High Court of DelhiW.P.(C)/1869/2026

M/S. Dhir International Private Limited And Others. v. Karnataka Bank Limited.

2026-02-16Hon'Ble Mr. Justice Jasmeet Singh13 pages

$~4 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 1869/2026 & CM APPL. 9126/2026 M/S. DHIR INTERNATIONAL PRIVATE LIMITED AND OTHERS .....Petitioner Through:

Mr. M. Dutta Senior Advocate alongwith Mr. Amar Nath, Mr. Brijesh Kumar Jha, Mr. Aditya Guha, Mr. Anand Kumar Soni and Mr. Aayush Goyal Advocates versus KARNATAKA BANK LIMITED .....Respondent Through:

Adv Sanjay Bajaj, Adv Rajat Prakash

CORAM:

HON'BLE MR. JUSTICE JASMEET SINGH

O R D E R

% 16.02.2026 1.

This is a writ petition filed under Articles 226 and 227 of the Constitution of India seeking the following prayers:- "a) issue a writ, order or direction in the nature of certiorari or any other appropriate writ, order or direction that this Hon'ble Court deems fit and proper in the facts and circumstances of the present case, quashing / setting-aside the impugned Communication(s) dated 29.05.2025 and 28.11.2025 passed and issued by the Respondent Bank, declaring the Petitioner(s) Loan Account(s) as "Fraud" as per the RBI Master Direction No. 5/23.04.001/2024-25 dated 15.07.2024, as being wrong, unlawful, illegal and contrary to the aforesaid Directions issued by the Reserve Bank of India;

b) issue a writ, order or direction in the nature of mandamus or any other appropriate writ, order or direction that this Hon'ble Court deems fit and proper in the facts and circumstances of the The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

present case, directing the deletion and removal of the Petitioner(s) from the List of Fraud / Fraudulent Account(s) / Central Fraud Registry (CFR) and such other / further platforms that may have been intimated / informed pursuant to the classification Order(s) enumerated above;...." 2.

The brief facts are that the petitioner No. 1 i.e., M/s Dhir International Private Limited, is presently under Liquidation. The petitioner No. 2 is the former Managing Director, petitioner No. 3 is the Former Founder and Director, and petitioner No. 4 is an alleged Guarantor, of the petitioner No. 1 and the petitioner No. 5 is alleged Corporate Guarantor of the facilities purportedly availed by the petitioner No. 1. 3.

The petitioner No. 1's account(s) were declared Non-Performing Assets ("NPA") and vide a Demand-Notice dated 11.11.2016 issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("Securitization Act") the respondent Bank demanded repayment of its alleged dues. The petitioner No. 1 replied to same vide letter dated 12.01.2017 and denied all the claims made by the respondent Bank. 4.

Thereafter, the respondent Bank issued Possession Notice dated 17.04.2017 under Section 13(4) of the Securitization Act, seeking possession of the Secured Assets. Aggrieved by the same, the petitioner(s) filed Securitization Application being S.A. 90/2017 before the Debt Recovery Tribunal, Delhi, which was allowed vide judgment dated 27.06.2018.

Aggrieved by the same, the respondent Bank filed a statutory Appeal No. 451/2018 before the Debt Recovery Appellate Tribunal, New The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

Delhi, wh hich was allowed vide judgment da ated 03.04.2025. The petitioner r(s) filed Writ Petition (Civil) 8071/202 25 challenging the said judgemen nt, which was dismissed vide judgment dated 09.01.2026.

In amidst all this, the respondent Bank issued th he Show Cause Notice dated 15.0 04.0205, proposing to declare the petiti ioner(s) as a fraud. The said show w cause notice is extracted below:- The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The petiti ioner(s) gave a detailed reply dated 0 06.05.2025 to the said Show Cau use Notice and the same is extracted be elow:- The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

Thereafte er, a virtual hearing was granted to o the petitioner(s) on 28.05.202 25 and subsequently, the impugned o rder dated 29.05.2025 was passe ed, which reads as under:- The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

Hence, th he present petition.

10.

I have hea ard learned counsels for the parties.

11.

The learn ned counsel for the petitioner(s) has han nded over in the Court The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

today page No. 121 of the file of the present petition, as the same was missing from the Court file.

12.

The "Master Directions on Fraud Risk Management in Commercial Banks (including Regional Rural Banks) and All India Financial Institutions (AIFIs)" ("Master Directions on Fraud"), under which a party can be declared as fraud sets out in detail the procedure required thereunder. The relevant clause from the same reads as under:- "2.1.1.3. Banks shall have a well laid out system for issuance of SCN and examination of the responses / submissions made by the Persons / Entities prior to declaring such Persons / Entities as fraudulent.

2.1.1.4. A reasoned Order shall be served on the Persons / Entities conveying the decision of the bank regarding declaration / classification of the account as fraud or otherwise. Such Order(s) must contain relevant facts / circumstances relied upon, the submission made against the SCN and the reasons for classification as fraud or otherwise." 13.

A perusal of the aforesaid clauses from the Master Directions on Fraud, shows that the bank is required to pass reasoned orders containing relevant facts, circumstances, submissions and reasons for classification as fraud.

14.

In the present case, the detailed reply dated 06.05.2025 submitted by the petitioner(s), though may have been considered in the impugned order but the defence raised by the petitioner(s) in the said reply have not formed part of the reasons provided in the impugned order. 15.

A perusal of the impugned order (extracted above), shows that it is a The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

cryptic order and in fact does not show due application of mind or consideration of the defence raised by the petitioner(s). In my opinion, the same falls foul of the directions given in the Master Directions on Fraud.

16.

In this view of the matter, it is directed that the respondent Bank shall give a personal hearing to the petitioner(s) within 2 weeks from today and thereafter, pass a detailed order in terms of Master Directions on Fraud within 4 weeks thereafter.

17.

Consequently, the impugned order dated 29.05.2025 is hereby set aside, with the aforesaid directions.

18.

The petition is disposed of in the aforesaid terms, along with pending application(s), if any.

19.

The page No. 121 of the file handed over in the Court today is taken on record.

JASMEET SINGH, J FEBRUARY 16, 2026 / (MS) The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.