Writ Petition Challenging NPA Status Dismissed as Petitioner Breached Sanction Letter by Diverting Sale Proceeds
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- Last Updated on 12 September, 2024
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Case Details: Sharma Enterprises v. Banking Ombudsman - [2024] 166 taxmann.com 223 (HC-Delhi)
Judiciary and Counsel Details
- Dharmesh Sharma, J
- Shekhar Nanavaty, Shubham Dhyani & Ms Shikha Gupta, Advs. for the Petitioner.
- Abhinav Sharma, Dipan Sethi, Advs. & Gyanendra Agrawal, Adv. for Respondent.
Facts of the Case
In the instant case, the petitioner, proprietorship concern and MSME availed credit facilities from the respondent bank in terms of the sanction letter, which stated that the company i.e. the petitioner would deal exclusively with the bank and would not open any account in any other bank without their permission and also party had to route sale proceeds through said bank’s account only.
However, the petitioner diverted its sale proceeds and routed the same through Baroda Bank, wherein the petitioner had an account. The Respondent bank declared the petitioner’s account NPA.
The petitioner instituted a complaint with the Banking Ombudsman, raising a grievance that its account was declared as NPA contrary to the Notification dated 1-7-2015 and without following the prescribed procedure. However, the Ombudsman said the complaint was rejected.
The petitioner filed the instant writ petition praying for some relief, i.e., to issue an appropriate writ, thereby quashing the order passed by the Ombudsman as it was passed without assigning any reason.
It was noted that the petitioner did not come clean since after sanction/credit facilities by the respondent bank, as per the statement of account of the petitioner, a credit amount was routed by the petitioner and credited in account with Baroda Bank, instead of being credited to account of respondent bank.
High Court Held
The High Court held that since the petitioner abused the process of law as he was in wanton breach of the sanction letter, it was not entitled to any relief and, thus, the instant writ petition was to be dismissed with token costs.
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