consent or connivance of the petitioner in the alleged acts of wilful default has not been substantiated in any manner whatsoever. No exceptional circumstance or rare case has been made out in terms of the exception clause in the case of the petitioner. 33. The mere fact of the petitioner being a Non-Whole Time Director in the borrower-Company during the relevant period does not satisfy the parameters of Clause 3(d) insofar as such Directors are concerned. This Court finds abject failure on the part of the bank to substant....