1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 2193 of 2010 Hanil Era Textile Limited & anr. ....Petitioners Vs. The Reserve Bank of India & anr. ....Respondents Mr. M.M. Vashi i/b. M/s. M.P. Vashi & assoc. for the petitioners Mr. N.K. Kamat, advocate for respondents 3 & 4. CORAM:- A.M.KHANWILKAR AND R.M.SAVANT, JJ DATED:- MAY 06, 2010 P.C. Heard Counsel for the parties. 2. Rule. Rule made returnable forthwith. Mr. Kamat waives notice for Respondents 3 & 4. 3. As short question is involved, Petition is taken up for final disposal forthwith, by consent. 4. This Writ Petition under Article 226 of the Constitution of India 2 essentially takes exception to the decision taken by Respondent No. 2 in June 2009 and which is recorded in the minutes of meeting dated 5th February, 2010 notifying the Petitioner as willful defaulter. For the nature of order that we propose to pass, it may not be necessary to advert to the factual aspects of the matter. Suffice it to observe that it is common ground that the Respondent Bank issued show-cause notice to the Petitioner on 10th September, 2009 calling upon the Petitioner as to why it should not be declared as willful defaulter. In response to the said show-cause notice, the Petitioner submitted its explanation on 16th September, 2009. After considering the said explanation, the Committee for identification of willful defaulter constituted by the Respondent Bank identified the Petitioner as willful defaulter, which decision according to Committee was in conformity with the guidelines of Reserve Bank of India for classifying the borrower as willful defaulter. 5. Two fold grievance was made before us. The first grievance was that the Committee referred to in the communication dated 10th September, 2009 was not duly constituted as was required under guidelines issued by the Reserve Bank of India dated 3rd July, 2009. Clause-3 of the said guidelines provides that the Committee should be of higher functionaries headed by the Executive Directors and consisting of two GMs and DGMs as decided by the Board of the concerned 3 Bank. In the context of this grievance, we called upon the Respondents to file affidavit specifically dealing with this contention. Pursuant to the said liberty, the Respondents have filed affidavit disclosing the constitution of the Committee. On bare perusal of the said affidavit, we have no difficulty in accepting the stand of the Respondent Bank that the Committee so constituted by the Respondent Bank was in conformity with the guidelines issued by the Reserve Bank of India in particular clause 3(i). 6. The second grievance made before us is that in any case the decision of the said Committee is vitiated on account of the fact that no hearing was given to the Petitioner before taking the final decision. In the context of this grievance, the stand taken by the Respondent Bank is that the Petitioner was given sufficient opportunity by issuing show-cause notice. In response to the said show-cause notice, the Petitioner offered explanation in writing which was duly considered by the Committee and final decision has been taken on that basis. This stand will have to be stated to be rejected keeping in mind the norms prescribed by the Reserve Bank of India under the said guidelines. In clause 3(iv) of the said guidelines, it is stipulated that :- “Further, the above Grievance Redressal Committee should also give a hearing to the borrower if he represents that he has been wrongly classified as willful defaulter.” 4 7. The expression used in the guidelines is of giving hearing to the borrower and not of merely giving an opportunity to offer explanation in the context of the show-cause notice. Thus understood, the procedure before taking the final decision adopted by the Respondent Bank is not in conformity with the guidelines 3(iv) referred to above. On this count alone we are inclined to accept the challenge of the Petitioner and allow the Writ Petition in terms of prayer clauses (a)&(b). 8. We make it clear that this decision is not an expression of opinion either way on the merits of the contention available to both sides as to whether infact the Petitioner is a willful defaulter as per the norms specified by the Reserve Bank of India or otherwise. That issue will have to be reconsidered by the Committee after giving hearing to the Petitioner afresh on its own merits in accordance with law. All questions in that behalf are left open. 9. Rule made absolute on the above terms. (R.M. SAVANT, J) (A.M.KHANWILKAR, J)