Willful Defaulter under RBI Act can’t be represented through Advocate / Chartered Accountants: Madhya Pradesh HC [Read Judgment]

The Madhya Pradesh High Court has held that a ‘willful defaulter’ under the Reserve Bank of India (RBI) cannot be represented through the lawyers or Chartered Accountants.

The State Bank of India has issued a notice to the petitioner-Company proposing to declare them as ‘‘wilful defaulter’’ under Master Circular. By way of show cause notice, the petitioners were called upon to show cause and make a representation within 30 days of the receipt of the notice as to why they should not be included in the list of ‘wilful defaulter’. Vide reply dated 29.7.2017, the petitioners have requested for supply of all the details and documents relied upon by the respondent No.1/bank and which formed the basis of allegations/charges containing in the said show cause notice. Vide letter dated 29.11.2017, the petitioners were directed to appear before the ‘wilful defaulter’ Identification Committee.

The petitioners approached the court by way of writ petition seeking a direction as to permit them to be represented through their Advocate or CA at the time of personal hearing before the Identification Committee. By order dated 16.1.2018, the writ petition was disposed of with a liberty to the petitioners to make an application before Identification Committee, seeking permission to represent through its Advocate, in light of the judgment passed by the Delhi High Court in the case of Punjab National Bank V. Kingfisher Airlines Ltd decided on 17.12.2015. however, the request was rejected.

Dismissing the petition, Justice Vivek Rusia observed that a coordinate Bench of this court in the case of Surender (supra) has already held that the borrower is not having the right to be represented through lawyer/advocate under the master circular.

“As per clause 3.(b) the personal hearing is available only to borrower Director and Promoter of the alleged default unit. The identification committee is neither a court nor a tribunal. Therefore, I have no reason to take a different view as taken by the coordinate bench of this court in the case of Surender (supra). Even otherwise, a similar issue is also pending before the Div. Bench of this court as well as the Apex.”

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