Authority: High Court at Calcutta (Constitutional Writ Jurisdiction), Bench of Justice Krishna Rao
Order Date: 02 July 2026
Case Overview
- Parties: petitioner Monoranjan Roy vs. Union Bank of India (UBI) & others.
- Nature of proceeding: Writ petition (W.P.A. No. 26107 of 2025) challenging a Show‑Cause Notice dated 13 October 2025 issued by UBI under RBI Guidelines to categorize the petitioner’s account as fraud.
- Background:
- The Show‑Cause Notice was based on a Forensic Audit report dated 26 May 2025 prepared by R. Dokania and Company, covering transactions from 1 April 2013 to 31 March 2018.
- The petitioner replied on 15 October 2025, stating that Pincon Spirits Limited (PSL) had been operating with due diligence, but its directors (including the petitioner) were arrested on 2 Nov 2017 and 19 Apr 2018, and the Directorate of Economic Offences (DEO), West Bengal, had seized PSL’s offices, production units, and stocks in Nov/Dec 2017, preventing document production.
- The petitioner asserted that the loan account had a satisfactory credit history and that the NPA status was not due to intentional default; production stoppage had hurt revenue.
- The consortium of banks (including UBI) met on 31 Jan 2018; DEO had seized hypothecated stocks, but no action was taken by the banks to protect the security.
- PSL was subject to multiple litigations, including a CIRP before the NCLT, Kolkata. The NCLT order dated 30 Sept 2019 observed that allegations of illegal fund collection were unsupported and directed DEO to detach attached property.
- On 19 Feb 2020, the NCLT ordered DEO to de‑attach all properties attached on 16 Apr 2018 and restore them to the liquidator, also imposing a cost of Rs 5 lakhs on the applicant.
- Allegations in the Show‑Cause Notice: non‑compliance with Section 137 of the Companies Act, 2013 (failure to hold AGM and file financial statements for FY 2017‑18) and unusual addition of fixed assets (Rs 52.15 lakhs for FY 2014 and Rs 18.94 crores for FY 2017) without supporting documents.
- Petitioner’s Submissions:
- Forensic Audit report is incomplete, prepared solely for confidential use, and cannot be the basis of the notice.
- Violation of natural justice and lack of disclosure of material relied upon (citing T. Takano v. SEBI and Milind Patel v. Union Bank of India).
- Bank’s Submissions:
- The Forensic Audit report was enclosed with the notice; the petitioner received it.
- The petitioner’s reply addressed all allegations; no request for additional documents was made.
- Under Master Directions on Fraud Risk Management, a 21‑day period was provided, and the petitioner filed the writ before the bank’s decision, rendering the writ non‑maintainable (citing Union of India v. Kunisetty Satyanarayana and Hemant Kanoria v. Karnataka Bank).
- Judicial Precedents Cited:
- T. Takano (2022) on transparency and natural justice.
- Milind Patel (2024) on disclosure for fair trial.
- Union of India (2006) on rare jurisdictional quash of show‑cause notices.
- Hemant Kanoria (2026) on procedural requirements for fraud declarations.
- State Bank of India v. Rajesh Agarwal (2023) guiding the content and timeline of show‑cause notices.
Final Outcome
- The Court held that the petitioner had duly replied to the show‑cause notice, did not contest the forensic audit report, and had offered to appear for a personal hearing.
- No merit was found to interfere with the bank’s issuance of the show‑cause notice dated 13 Oct 2025.
- Order: W.P.A. No. 26107 of 2025 is dismissed. The parties may act on the server copy of the judgment posted on the Court’s website.
Topics: Banking Regulation, Fraud Risk Management, Judicial Procedure