MAHENDRA KUMAR GUPTA AND ORS vs UCO BANK AND ORS
- Court
- Calcutta High Court
IN THE HIGH COURT AT CALCUTTA
(Constitutional Writ Jurisdiction)
APPELLATE SIDE
Present:
The Hon’ble Justice Krishna Rao
WPA No. 5962 of 2026
With
CAN No. 1 of 2026
Mahendra Kumar Gupta & Others
Versus
UCO Bank and Others
Mr. Krishnaraj Thaker, Sr. Adv.
Mr. Ishaan Saha
Mr. Shounak Mukhopadhyay
Mr. Shivam Bimsaria
Mr. Rohan Thakur
Ms. Akansha Singhania
.....For the petitioners.
Mr. Shiv Mangal Singh
.....For the UCO Bank.
Mr. Shubham Raj
Ms. Safura Ahmed
.....For the Respondent No. 6.
2
Hearing Concluded On : 09.04.2026
Judgment on : 20.04.2026
Krishna Rao, J.:
1. The petitioners have filed the present writ petition challenging the show
th
cause notice dated 30 May, 2025, order passed by the Identification
th
Committee dated 17 November, 2025 and the order passed by the
th
Review Committee dated 28 January, 2026, declaring the petitioners
as “Wilful Defaulters”.
2. The petitioner nos. 1, 2 and 3 are the suspended directors of M/s
Gupta Power Infrastructure Limited and the petitioner no. 4 is the
erstwhile director of the said company.
th
3. The respondent no.2 has issued the show cause notice dated 30 May,
2025 to the petitioners calling upon the petitioners to submit their
respective submissions within 21 days from the date of issuance of the
show cause notice as to why the petitioners will not be identified as
Wilful Defaulters in terms of the Reserve Bank of India’s Master
Directions, failing which the Identification Committee will take further
steps towards classification as Wilful Defaulters.
4. The petitioners have submitted their detailed reply to the show cause
th
notice on 15 July, 2025. On receipt of the reply filed by the
th
petitioners, the Identification Committee by an order dated 17
November, 2025, proposed to declare the petitioners as Wilful
rd
Defaulters. After the proposal as Wilful Defaulters, on 23 December,
3
2025, the Review Committee issued notice to the petitioners for
th th
personal hearing of the petitioners on 24 December, 2025. On 28
January, 2026, the Review Committee classified the petitioners as
Wilful Defaulters.
5. Mr. Krishnaraj Thaker, Learned Senior Advocate, representing the
petitioners submits that despite of irregularities pointed out by the
th
petitioners by their reply dated 15 July, 2025, to the show cause
th
notice dated 30 May, 2025, the respondents without considering the
reply of the petitioners, have passed an order declaring the petitioners
as Wilful Defaulters. He further submits that before the impugned
orders passed by the respondent authorities, the petitioner have filed a
writ petition being WPA No. 2128 of 2025 and in the said case, this
Court has passed directions for exchange of affidavits, however,
pending the writ petition, the respondents have passed the impugned
orders.
6. Mr. Thaker submits that the contents of show cause notice, order of the
Identification Committee and the order of the Review Committee are the
replica of each other. He submits that neither the Identification
Committee nor the Review Committee have considered the reply
submitted by the petitioners to the show cause notice.
7. Mr. Thaker pointed out that the respondent no.2 has only issued show
cause notice, the order of the Identification Committee and the order of
4
the Review Committee though all the authorities are different but
orders have been issued by the same person.
8. Mr. Thaker submits that Master Directions issued by the Reserve Bank
th
of India dated 30 July, 2024 with respect to Wilful Defaulters and
Large Defaulters, it is categorically provided that the Review Committee
shall not be comprised of members who are the part of the
Identification Committee.
9. Mr. Thaker further submits that the Master Directions provides for
opportunity of personal hearing and the Review Committee shall after
assessing the facts or materials on record, including written
representation, if any, consider the proposal of the Identification
Committee and take decision but in the case of the petitioners, the
Review Committee has not considered the reply submitted by the
petitioners and had reiterated the contents of show cause notice and
the order of the Identification Committee. He submits that the orders
passed by the Identification Committee and the Review Committee are
without any reasons. In support of his submissions, he has relied upon
the judgment in the case of Narendra Seoomal Sabnani and Others
Vs. State Bank of India, Stressed Asset Resolution Group (SARG) &
Ors. reported in 2021 SCC OnLine Bom 4604 .
10. Mr. Thaker further relied upon the judgment in the case of Amit
Kumar Kejriwal Vs. Bank of India and Others reported in 2025
5
SCC OnLine Cal 9163 and submits that this Court has decided the
similar issue in the said case.
11. Mr. Shiv Mangal Singh, Learned Advocate representing the UCO Bank
submits that the respondent no.6 is in liquidation but the petitioners
have made the respondent no.6 in the instant writ petition as party,
thus the writ petition is not maintainable. He submits that the
petitioners have not made the Liquidator as party to the instant writ
application.
12. Mr. Singh submits that the petitioners have challenged the Forensic
Report in another proceeding and thus the petitioners cannot choose
two forums. He further submits that for the Identification Committee
and for the Review Committee, two separate committees were
constituted with different designation and in both the Committees, the
Deputy General Manager (Recovery and Law), is appointed as convener.
The duty of the respondent no. 2 for conveys the meetings of the said
Committees and to forward the decisions of the Committees. The
respondent no. 2 has not participated in the decision making process
by both the committees.
13. Mr. Singh submits that the company availed credit facilities aggregating
to Rs. 3570.90 Crores from Consortium of 11 Banks (including UCO
Bank) and the lead bank is Canara Bank but the petitioners have not
made Canara Bank as party to the instance writ petition.
6
14. Mr. Singh submits that the Identification Committee and the Review
Committee have duly considered the reply submitted by the petitioners
and found not satisfactory, accordingly, the Identification Committee
proposed for declaring the petitioners as Wilful Defaulters and the
Review Committee satisfied with the proposal and passed an order for
declaring the petitioners as Wilful Defaulters.
15. Clause 3(r)(v) under the Heading-Note of the Master Directions on
th
Treatment of Wilful Defaulters and Large Defaulters dated 30 July,
2024, issued by the Reserve Bank of India, reads as follows:
“Note: The Review Committee shall not be
comprised of members who are the part of the
Identification Committee.”
16. The respondents have constituted the Committee for Identification of
Wilful Defaulters consisting of the following officials:
1. Executive Director …. Chairman
2. General Manager (Credit
Monitoring)
…. Member
3. General Manager (Recovery and
Law)
…. Member
Deputy General Manager
(Recovery)
…. Convener
17. The Review Committee for Wilful Defaulters consisting of following
officials:
1. MD & CEO …. Chairman
2. Independent Director/
Non-Executive Director
…. Member
7
3. Independent Director/
Non-Executive Director
…. Member
Deputy General Manager
(Recovery)
…. Convener
18. The Identification Committee headed by an Executive Director and two
senior officers. The role of the Convener is to ensure procedural
compliance during the initial phase of classification. If the Committee
determines a potential case of willful default, the convener shall issue
show cause notice to the borrower, guarantor, promotor, or the
director, detailing the evidence of the default and giving them 21 days,
to submit representation. The convener ensures that all materials and
evidence supporting the claim of willful default are disclosed with the
show cause notice. The convener ensures all submissions from the
borrower, guarantor, promotor, or the director are recorded and
presented to the Committee for Review. After the Committee concludes
that there is a case for willful default, the convener notifies the
borrower, guarantor, promotor, or the director of the proposal to
classify them as Wilful Defaulters, citing the reasons and inform them
of their right to make a representation to the Review Committee.
19. The Review Committee headed by Chairman/ CEO and MD and
includes at least two independent directors, ensuring an independent
assessment. The Convener receives the borrower, guarantor, promotor,
or the director’s written representation/ objection against the proposal
and ensures they are submitted to the Review Committee. The
8
Convener schedules and coordinates ensuring the principles of natural
justice are followed. The Convener serves the final order passed by the
Review Committee to the borrower, guarantor, promotor, or the
director. The convener ensures that the order states that it has been
approval of the competent authority (Review Committee) and identifies
its members.
20. One person should not be the convener of both the Identification
Committee and the Review Committee. The Identification Committee
performs the initial investigation and recommends a finding. The
Review Committee is designed to review the initial proposal
independently and pass a reasoned order, ensuring that the findings
are based on facts and fair process.
21. If One person convenes both, they are reviewing their own previous
work, making the “review” process a mere formality and not
independent. To ensure the validity of a reasoned and speaking order
or final order, the convener of the Identification Committee must be
different person from the convener of the Review Committee.
22. In the present case, the Deputy General Manager (Recovery and Law)
has issued show cause notice to the petitioners, proposal of the
Identification Committee to declare the petitioners as Wilful Defaulters
as convener of the Identification Committee and issued the order of the
Review Committee declaring as Wilful Defaulters, thus by allowing the
9
respondent no. 2 as convener of both the Committees, is illegal and bad
in law.
23. The petitioners have submitted detailed reply to the show cause notice.
In the show cause notice at page 4 paragraph (a) the allegation of total
diversion of Rs. 976.97 crores is recorded. The same allegation is
recorded at page 3 para (a) of the Identification Committee’s report and
at page 11 para (a) of the Review Committee’s report.
24. Allegation (b) is relating to party transactions and diversion of fund
which is recorded at page 5 of the show cause notice, page 4 of
Identification Committee report and page 12 of the Review Committee
report. Allegations (c), (d) and (e) are mentioned at page 6 of the show
cause notice, page 5 of the Identification Committee report and pages
13 and 14 of the Review Committee report. Allegations of (f) and (g) are
mentioned at page 7 of the show cause notice, page 6 of the
Identification Committee report and page 14 of the Review Committee
report. Observation of the Identification Committee is mentioned at
pages 7 and 8 of the show cause notice, pages 6 and 7 of the
Identification Committee report and pages 15 and 16 of the Review
Committee report. The decision is recorded at pages 9 and 10 of the
show cause notice, pages 8 and 9 of the Identification Committee report
and pages 16 and 17 of the Review Committee report.
25. The contents of show cause notice, Identification Committee report and
Review Committee report are identical and similar. The Review
10
Committee has taken note of the reply submitted by the petitioners
th
dated 15 July, 2025 at pages 5 to 9 of the Review Committee order
but there is no reason why the reply submitted by the petitioners is not
accepted or not satisfactory. The Identification Committee and the
Review Committee have not assigned any reasons and have also not
considered the representation/ written objection of the petitioners.
th
26. Clause 4(a)(vii)&(ix) of the Master Circular dated 30 July, 2024, reads
as follows:
“ (vii) The Review Committee shall provide an
opportunity for a personal hearing also to the
borrower/guarantor/promoter/director/persons
who are in charge and responsible for the
management of the affairs of the entity. However, if
the opportunity is not availed or if the personal
hearing is not attended by the
borrower/guarantor/ promoter/ director/ persons
who are in charge and responsible for the
management of the affairs of the entity, the Review
Committee shall, after assessing the facts or
material on record, including written
representation, if any, consider the proposal of the
Identification Committee and take a decision.
(ix) The Review Committee shall pass a
reasoned order and the same shall be
communicated to the willful defaulter.”
27. In the present case, the Review Committee has violated the above
th
provisions of Master Directions dated 30 July, 2024, issued by the
Reserve Bank of India by not considering the written reply filed by the
petitioners and without assigning any reasons declared the petitioners
as Wilful Defaulters.
11
28. Pending disposal of the present writ application, the respondent bank
th
issued a notice dated 6 March, 2026, directing the petitioner no.1 to
repay the entire dues of the bank within 15 days failing which the bank
will proceed to publish the photographs of the petitioners in two
newspapers. The petitioners have brought the same on record of this
proceeding by way of CAN No.1 of 2026.
29. At the time of hearing, Mr. Thaker prays for leave to delete the name of
the respondent no.6 from the cause title, the same is allowed, the
petitioners are given liberty to delete the name of the respondent no.6
in course of the day.
30. Considering the above, the order passed by the Identification
th
Committee dated 17 November, 2025 and the order passed by the
th
Review Committee dated 28 January, 2026, are set aside and
th
quashed. Consequently, the notice dated 6 March, 2026, is also set
aside and quashed. The respondent bank is at liberty to take
appropriate steps against the petitioners, if any, in accordance with law
from the stage of constitution of Identification Committee.
31. WPA No. 5962 of 2026 along with CAN No.1 of 2026 are disposed of .
Parties shall be entitled to act on the basis of a server copy of the
Judgment placed on the official website of the Court.
12
Urgent Xerox certified photocopies of this judgment, if applied for,
be given to the parties upon compliance of the requisite formalities.
(Krishna Rao, J.)