M/S V R Construction vs Bank Of India

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
1
IN THE HIGH COURT OF MADHYA PRADESH
A T I N D OR E
BEFORE
HON'BLE SHRI JUSTICE SUBODH ABHYANKAR
&
HON'BLE SHRI JUSTICE JAI KUMAR PILLAI

WRIT APPEAL No. 3730 of 2026
CNR No.: MPHC020411242026
M/S SA INFRASTRUCTURE THROUGH ITS PROPRIETOR

SAYYED AFSAR ALI

Versus
BANK OF INDIA AND OTHERS


WRIT APPEAL No. 3731 of 2026
CNR No.: MPHC020411312026
SAIYYED OWAIS ALI AND OTHERS
Versus
BANK OF INDIA AND OTHERS

WRIT APPEAL No. 3734 of 2026

CNR No.: MPHC020411732026
M/S V R CONSTRUCTION
Versus

BANK OF INDIA AND OTHERS

Appearance:
Shri Vivek Dalal - Advocate for the appellants/writ petitioners.
Shri Arpit Guru – Advocate for the respondents/Bank of
India.

Reserved on : 14.10.2026
Pronounced on : 05.11.2026
…........................................................................................................
Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
2
These appeals having been heard and reserved for orders/judgement,
coming on for pronouncement this day, the Court passed the following:
JUDEMENT

Per : Justice Subodh Abhyankar:-

1] Heard.
2] This order shall govern the disposal of all these three Writ Appeal
Nos.3730/2026, 3731/2026 and 3734/2026, as the same have arisen out of
a common order passed by the writ Court dated 06.10.2026, in W.P.
Nos.40821/2026, 41448/2026 and 41453/2026, wherein challenge to the
orders dated 24.08.2026, 10.09.2026 and 10.09.2026 respectively,
whereby the petitioners’ accounts have been declared as fraud by the
respondent/ Bank of India, have been rejected.
3] In brief, the facts of the case are that the aforesaid orders dated
24.08.2026, 10.09.2026 and 10.09.2026 respectively were passed against
the petitioners by the respondents/Bank of India on the ground of various
illegalities committed by the petitioners, including systematic diversion,
misutilization of sanctioned bank credit, falsification of accounts, and
material misrepresentation etc. Initially a show cause notice was also
issued to the petitioners on 01.07.2026, however, as no reply was filed by
the petitioners, time was also extended by the Bank of India for further 21
days, however, as the petitioners also found this extension of time to be
inadequate, they further sought 90 days extension. However, 31 days’
time was also granted to the petitioners by the Bank of India on
21.07.2026, however, it was granted from the date of receipt of show
cause notice, thus, the petitioners again sought 90 days’ time on
Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
3
28.07.2026 from the said date only instead of the date of show cause
notice, however, the final order(s) of declaring the petitioners’ accounts
as fraud were passed on 24.08.2026, 10.09.2026 and 10.09.2026 as
aforesaid.
4] Shir Vivek Dalal, learned counsel for the petitioners has
submitted that the respondents are relying upon the Forensic Audit Report
and the scores of documents, running into 50 pages, whereas, the
petitioners were also not supplied with the relevant documents, which is
also reflected in the communications made by the petitioners. It is also
submitted that in the forensic audit report, which was provided to the
petitioners, various observations were made in respect of transactions
spreading across multiple financial years, which required detailed
verification from firms’ books of accounts, bank records, and supporting
documents and thus, it cannot be said that the time sought by the
petitioners was unreasonable considering the volume of the record
involved. It is further submitted that certain documents were also lying
with the GST department, regarding which an email was also sent to the
department, and the supply of documents is still awaited. Counsel has
further submitted that the impugned orders have also not been passed by
the same authority, which issued the show cause notices.
5] Shri Arpit Guru, leaned counsel for the respondents, on the
other hand, has opposed the prayer, and it is submitted that the email
which the petitioners are referring to, to the GST department was only
sent after the final order was passed and thus, cannot be relied upon. It is
further submitted that despite various opportunities granted to the
petitioners, the reply was not filed, and thus, the respondents had no other
Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
4
option but to pass the ex-parte final order on the basis of the documents
available on record, and the writ Court has rightly rejected the petitions
relying upon the master circular issued by the Reserve Bank of India.
Thus, it is submitted that no case for interference is made out, and the
appeals are liable to be dismissed.
6] Heard. Having considered the rival submissions and on perusal
of the record, it is found that the writ Court has observed that as per the
master circular, twenty one days’ time was required to be granted,
whereas, the respondents/Bank of India granted thirty one days’ time and
despite that the petitioners failed to file their reply. Thus, the petitions
have been dismissed, holding that there is no violation of principles of
natural justice. Whereas, on perusal of the master circular issued by the
RBI, we find that Clause 2.1.1.2 provides as under:-
“…………..
2.1.1.2 A reasonable time of not less than 21 days shall be
provided to the Persons/Entities on whom the SCN was served to
respond to the said SCN.”
(emphasis supplied)
7] It is apparent from the aforesaid provision itself that the
minimum time which the Bank is required to grant to the persons/entities
is 21 days to reply to the show cause notice, thus, there is no upper limit
of time is provided for filing the reply to the SCN. Whereas, in the initial
show cause notice dated 01.07.2026, only 15 days’ time was granted,
thereafter the same was extended for a period of 21 days on 06.07.2026
from the date of SCN, whereas the subsequent extension for 31 days was
also granted on 21.07.2026, but the same was also from the date of
issuance of the show cause notice i.e., 01.07.2026 and not from
21.07.2026. Thus, it is apparent that even on 21.07.2026, when the time
Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
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period of 31 days was extended, it was actually for a period of 10 days
only, whereas, from the show cause notice and audit report, which is also
placed on record along with the petitions, it is found that the transaction
period is stated to be between 2020 to 2025, thus, total period of five
years was covered in the Forensic Audit Report of which the petitioners
were directed to file a reply within 31 days.
8] In the considered opinion of this court, the aforesaid total
period of thirty one days cannot be said to be adequate or reasonable to
file a reply when the petitioners’ contention is that a long period of five
years was involved, and they were also not supplied various documents
and their documents were also lying with the GST department.
9] In such circumstances, we are of the considered opinion that it
is not a case where it can be said that a reasonable time was granted to the
petitioners to file their reply, especially when the extensions of 21 days
and 31 days granted on 06.07.2026 and 21.07.2026 respectively, were
also from the date of the show cause notice i.e., on 01.07.2026, and not
from the date of extension, whereas, as per the RBI master circular as
aforesaid, there was no upper limit provided for filing the reply, hence it
was the duty of the Bank to provide some reasonable time to the
petitioners to file their replies and the extension of time was only an
eyewash. The aforesaid aspects of the matter have been glossed over by
the writ Court while rejecting the petitioners’ claim. We find that the
petitioners were apparently denied a reasonable time to file their replies,
and it cannot be said that the principles of natural justice were not
violated. In view of the same, the impugned orders cannot be
countenanced in the eyes of law and are liable to be set aside.
Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM

NEUTRAL CITATION NO. 2026:MPHC-IND:30640


WA Nos.3730, 3731 and 3734 of 2026
6
10] Accordingly, the appeals are hereby allowed, and the
impugned order dated 06.10.2026 is hereby set aside, and consequently
orders dated 24.08.2026, 10.09.2026 and 10.09.2026, declaring the
petitioners’ account(s) as fraud are also hereby set aside, and considering
the time already spent by the parties in litigation, we hereby grant further
15 days’ time from the date of pronouncement of this judgement, to the
petitioners to file their reply. The matter is remanded back to the
respondents to pass fresh orders after taking into account the reply filed
by the petitioners, in accordance with law.
11] It is made clear that this Court has not reflected upon the merits
of the case.
12] Accordingly, the appeals stand allowed and disposed of .


(SUBODH ABHYANKAR) (JAI KUMAR PILLAI)
JUDGE JUDGE

Pankaj



Signature Not Verified
Signed by: PANKAJ
PANDEY
Signing time: 11/6/2026
5:16:07 PM