TaxTMI 
TaxTMI 
2026 (5) TMI 526
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....t in Raigarh District in the State of Chhattisgarh. The respondent no. 1 had sanctioned a loan in the name of the Company in the month of March, 2010 for the said project. Before the Company could complete the erection and installation, the coal block allotted to the company was cancelled by the Central Government pursuant to the orders passed by the Hon'ble Supreme Court in the month of September, 2014. Due to the de-allocation of Coal Block in terms of the order passed by the Hon'ble Supreme Court, the banks withheld further disbursements as there was no clarity with regard to the supply of coal. The de-allocation of coal block jeopardizes the project, and as a result the erection and installation work for the project was put in hold and the project could not achieve its commercial operations. In view of the said facts, the stoppage of fund disbursement by several members of the consortium of bankers including the respondent no. 1 had cascading effect on the accounts of the company and the account of the company was declared as Non-Performing Assets on 31st March, 2016. 3. In the year 2017, one of the consortium lenders being Bank of Maharashtra filed proceedings against the c....
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.... against the petitioners under the Master Directions but it was kept open for the bank to proceed in accordance with law in the light of the Judgment in the case of State Bank of India & Ors Vs. Rajesh Agarwal & Ors. reported in (2023) 6 SCC 1. 6. The respondent no. 1 also initiated Wilful Defaulter proceedings against the petitioners on the basis of the Transaction Audit Report but subsequently the respondent no. 1 on its own accord decided to withdraw the Wilful Defaulter proceeding against the petitioners by virtue of an order dated 9th November, 2022. On 18th June, 2021, the respondent nos. 1 and 2 filed a complaint before the Central Bureau of Investigation (CBI) and on 18th August, 2023, the CBI registered a case against the petitioners. The petitioners have challenged the said proceeding in a writ proceeding being WPO No. 1626 of 2023 and the High Court by a judgment dated 17th November, 2023, quashed the complaint dated 18th June, 2021. 7. Mr. Sabyasachi Chowdhury, Learned Senior Advocate representing the petitioners submits that on 25th October, 2023, the respondent no.2 issued show cause notice to the petitioners which was received by the petitioners on 17th Novembe....
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.... petitioners as fraud but the same was never informed to the petitioners and thus the said action of the respondents is dehors both the Master Circular and the judgment passed by Hon'ble Apex Court passed in the case of State Bank of India and Others Vs. Rajesh Agarwal and Others reported in (2023) 6 SCC 1. 12. Mr. Chowdhury submits that the respondents have proceeded to declare the account as fraud upon mere a perception and on the basis that the petitioners did not provide a pointwise response to the allegations contained in the Transaction Audit Report and also on the basis that more than 60% of the lenders have already reported the account of the petitioners as fraud. He submits that such unilateral action on the part of the other lenders was neither informed to the petitioners by virtue of the show cause notice dated 25th October, 2023, nor any other communication. He submits that the petitioners were never provided with the opportunity to deal with the action undertaken by the other lenders. 13. Mr. Chowdhury submits that the respondent bank already reported the account of the petitioners as fraud to the Reserve Bank of India on 16th July, 2024 and thereafter informed t....
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....further submits that relevant extracts of the Transaction Audit Report were also provided to the petitioners along with show cause notice. She submits that the petitioners have not replied with regard to the Transaction Audit Report and only requested for withdrawal of the proceedings and accordingly on 9th August, 2024, the account of the petitioners was declared as fraud. 18. Ms. Choudhury submits that prior to show cause notice on the basis of complaint of Punjab National Bank dated 18th June, 2021, the Central Bureau of Investigation has registered FIR against the petitioners and M/s Visa Power Limited. She submits that as per the allegations against the petitioners was for siphoning off and diversion of funds, criminal misappropriation, criminal breach of trust and cheating by causing loss of the public money to the tune of Rs. 1964 crores. The FIR was challenged before the Coordinate Bench of this Court and being aggrieved with the order passed by the Coordinate Bench of this Court, the respondent bank has preferred an appeal. The appellate Court held that the case initiated against the petitioners is not limited to the transaction for a period from 23rd December, 2015 to ....
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....hat the report does not support the contention of the Liquidator that the Auditor observed that the transactions in question are either undervalued or preferential or fraudulent. The order of the Learned Tribunal has been upheld by the Appellate Tribunal by its order dated 30th September, 2019. 23. After the order passed by the Learned National Company Law Tribunal and Appellate Tribunal, the bank has passed the following order: "Deliberation of the Committee: The committee noted that the wilful default proceedings in the account was initiated on the ground of Diversion of funds, siphoning of funds and unauthorized disposal of charged assets, the basis of which is the Transaction Audit Report of M/s Deloitte Touche Tohmastu India LLP The committee further observed that NCLT Kolkata vide order dated 25.07.2019 has held that audit report dated 24.08.2018 of DTTILLP, by itself without any independent material on record does not prove any preferential undervalued and fraudulent transaction. The committee also took note of the fact that the appeal filed by the RP against order of NCLT was not entertained by the Hon'ble NCLAT and hence the order of NCLT has attai....
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....s fraud. The Competent Authority, further, accorded approval to report the account as fraud to RBI. The competent authority, after due consideration of the above said facts and examining the evidences on record, found that the borrower M/s Visa Power Ltd. and its directors Sh. Vishambhar Saran and Sh. Vikas Agarwal are responsible for above event(s) of fraud and hence the account is hereby declared as "fraud" on the grounds of "Diversion of funds" which constitute cogent ground(s) for the account(s) being classified as 'fraud' in terms of extant Bank guidelines issued in consonance with the RBI guidelines/ Master Directions on Fraud read with Judgement dated 27.03.2023 of Honourable Supreme Court of India in Civil Appeal No. 7300/2022. The Bank has reported the account as fraud to the Reserve Bank of India (RBI) on 16.07.2024 vide FMR No. PNB2403-0361 as per the directions contained in the RBI Master Directions/ Circulars issued time to time, in this regard." 25. The bank has relied Joint Lenders Meeting comprising of other Consortium of Lenders stating that since 60% lenders have reported the account of the petitioners as fraud and the respondent bank ....