Bombay HC Grants Interim Stay on IDBI Bank's Show-Cause Notice to Naresh Goyal

7 Jul 2023 , 10:54 AM

The Bombay High Court temporarily stayed the show cause notice issued by IDBI Bank to Naresh Goyal, the former promoter of Jet Airways, and his wife Anita Goyal. The notice was issued in accordance with the RBI’s master circular on wilful defaulters. The division bench of Justice GS Patel and Justice Dr. Neela Gokhale granted the stay and allowed the lender time to file a response.

Goyal’s attorneys, Milind Sathe and Abad Ponda, argued that the bank’s decision to declare them wilful defaulters was against natural justice standards. They further claimed that the order was granted without allowing for a proper hearing. On July 4, Goyal filed a lawsuit through his legal team Naik Naik & Co., represented by Ameet Naik and Abhishek Kale.

This is the second relief for Goyal, as the court had recently stayed the RBI circular that allowed banks to label any account as ‘fraud’ without providing a hearing to the account holders, extending the stay till September 11.

The petition names several respondents, including the Wilful Defaulter Identification Committee, Wilful Defaulter Review Committee, Credit Information Bureau (India) Ltd, and Central Information Commission, in addition to IDBI Bank and the RBI.

Goyal’s writ contends that the Review Committee had a sacred duty under the RBI master circular to objectively verify the allegations made against him. The petition argues that this duty is particularly crucial due to the wide-ranging implications resulting from the determination of being labeled a wilful defaulter.

Furthermore, the petition alleges that IDBI Bank and the Review Committee committed a serious procedural error by denying Goyal the fundamental right to present his case to the Review Committee.

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