The Calcutta High Court has invalidated a complaint filed by Punjab National Bank (PNB) against the petitioner, urging the Central Bureau of Investigation (CBI) to initiate a First Information Report (FIR) based on the petitioner being labeled a "wilful defaulter" under the Reserve Bank of India's (RBI) 2015 Master Circular on Wilful Defaulters. The petitioner argued that the Wilful Defaulter Identification Committee (IC) had spontaneously revoked its previous order declaring the petitioner a wilful defaulter in 2021, rendering the complaint obsolete.
Justice Sabyasachi Bhattacharya, in a single-bench hearing, emphasized the importance of equality before the law under Article 14 of the Constitution. The judge highlighted that the grounds cited in the complaint were no longer applicable, and any display of arbitrariness or malice against a citizen contravenes Article 14. Consequently, the court allowed the petitioner's plea, setting aside the PNB's complaint to the CBI.
The petitioner's counsel contended that both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) ruled in favor of the petitioner after the wilful defaulter notice, rejecting claims by the liquidator. The IC subsequently dropped the wilful defaulter proceedings against both the borrower company and the petitioner. Furthermore, the petitioner's account was declared fraudulent under another RBI directive, but the Delhi High Court overturned this declaration in subsequent proceedings.
The counsel argued that a Look Out Circular (LOC) related to the defaults had also been annulled by the court, asserting that the complaint's basis had become obsolete. The petitioner claimed that the CBI acted without authority by registering an FIR more than two years after the complaint, as the allegations had been withdrawn before the FIR was filed.
PNB's counsel argued that the complaint was relevant when lodged, and subsequent events should not negate its validity. They contended that the IC's dropping of proceedings did not absolve the petitioner from further scrutiny by the bank. According to Section 154 of the Code of Criminal Procedure (CrPC), the bank argued that a complaint could be registered under general criminal law principles, and the court could not quash the complaint at an early stage.
The court examined the 2021 complaint and found that it sought to lodge the complaint based solely on the petitioner being declared a wilful defaulter under the RBI's master circular. The grounds mentioned, such as "siphoning and diversion of funds" and "loss to public money," aligned with the RBI Master Circular on Wilful Defaulters.
The court noted that the entire cheating allegation against the petitioner was rooted in the siphoning and diversion of funds, justifying the CBI's involvement under the RBI Master Direction, 2016. However, the court observed that all grounds in the bank's complaint were tied to the withdrawn wilful defaulter declaration by the IC.
Highlighting that the cause of action had become obsolete, the court emphasized that the wilful defaulter declaration had been recalled by the IC, and subsequent proceedings discredited the allegations against the petitioner. Consequently, on the date of FIR registration (August 18, 2023), none of the bank's allegations in the complaint were valid.
In conclusion, the court set aside the bank's complaint, granting the petitioner the right to approach the appropriate forum to quash the FIR or any related actions initiated by the CBI.
TAGS: Master Circular Petitioner Arbitrariness Article 14 Equality before the law
