HC upholds order to set aside banks declaring Ratul Puri as wilful defaulter
This story was originally published at 18:02 IST on 8 August 2025
Register to read our real-time news.Informist, Friday, Aug. 8, 2025
NEW DELHI – The division bench of the Delhi High Court on Friday upheld its single judge's 2023 order to set aside Bank of Baroda and Punjab National Bank's decision to declare businessman Ratul Puri as a wilful defaulter according to the Reserve Bank of India's Master Circular on Wilful Defaulters, 2015.
"We are in entire agreement with the learned single judge that the Master Circular does not envisage categorisation of a borrower as wilful defaulter without the requisite degree of circumspection and examination," the high court said. The banks, in each case, were not justified in tagging the respondent as "wilful defaulter" solely on the basis of the forensic audit report, without any independent analysis, it said.
The factors required to be borne in mind while declaring a borrower as wilful defaulter are set out in the 2015 Master Circular itself, but they do not appear to have engaged the attention of the banks before issuing a show-cause notice to the respondent, in each case, the high court said. "For all these reasons, we are of the opinion that the learned single judge has correctly exercised his jurisdiction even in respect of the judgment forming the subject matter of challenge in the present appeal which is, therefore, upheld in its entirety," said the court.
The case has its genesis in Moser Baer India Ltd. availing loans from various banks from 2006 to 2010, when Ratul Puri was the whole-time director of the company. Thereafter, Puri had exited the company in 2010 itself and was currently the chairman of Hindustan Power Pvt. Ltd.
The bank's identification committee and the review committee, relying on the forensic audit report, had said that Moser Bear had made substantial investments in subsidiaries and related entities amounting to INR 15.87 billion as of 2013. These investments amounted to diversion and siphoning of funds within the meaning of RBI's master circular. The banks said that during the period when the funds had been invested by Moser Bear in its subsidiaries, Ratul Puri was a whole-time director in the company and in complete control of its affairs.
On Friday, shares of Bank of Baroda ended 1.2% lower at INR 239.22 on the National Stock Exchange, and those of Punjab National Bank ended 0.7% lower at INR 103.95. End
Reported by Surya Tripathi
Edited by Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
