The Delhi High Court has ruled that the classification of Ratul Puri, former director of Moser Baer India Limited, and his mother, Nita Puri, as “wilful defaulters” by two public sector banks is legally untenable.
A division bench comprising Justice C Hari Shankar and Justice Ajay Digpaul dismissed appeals filed by Bank of Baroda (BoB) and Punjab National Bank (PNB) challenging a single-judge order that had earlier set aside the declarations.
The bench held that the banks had failed to substantiate, “through verified and objective material, that the transactions in question involved borrowed funds that had been intentionally diverted or siphoned off.”
Emphasising the gravity of such a designation, the court observed:
“The authorities, at all stages, have to be alive to the fact that a declaration of wilful default, within the meaning of the Master Circular, results in civil death.”
It further noted that the decision to classify a borrower as a wilful defaulter must be rooted in objective facts, case-specific circumstances, and the borrower’s overall track record.
The single-judge bench had previously found that the essential elements of wilful default, as defined under the RBI’s Master Circular, were not satisfied in this case. Both BoB and PNB had filed appeals against that decision, which have now been rejected by the High Court.
