Authority: High Court at Calcutta (Constitutional Writ Jurisdiction)

Order Date: 02 July 2026

Case Overview

  • petitioner: Monoranjan Roy filed WPA No. 25902 of 2025 challenging a Show Cause Notice dated 4 July 2025 issued by Bank of Baroda, which directed him to show cause within 21 days why his account should not be categorized and reported as fraud under RBI Guidelines, and an order dated 18 September 2025 reporting his name as fraud to RBI.
  • the Show Cause Notice was based on a Forensic Audit report dated 26 May 2025 prepared by R. Dokania and Company, covering transactions of Pincon Spirit Limited (PSL) from 1 April 2013 to 31 March 2018.
  • petitioner’s reply filed on 9 July 2025 stated that PSL’s directors were arrested on 2 November 2017 and 19 April 2018, that DEO seized PSL’s offices, production units and subsidiary units in Nov/Dec 2017, and that the loan account had a satisfactory credit standing; he argued that NPA status was not due to willful default.
  • petitioner further alleged that the Forensic Audit report was inconclusive, prepared solely for confidential use, and that the bank had not considered his detailed reply or a subsequent e‑mail dated 10 October 2025.
  • the e‑mail (10 Oct 2025) asserted that the original cash‑credit limit of Rs 15.50 crore (later reduced to Rs 9.50 crore) could not justify payments of Rs 27.03 crore, that trade receivables/payables matched business volumes, that stock audit and due‑diligence reports confirmed the account as standard & performing, and that the bank/consortium took no legal action against the West Bengal Directorate of Economic Offences (DEO) despite seizure of hypothecated stocks.
  • the petition also referenced multiple consortium meetings (31 Jan 2018, 7 Aug 2017, 27 Jun 2017, 15 Mar 2018) where the borrower’s status and security issues were discussed.
  • the tribunal (National Company Law Tribunal, Kolkata) had earlier dealt with related matters: CA (IB) No. 577/KB/2019 (order dated 30 Sep 2019) dismissed the application seeking dismissal of the CIRP, noting PSL was not a chit‑fund company; and CA (IB) No. 1741/KB/2018 (order dated 19 Feb 2020) directed DEO to de‑attach assets attached on 16 Apr 2018, citing inconsistency between West Bengal’s WBPIDFE Act and the I&B Code.
  • the forensic audit highlighted two specific violations: non‑compliance with Section 137 of the Companies Act, 2013 (failure to file financial statements for FY 2017‑18 and hold AGM) and unusual addition of fixed assets – Rs 52.15 lakhs for FY 2014 and Rs 18.94 crore for FY 2017 – without supporting invoices, challans, insurance or location evidence.
  • the bank relied on Master Directions on Fraud Risk Management, which prescribe a 21‑day period for reply to a show‑cause notice and subsequent consideration before declaring an account as fraud.
  • counsel for the bank (Mr Dipanjan Datta) argued that the petitioner had fully replied, did not request any documents, and that filing the writ before the bank’s decision rendered the petition non‑maintainable.
  • the court cited several precedents: T. Takano v. SEBI (2022) on disclosure and natural justice; Milind Patel v. Union Bank of India (2024) on transparency; Union of India v. Kunisetty Satyanarayana (2006) on rare jurisdictional quash of show‑cause notices; Hemant Kanoria v. Karnataka Bank (2026) on dismissal of writs filed without awaiting bank’s decision; and Hemant Kanoria v. Bank of India (2024) outlining procedural requirements for fraud declarations under Master Directions.
  • the court observed that the petitioner’s reply addressed each allegation, did not contest the forensic audit’s validity, and only sought personal interaction with a bank official; consequently, there was no basis to interfere with the bank’s show‑cause notice or the subsequent fraud categorisation order.

Final Outcome

  • The High Court dismissed WPA No. 25902 of 2025 on 2 July 2026, holding that the show‑cause notice and the fraud‑reporting order were procedurally valid; parties are to act on the server copy of the judgment posted on the court’s website.

Topics: Bank fraud classification, Judicial review of banking regulations