The Bombay High Court recently ordered a stay, restricting Canara Bank from undertaking further steps to include arraigned taxation lawyer Anil Harish’s name in the list of wilful defaulters maintained by the Credit Information Bureau (India) Limited ( CIBIL ).
Tax Lawyer Anil Harish, a lawyer and former independent director of Valecha Engineering Limited from 1993 to 2014 moved the Bombay High Court in August, seeking withdrawal of his name from the list of wilful defaulters maintained by CIBIL.
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Harish, represented by Senior advocate Sharan Jagtiani and Munaf Virjee contended before the High Court that he had resigned from his position of non-executive director at Valecha Engineering Limited in September 2014, one-and-a-half years before the arraigned company’s account was declared a non-performing asset (NPA) on Jan 30th, 2016.
Averring the actions of declaring him to be a wilful defaulter in complete breach of the principles of natural justice and the law laid down by the Supreme Court in a 2019 hearing where the Apex Court stressed that an alleged defaulter be given an opportunity of hearing before being declared a ‘wilful defaulter’.
Furthermore, the Petitioner submitted before the Bombay High Court that a 2015 Master Circular released by the Reserve Bank of India provides that a non-executive director may not be held liable for wilful default if the bank is not fully satisfied that the non-executive director was actively involved in the occurrence of the default.
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A Division Bench of Justice Burgess Colabawalla and Justice Somasekhar Sundaresan highlighted procedural errors and breaches of natural justice in the conduct of the Bank and observed that Harish had no active role in the default, as he had resigned well before the NPA declaration.
The Bombay High Court further directed Canara Bank not to include Anil Harish in the list of wilful defaulters maintained by CIBIL. The Bench
Noting the failure on behalf of Canara Bank to respond to Harish’s legal notice and continued absence during hearings, the Bombay High Court warned the bank of proceedings in their absence if it fails to appear during proceedings on the 11th of December, 2024.
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