Ms Punjab Lighting Industries Limited And Others v. Punjab National Bnak And Another
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP-14663-2025 (O&M) Date of decision :14.07.2025 Punjab Lighting Industries and others ... Petitioners
Versus
Punjab National Bank and another
...Respondents
CORAM : HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL HON'BLE MR. JUSTICE DEEPAK MANCHANDA
Mr. C.S. Pasricha, Advocate for the respondent-Bank. **** Anupinder Singh Grewal, J. (Oral) This petition has been preferred by the petitioners to summon and quash the impugned show cause notice as well as the impugned orders vide which the petitioners have been arbitrarily, erroneously and illegally declared as wilful defaulter pursuant to RBI Master Circulars dated 01.07.2023 and 01.07.2015 on wilful defaulter (Annexures P-17 and P-18) respectively.
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!the petitioner in the earlier writ petition(s). The petitioner should not be allowed to /
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"i. Issue a writ in the nature of certiorari, calling for and quashing the impugned show cause notice, if any, impugned Fraud Monitoring Return/Report and all consequential proceedings arising therefrom, vide which Respondent no.2 and 3 has declared the Petitioners as fraud in terms of RBI Circular dated 01.07.2016 titled 'Master Directions on Frauds - Classification and Reporting by Commercial Banks and Select Financial Institutions' (Annexure P-17),' in complete violation of principles of natural justice and behind the back of petitioners;
ii. issue a writ in the nature of prohibition, restraining the Respondents from initiating or continuing with any measures/proceedings on the basis of impugned Fraud Monitoring Return/Report and if taken direct the same to be placed on record and quash the same;
iii. issue a writ in the nature of declaration, declaring illegal all actions taken by Respondent No.2 and 3 and consequently and specifically, direct that any instructions issued/information shared by the Respondents with external authorities/agencies, in pursuance to the circular dated 01.07.2016(Annexure
P.17)are a nullity and have no effect;
iv. issue a writ in the nature of certiorari, calling for the impugned Forensic Audit Report and other records and proceedings based on which the account of Petitioners have been declared as fraud and after going through the same, to quash and set aside the same;
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' "It is therefore, most respectfully prayed that this Hon'ble Court may be pleased:
1. To call for records of the case and especially Auditors Report dated 14.11.2023, Show Cause Notice dated 23.02.2024 and the Letter/Order of the Respondent Bank dated 05.04.2024 declaring the account of the Petitioners as fraudulent; AND
2. To Issue a Writ in the nature of Certiorari for quashing the forensic auditors beport dated 14.11.2023, the Show Cause Notice dated 23.02.2024, and the Letter/Order of the Respondent Bank dated 05.04.2024 declaring the account of the Petitioners as fraudulent, all of which are not being supplied to the Petitioners by Respondent no. 2 - Bank despite repeated requests by email; AND/OR
3. To issue any other appropriate writ, order or direction which this Hon'ble Court may consider just and appropriate in the facts and circumstances of the present case; AND/OR
4. This Hon'ble Court may appoint an independent auditor to go into the financial affairs of the Petitioner company who should associate the Petitioners with a fact finding enquiry regarding the financial affairs of the Petitioner company; AND
5. All subsequent actions in pursuance to the declaration of the Petitioners account to be fraudulent, be declared illegal, null and void; xxx xxx"
8.
The second writ petition was dismissed as withdrawn vide order dated 22.05.2025, after this Court had observed that in the earlier petition preferred by the petitioners bearing CWP No.18314-2024, similar relief had been sought. Relevant extract of order dated 22.05.2025 is reproduced hereunder:-
"3. After hearing learned counsel for the petitioners, we find that the petitioners had earlier preferred petition bearing CWP-18314-2024, wherein they had sought similar relief which was disposed of vide order dated 12.12.2024 (Annexure P-10).
4.
At this stage, learned counsel for the petitioners submits that the earlier petition had been erroneously disposed of as a part of bunch of cases and the petitioners want to withdraw the instant petition with liberty to prefer an application seeking review of the order dated 12.12.2024 passed in the earlier petition.
5.
Learned counsel for the respondent-Bank submits that he would be raising objections with regard to the maintainability of the review application, if any, at an appropriate stage. 6.
The petition is dismissed as withdrawn with the aforesaid liberty."
9.
The petitioners therefore, are before this Court in a third round of litigation and are now challenging their declaration as 'willful defaulter' on 26.08.2022.
10.
We cannot accept the contention of the learned counsel for the petitioners that they did not have knowledge of being declared as wilful defaulters for the reason that, after having been declared as 'wilful defaulter', the petitioners were subsequently declared as 'fraud'. Two writ petitions had been preferred by the petitioners challenging the action of the respondents in declaring the petitioners as 'fraud'. It is difficult to believe that the petitioners did not have any knowledge about the fact that they had 0 1.
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"23. That however, in blatant ignorance of all the steps taken by the Petitioners to shield the interest of Respondent Bank, Petitioners came to knowthat their loan account has been declared as Wilful Defaulter on dated 26.08.2022pursuant to RBI Master Circular on Wilful Defaulters dated 01.07.2013 and 01.07.2015 (Annexure P.17 and P.18 respectively) in a completely slip shod manner that too behind the back of the Petitioners. At the threshold, such conduct is clearly unwarranted and is in breach of the ingrained principles of natural justice because had the Petitioners been afforded with an opportunity to explain the correct factual position, they could have very well responded to the queries of the bank, before casting serious civil/penal consequences upon it by declaring them as wilful defaulters."
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' "27. That to add to their plight, yet again, in perpetuation of this illegality, even the order of WDIC was never served upon the Petitioners thereby depriving them of an opportunity to prefer their representation before the review committee. Still further, the review committee instead of taking cognizance of the aforesaid illegalities, acted as a rubber stamp and merely endorsed the findings of the Committee for Identification of Wilful Defaulter without applying its mind. This blatant non application of mind gains significance in light of civil and penal ramifications flowing from the impugned declaration. On the strength of such wrongful declaration, the Respondent bank has published a list of willful
defaulters recently wherein the name of the Petitioners is shown as wilful defaulter, copy of which is annexed hereto as Annexure P.29." *#
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To start with, the Respondents 1 to 6 had taken a plea that the Municipal Commissioner had not obtained the approval of the Bombay Municipal Corporation under Rule 4(a)(i) of the Development Control Rules for change of user. The counsel for the BMC, however, informed the court that he had already sought the sanction of the Bombay Municipal Corporation and the proposal would soon come up before the Corporation for discussion and on that ground he sought an adjournment of the case to enable the Corporation to approve the said proposal. On 6)1)1983 the BMC by its resolution accorded sanction under Rule 4(a)(i) of the Development Control Rules for the change of present user of BEST bus depot to a combined user of BEST bus depot with commercial offices proposed by the Municipal Commissioner. The court thereafter allowed Respondents 1 to 6 to amend their writ petition as the plea taken by them had lost its force after the sanction.
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namely, M/s Western Builders.
20. So far as the first reason is concerned, the High Court in our opinion was not right in holding that the earlier judgment would not operate as res judicata as one of the grounds taken in the present petition was conspicuous by its absence in the earlier petition. Explanation IV to Section 11 CPC provides that any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
An adjudication is conclusive and final not only as to the actual matter determined but as to every other matter which the parties might and ought to have litigated and have had it decided as incidental to or essentially connected with the subject-matter of the litigation and every matter coming within the legitimate purview of the original action both in respect of the matters of claim or defence. The principle underlying Explanation IV is that where the parties have had an opportunity of controverting a matter that should be taken to be the same thing as if the matter had been actually controverted and decided. It is true that where a matter has been constructively in issue it cannot be said to have been actually heard and decided. It could only be deemed to have been heard and decided.
The first reason, therefore, has absolutely no force."
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(ANUPINDER SINGH GREWAL) JUDGE (DEEPAK MANCHANDA) 14.07.2025 JUDGE Sapna Whether speaking/reasoned :
Yes/No Whether reportable :
Yes/No