Quashed

Rajesh G. Poddar v. Reserve Bank of India

Bombay HC11 Jun 2024WP/1943/2024

Case brief

AI extract

What is this about?

The High Court quashed the bank's declaration of the petitioners' account as fraud, holding it contrary to the Supreme Court's judgment in Rajesh Agarwal due to lack of hearing. The Court clarified that the bank could initiate fresh proceedings under the new RBI Master Circular of July 2024, while allowing pending criminal proceedings to continue.

What did the court decide?

Declaration of fraud set aside. Bank permitted to initiate fresh proceedings under RBI Master Circular dated 15th July 2024.

Rajesh G. Poddar vs Reserve Bank of India — Banking and Recovery | Bombay HC (2024)

¶1

11.wp.1943.2024.doc

¶2

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1943 OF 2024

¶3

Rajesh G. Poddar & Ors. .. Petitioners

¶4

Versus

¶5

Digitally signed by UTKARSH UTKARSH KAKASAHEB KAKASAHEB BHALERAO BHALERAO Date: 2024.08.09 18:07:11 +0530

¶6

Reserver Bank of India & Anr.

¶7

.. Respondents

¶8

Ms.Radhika Nair a/w Keertana Nair i/b Anchal Garg, Advocates for the Petitioners.

¶9

Mr.Shyam Kapadia a/w Abdullah Qureshi, Shradha Patil i/b India Law LLP, Advocates for Respondent No.2.

¶10

CORAM :B. P. COLABAWALLA & FIRDOSH P. POONIWALLA, JJ. DATE : AUGUST 08, 2024

¶11

P. C.

¶12

1. The above Writ Petition is filed challenging the impugned declaration of fraud of the Petitioners’ account under the RBI circular dated 1^st July 2016.

¶13

2. It is the case of the Petitioners that the copy of such declaration has not been served on the Petitioners. This apart, one of the main grounds to challenge the said declaration is that no hearing was given before the Petitioners’ account was declared as ‘Fraud’. Further no

¶14

Page 1 of 4 AUGUST 08, 2024

¶15

Utkarsh

¶16

11.wp.1943.2024.doc

¶17

documents were also furnished. In such circumstances, the argument is that the entire action of the 2^nd Respondent Bank in declaring the Petitioners account as fraud, runs in the teeth of the decision of the Hon’ble Supreme Court in the case of State Bank of India & Ors. V/S Rajesh Agarwal & Ors. [2023 (6) SCC 1] .

¶18

3. Mr.Kapadia, the learned counsel appearing on behalf of Respondent No.2, fairly conceded that the declaration of the account of the Petitioners as a fraud account is in fact contrary to the judgment of the Hon’ble Supreme Court in the case of Rajesh Agarwal (supra) . He however submitted that no malafides can be attached to the actions taken by the 2^nd Respondent Bank because the declaration of fraud was done prior to the decision rendered by the Hon’ble Supreme Court in Rajesh Agarwal .

¶19

4. Having heard the learned counsel appearing for the parties we are of the view that since the declaration of the Petitioners’ account as fraud is contrary to the decision of the Hon’ble Supreme Court in Rajesh Agarwal , the above Petition deserves to be allowed. It makes little difference whether the action taken by the 2^nd Respondent Bank is before or after the decision of the Hon’ble Supreme Court in Rajesh

¶20

Utkarsh

¶21

Page 2 of 4 AUGUST 08, 2024

¶22

11.wp.1943.2024.doc

¶23

Agarwal . It is not as if the judgment in Rajesh Agarwal applies only prospectively. In the said decision, the Hon’ble Supreme Court only declared what the law always was and would apply even to actions taken prior to passing of the said judgment.

¶24

5. In these circumstances, the declaration of fraud of the Petitioners’ account by the 2^nd Respondent Bank is hereby quashed and set aside. We however make it clear that criminal proceedings that have been initiated by the 2^nd Respondent Bank against the Petitioners shall proceed on its own merits but de-hors the Petitioners’ account being declared as a fraud account under the Master Circular dated 1^st July 2016.

¶25

6. We further clarify that since now a new Master Circular has been issued by RBI [regarding fraud declarations] dated 15^th July 2024, the 2^nd Respondent Bank shall be entitled to initiate fresh proceedings for declaring the Petitioners account as a fraud by strictly following the RBI circular dated 15^th July 2024 and the decision of the Hon’ble Supreme Court in the case of Rajesh Agarwal . In the event the account of the Petitioners is once again declared as fraud [by following the due procedure], the 2^nd Respondent Bank will not have to file a fresh

¶26

Page 3 of 4 AUGUST 08, 2024

¶27

Utkarsh

¶28

11.wp.1943.2024.doc

¶29

criminal complaint as contemplated in clause 5 of the RBI circular dated

¶30

15^th July 2024 and the complaint already filed and pending shall be taken to its logical conclusion.

¶31

7. The Writ Petition is disposed of in the aforesaid terms. However, there shall be no order as to costs.

¶32

8. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

¶33

[FIRDOSH P. POONIWALLA, J.] [B. P. COLABAWALLA, J.]

¶34

Page 4 of 4 AUGUST 08, 2024

¶35

Utkarsh

Rajesh G. Poddar v. Reserve Bank of India

Case brief

What is this about?

What did the court decide?

Rajesh G. Poddar v. Reserve Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

Similar cases

Ami Dushyant Parekh Alias Ami Moneek Trivedi vs Union of India, Th. the Department of Health and Family Welfare

Anjali Lokesh Thadani vs Priya Moti Thadani and Ors.

Hashmat Ali Riyasat Ali Shaikh vs Slum Rehabilitation Authority

Raj Kantilal Shah vs Sanskar Gem Pvt. Ltd.

Sudhir Amritlal Kotak vs the Sub Registrar, Administrative Officer

Rajesh G. Poddar vs Reserve Bank of India