Atibir Industries Company Ltd.

A wilful defaulter proceeding does not come within the contemplation of Section 14 or Section 96 of the IBC – Atibir Industries Company Ltd. and Ors. Vs. Indian Bank – Calcutta High Court

Hon’ble Calcutta High Court held that:

(i) A borrower becomes a defaulter and is declared to be a wilful defaulter upon the criteria of the Wilful Defaulter Master Circular being satisfied, even without classification of the account as NPA.
(ii) The proper stage for consideration of compliance of Clause 2.6 on all other aspects is the order passed by the Wilful Defaulter Identification Committee on consideration of the Show-cause Notice and the reply thereto.
(iii) A wilful defaulter proceeding cannot, by any stretch of imagination, be said to be even remotely relatable to recovery of debt but is merely an off-shoot of the debt. The corpus of debt is not the subject-matter of a wilful defaulter proceeding, unlike a recovery proceeding, but is a mere stimulus to spur the wilful defaulter proceeding into motion.
(iv) The yardsticks of declaration of wilful defaulter under the Master Circular are different from a recovery proceeding or a relatable proceeding; such declaration is merely to disseminate credit information pertaining to wilful defaulters for cautioning banks and financial institutions so as to ensure that further bank finance is not made available to them.

A wilful defaulter proceeding does not come within the contemplation of Section 14 or Section 96 of the IBC – Atibir Industries Company Ltd. and Ors. Vs. Indian Bank – Calcutta High Court Read Post »

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