Mumbai: Bombay High Court directed a stay and restrained Canara Bank from taking further steps in respect of the inclusion of tax lawyer Anil Harish‘s name in credit rating agency Credit Information Bureau (India) Limited’s list of wilful defaulters. Until a decade ago, Harish was an independent director of a company whose account was subsequently declared a non-performing asset.
Justices Burgess Colabawalla and Somasekhar Sundaresan on Tuesday said, “A strong prima facie case is made out for granting ad-interim relief.”
They added, “We say this because it is clear from the record that not only did the petitioner resign as a director of Valecha Engineering Limited much prior to the account of the said company being declared as NPA, but prima facie there has been a complete breach of the principles of natural justice and the law laid down by the Supreme Court.”
Harish moved HC in Aug after learning that his name appeared in the list of wilful defaulters on CIBIL’s website. He challenged the action of declaring him a wilful defaulter, stating he was not a promoter-director of the company which committed default but only an independent non-executive director from 1993 to Sept 2014. Also, in fact, he is a lawyer by profession. His petition stated that before a non-executive director is held liable for wilful default, the bank has to be satisfied that he is actively involved in the occurrence of the default in terms of the Reserve Bank of India’s July 2015 master circular on wilful defaulters.
Harish had resigned on Sept 30, 2014, and the company’s account was declared an NPA for the first time only on Jan 30, 2016, “one-and-a-half years after his resignation.” Therefore, he could never have been declared a wilful defaulter. His petition further stated that the entire action declaring him a wilful defaulter is in complete breach of the principles of natural justice and the law laid down by the Supreme Court in May 2019 to give a defaulter an opportunity of hearing before declaration as a wilful defaulter.
Among his prayers, Harish urged the High Court to quash and set aside the inclusion of his name in CIBIL’s wilful defaulters’ list, to declare it illegal and void, and to direct his name to be deleted/removed. Senior advocate Sharan Jagtiani, with advocate Munaf Virjee, for Harish, argued that a non-executive director is not involved in the day-to-day functions of a company.
The judges took note that despite being served a lawyer’s notice on Dec 3 to appear, the bank was not represented. Posting the hearing on Dec 11, they put it to notice that “if they do not appear, we will proceed to decide the above matter in their absence.”
