Gsr Marketing Limited Thr. Its Director Suresh Kumar Chitlangya vs Union Bank Of India

CNR No : HCBM010297012026

904-WP-8111-26.DOC
2026:BHC-AS:42220-DB

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.8111 OF 2026
GSR Marketing Limited )
Through its director / authorized )
representative Mr. Suresh Kumar )
Chitlangya )
having its registered office at )
st
2-2-5, Flat No.1 and 6, 1 floor, )
Ushakiran Arcade, Vidya Nagar, )
Hyderabad, Telangana, India-500044) ...Petitioner
Versus
Union Bank of India )
st
Having Zonal Office at, 1 floor, )
103-104, Stellar Enclave, Do Road, )
Near Parihar Chowk, Aundh, )
Pune 411009 ) ...Respondent
----------
Mr. Pranav Avhad a/w Ms. Darshna Naval a/w Mr. Amit Rathi for Petitioner.
Mr. Anup Khaitan a/w Mr. Harsh Gutka, Ms Akshita Rathodi, Mr. Aayush
Khanvilkar for Respondent Bank.
-----------
CORAM : SARANG V. KOTWAL &
RANJITSINHA RAJA BHONSALE, JJ.
th
DATE : 13 OCTOBER 2026.
JUDGMENT: (PER SARANG V. KOTWAL, J.)
1. Heard Mr. Pranav Avhad, learned counsel for the Petitioner and Mr.
Anup Khaitan, learned counsel for the Respondent-Union Bank of India.
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2. Rule. Rule made returnable forthwith with the consent of the parties.

3. The Petition is filed for quashing and setting aside the Show Cause
rd
Notice dated 23 March 2026 and Fraud Examination / Classification order
nd
dated 2 June 2026, passed by the Respondent-Bank.
4. The Petitioner company is a public limited company incorporated on
th
6 September 2007, having its office address at Hyderabad. The Petitioner
Company is engaged in the business of commercial trading of cement and
the export of agricultural commodities. The petition is filed through its
Director/Authorized Representative, Mr. Suresh Kumar Chitlangya.
5. For the purpose of its business operations, the Petitioner approached
the Respondent Bank and availed a sanctioned credit facility to the tune of
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Rs. 9 Crores on 8 January 2015, which was subsequently replaced by an
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Open Cash Credit Facility to the tune of Rs.6 Crores sanctioned on 30 July
2016. For the purpose of availing of this facility, the Petitioner company had
offered immovable properties located at Gat No.22/1 and Gat No.22/4, Loni
Kalbhor, Taluka Haveli, Pune The properties were owned by other persons
who had stood personal guarantors. However, after sometime, there was
some default in the payment of the Petitioner and the Petitioner company
submitted various proposals for one time settlement. However, nothing came
out of those proposals.
rd
5. Respondent-Bank issued Show Cause Notice dated 23 March 2026,
which is impugned in this Petition calling upon the Petitioner company and
its Directors, to show cause as the bank intended to declare their company as
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fraud as per the Master Directions on Fraud issued by the RBI.

nd
6. As the next stage, the Respondent-Bank issued order dated 2 June
2026 and conveyed the decision that the Petitioner company’s account was
classified as fraud. This order is also under challenge in the present petition.
7. Learned Counsel for the Petitioner submitted that it was mandatory on
the part of the Respondent-Bank to have furnished copies of the audit report,
forensic report and investigation report to the Petitioner company alongwith
Show Cause Notice to enable them to respond to the allegations in the Show
Cause Notice. In the present case, no such report was supplied to the
Petitioner. Learned counsel for the Petitioner relied on the observations of
the Hon’ble Supreme Court in the case of State Bank of India Vs. Amit Iron
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Private Limited & Ors decided on 7 April 2026 in Civil Appeal Nos.4243-
4244 of 2026 . He submitted that the Hon’ble Supreme Court has held that
supplying of such reports are mandatory.
8. Learned counsel for the Petitioner, therefore, submitted that there is
violation of this important mandatory requirement. The Show Cause Notice
as well as the impugned order are required to be quashed and set aside.
9. Learned counsel for the Respondent-Bank submitted that fraud
committed by the company and its guarantors is clear on the face of the
record. The guarantors had furnished securities of the lands which were
already sold and, therefore, it was not necessary to furnish any report.
10. We have considered these submissions. The Petitioner has taken a
specific pleading in paragraph 8 as follows:
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“Pertinently, neither the foundational Internal
Investigation/Audit Report dated 11.09.2025 nor the Title
Search Report dated 23.12.2023, nor any other material
document, was provided or enclosed by the Respondent
Bank along with the Impugned SCN.”

11. A specific ground was raised in Ground (C) as follows:
“It is submitted that in view of the decision of the Hon'ble
Supreme Court in Rajesh Agarwal, the right to be provided
with material documents underlying the show cause notice
including and, most specifically, the audit report has been
further explicitly recognized as an integral part of the right
of borrower to be provided with the opportunity to be
heard. Most recently, it has been held by the Hon'ble
Supreme Court in State Bank of India v. Amit Iron Private
Limited that a meaningful opportunity to be heard is an
indispensable prerequisite before passing an order of fraud
classification. That to make such opportunity to be heard
effective, it is incumbent upon the Respondent Bank to
supply copy of audit report, which form the bedrock of the
allegations, so as to enable the Petitioner to
comprehensively rebut the allegation.”
12. In response to these particular pleadings, the Respondent-Bank has
merely stated in the reply that Show Cause Notice was duly served upon last
known address of the company, to all concerned persons. It is further
mentioned in paragraph (k)(iii) that the Show Cause Notice referred to the
Forensic/Internal Audit/Internal Investigation Report which had been placed
before the Fraud Monitoring Group. In paragraph (k)(iv) it is specifically
mentioned that without prejudice, in the event, this Hon'ble Court holds
that the report was required to be furnished before passing the impugned
order, the appropriate course would be to permit the Respondent to furnish
the relevant report to the Petitioner and permit the Petitioner to submit its
representation, followed by a fresh reasoned decision rather than quashing
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the proceedings with a finding that no fraud-related issue exists.

13. In this background, the observations of the Hon’ble Supreme Court in
State Bank of India Vs. Amit Iron Pvt Ltd., are important. Paragraph 126 of
the said judgment reads as follows:
“126. In view of the discussion hereinabove, we hold: -
a) Rajesh Agarwal (supra) did not recognize any right in
the borrower to a personal hearing by the banks before
classifying their account as a fraud account;
b) The RBI in its Master Directions of 15.07.2024 correctly
understood the scope of Rajesh Agarwal (supra) and
incorporated Clause 2.1.1.1, 2.1.1.2, 2.1.1.3, and 2.1.1.4 as
the procedure to be followed before classifying an account
as a fraud account;
c) The procedure set out in Rajesh Agarwal (supra) which
has been incorporated in the Master Directions of 2024
strikes a fair balance between promptitude and fairness and
duly comports with the principles of natural justice
ensuring fairness to the borrower whose account is likely to
be classified as a fraud account.
d) Wherever audit reports are available, including forensic
audit reports, the same shall be furnished to the borrower
and their representation on the report, including on the
findings and conclusions be elicited, in case the banks
consider the audit report relevant for classifying the
account as fraud account. In view of the same, disclosure
by furnishing copies of the audit report, including the
forensic audit report to the borrower is mandatory. Supply
of reports in digital form will be valid compliance;
e) As held in T. Takano (supra), if the banks, for reasons to
be recorded establish that the disclosure of any part of the
report would effect the privacy of third parties, in that
exceptional situation banks would be justified to withhold
those portions of the report which concern third party
rights;
f) We reiterate that the rule is to supply the audit reports,
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including the forensic audit reports since even under Clause
4 of Chapter IV of the 15.07.2024 Master Directions post
the red-flagging of the account banks use the audit
mechanism for further investigation. Even in the
exceptional cases we hope and expect that the banks will
not unreasonably use the power of redaction since that will
only end up delaying the culmination of proceedings.
Clause 4.1.4 also reiterates that banks shall ensure the
principles of natural justice. That this was the legal position
even under the 2016 Master Directions is clear from para
95 of Rajesh Agarwal (supra);

g) The judgments of the High Courts which have taken a
contrary view to what we have held hereinabove would
stand overruled.”
In particular clause (d) is important, where it is held that furnishing
copies of the audit report, including the forensic audit report to the borrower
is mandatory.
14. The Show Cause Notice specifically mentions that the forensic audit /
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internal audit / internal investigation report dated 11 September 2025 was
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placed before the Fraud Monitoring Group on 20 February 2026 and this
particular report was in fact taken into consideration. The impugned order
mentions that based on deliberation and material available on records the
order was passed. In this view of the matter, we are of the opinion that it
was mandatory for the Respondent-Bank to have supplied the reports to the
Petitioner company based on which the impugned order was passed.
Therefore, relying on the observations of the Hon’ble Supreme Court in the
aforementioned judgment, we find that there was failure on the part of the
Bank to comply with this mandatory requirement.
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15. In this view of the matter, the Petition succeeds. It is made clear that

though we are quashing the impugned order, the Respondent-Bank would be
at liberty to issue fresh Show Cause Notice by providing all the necessary
documents including the reports which the Respondent-Bank intends to rely
on in taking forward the proceedings for declaring the Petitioner company’s
account as fraud. Hence, the following order:
ORDER
(i) Rule is made absolute in terms of prayer clause (I), which reads thus:
“I) Call for the records and proceedings concerning
the Impugned Show Cause Notice dated 23.03.2026
bearing No. the ZO/PUNE/RMD/1394/2025-26 and Fraud
Examination/Classification Order dated 02.06.2026
bearing No. ZOPUNE:RMD(FM):999:2026-27 issued and
passed by the Respondent Bank, and after examining the
legality, validity, and propriety thereof, be pleased to quash
and set aside the same;”.
16. Petition is disposed of accordingly with the aforesaid liberty to the
Respondent-Bank.

(RANJITSINHA RAJA BHONSALE, J.) (SARANG V. KOTWAL, J.)
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