1. Petitioners state that show cause notice dated 22.01.2015 as well as subsequent notice dated 20.02.2016, are fundamentally-defective and illegal as they were not issued by the Identification Committee as mandated by the RBI Master Circular on Wilful Defaulters. According to them, these notices were issued by an officer who was not a member of the Identification Committee, and neither notice bears the signatures or approval of the Committee members. They further contend that the notices do not disclose any reasons, material particulars, or independent findings of the Committee. They assert  that  no  deliberations  of  the  Committee  preceded  the issuance of these notices, thereby demonstrating total non- application of mind and rendering the entire exercise contrary to the mandatory procedural framework prescribed by the RBI.

               1.1. Petitioners state that they are members of the suspended management of Respondent No. 2 company, which has been admitted into Corporate Insolvency Resolution Process (CIRP) in CP(IB) No. 645/HDB/2018 by order dated 05.06.2023 of the NCLT, Hyderabad Bench. They further point out that due to deficiencies in the public announcement and other procedural aspects, the NCLT restarted the CIRP on 21.02.2025. The Petitioners contend that the branding of the suspended management as wilful defaulters directly affects their rights under the Insolvency and Bankruptcy Code, including their eligibility to submit a resolution plan for the MSME. They assert that such a classification has the effect of disqualifying them from participating in the resolution of the very company whose operations they managed, causing serious civil and commercial prejudice.

               1.2. It is stated, the default in servicing loans occurred due to circumstances entirely beyond their control. Respondent No. 2 is a hybrid seed manufacturing company whose operations depend heavily on climatic conditions. During the agricultural year 2012-13,  severe drought occurred, adversely affecting seed production and leading to steep financial losses and liquidity constraints. They assert that the drought caused a massive disruption in the entire seed industry and that company's inability to meet repayment obligations resulted directly from this natural calamity, not from any deliberate or wilful act on their part.

               1.3. Petitioners further state that at the critical time when the company was attempting to revive and restructure operations, the consortium lenders, including Respondent No. 1, failed to release sanctioned and essential working capital. They allege that the consortium did not release the Pre-CDR PD amounts in 2012, delayed the approval of the CDR package, delayed execution of the Master Restructuring Agreement, and even after approval, sanctioned funds were only partially released. They also contend that some member banks did not participate in the PDR. They state that the banks refused to release Rs. 15 crores required for packing and placing seeds in the market during 2013 and 2014, which led to inability to place stocks on time, high sales returns, accumulation of inventory, severe cash flow deterioration, loss of manpower, and eventual disruption of operations.

               1.4. Petitioners state that there was no dishonest intention, diversion of funds, or siphoning of money as alleged by the Bank. Prior to the drought, the company had consistently serviced its loan obligations. They further submit that group- company transactions referred to by the Bank were genuine commercial transactions involving other seed and biotechnology companies within their group, and these entities had substantial operations, dealer networks, and longstanding involvement in agricultural research. The Petitioners claim that such inter-company transactions were legitimate, commercially justified, and were well within the knowledge of the consortium lenders.

               1.5. It is explained that routing of funds through Bank of Baroda and RBL Bank occurred only due to the attachment of the company's TRA and consortium accounts by the Income Tax Department by order dated 27.03.2013. They state that this compelled temporary routing of funds through those banks. It is stated, the relevant bank statements were shared with the lead bank SBI and other lenders through an e mail dated 22.09.2014, and that during a Joint Lenders' Meeting held on 26.09.2014, lenders acknowledged receipt of such statements. They therefore, assert that there was no concealment, irregular diversion, or breach of consortium terms.

               1.6. Petitioners state that material documents required for submitting a meaningful response were not supplied to them, particularly the forensic audit report which was relied upon in the show cause notice. They state that they repeatedly requested the said report between 14.08.2020 and 16.03.2021, and that it was furnished only after this Court's direction in Writ Petition No. 6544 of 2021 dated 16.04.2021, whereafter the report was supplied on 11.05.2021. It is also stated, due to Covid restrictions, their auditors were unable to inspect the company's godown and locations for reconciliation, therefore sought reasonable time to prepare an effective response.

               1.7. Petitioners highlight that the chronology of events demonstrates a clear pattern of procedural violation. They refer to issuance of SCN dated 22.01.2015, their representations dated 28.01.2015, 04.02.2015 and 07.02.2015, the second SCN dated 20.02.2016, their reply dated 28.02.2016, and finally the communication dated 28.05.2019, through which they were informed for the first time that the Committee had classified them as willful defaulters on 05.06.2018. They contend that Bank never communicated any reasoned order of the Identification Committee nor the order of the Review Committee, thereby violating mandatory requirements of the Master Circular.

               1.8. Petitioners state that their explanations regarding receivables from group companies, reconciliation difficulties due to the withholding of stock by C&F agents, and issues arising from time-barred claims under the Limitation Act were not considered by the Bank at any stage of the proceedings. Classification as willful defaulters has profound adverse consequences, including serious reputational harm, denial of access to credit, restrictions from the banking system, and statutory disqualifications under the IBC. They contend that such classification operates as a continuing tort under Section 22 of the Limitation Act, as the adverse civil consequences persist on a daily basis. Petitioners further state that only three consortium banks SBI, IDBI and Respondent No. 1, classified them as willful defaulters, whereas the remaining consortium members did not do so, which according to them reflects arbitrariness and non-uniformity in lender conduct.

               1.9. Petitioners state that their earlier Writ Petition No. 27759 of 2024 was withdrawn on 30.12.2024 with liberty to file a fresh one due to technical defects. The present Writ Petition was filed in accordance with such liberty and that challenge is bona fide and not intended to delay the CIRP. Finally, Petitioners state that the entire exercise undertaken by Respondent No. 1 is arbitrary, lacks authority of law, violates the RBI Master Circulars, breaches the principles of natural justice, and infringes their fundamental rights under Articles 14 and 21. They therefore seek quashing of the communications dated 20.02.2016 and 28.05.2019 and consequential relief.

2. Respondent No. 1 states that Writ Petition is barred by delay and laches. It is stated, Petitioners were classified as willful defaulters by the Identification Committee on 05.06.2018, which classification was communicated to them through the letter dated 28.05.2019. Further, in accordance with the RBI Master Circular, Petitioners photographs were published in newspapers on 15.06.2019. Despite being aware of these actions since 2019, Petitioners approached this Court after several years, and no satisfactory explanation is offered for the long delay. It is stated, extensive recovery proceedings were already instituted well before and during the willful defaulter process. The consortium of lenders led by SBI filed OA No. 417 of 2016 before the DRT, subsequently renumbered as TA No. 2556 of 2017. The Bank also refers to independent recovery actions taken by other lenders, specifically pointing out that Punjab National Bank obtained a decree on 11.05.2018 for Rs. 76.78 crores. These proceedings demonstrate longstanding defaults and a continuous failure by the Petitioners to regularize dues.

               2.1. Respondent No. 1 states that Petitioners are chronic defaulters since classification of the account as NPA and have not demonstrated bona fide intent to repay. It is contended that Petitioners repeatedly resorted to various litigations across fora including DRT, NCLT and earlier writ proceedings, not for genuine grievance redressal but to obstruct and delay recovery. The Bank asserts that Petitioners were given sufficient opportunities to respond to the allegations of willful default. It is stated that show cause notices were issued, and Petitioners submitted several replies and representations in 2015 and 2016, all of which were placed before the Identification Committee. Respondent No. 1 states that the Committee considered Petitioners' replies, examined the entire record and thereafter, recorded a specific finding that there was diversion of funds and violation of lending conditions. It is asserted that the Committee reached its conclusions after due deliberation and satisfaction, and that Petitioners' allegation of non-application of mind is unfounded.

               2.2. Respondent No. 1 states that the entire process of classification was undertaken strictly in accordance with the RBI Master Circular dated 01.07.2015. The mandatory procedures relating to issuance of notice, consideration of replies, examination of materials and final decision making were fully adhered to and that there was no procedural irregularity or breach of natural justice. Respondent No. 1 further states that Petitioners did not avail the remedy of review that was available to them under the Master Circular. According to the Bank, Petitioners chose not to submit a representation to the Review Committee and instead continued initiating litigation to delay and derail recovery mechanisms. It is contended, Petitioners have repeatedly adopted a litigation strategy aimed at stalling CIRP proceedings also. They did not cooperate in the CIRP initiated by lenders and have been attempting to delay or obstruct lender actions initiated before the NCLT. Bank further states that all the findings of willful default were based on material duly verified by lenders, including findings relating to routing of funds outside consortium accounts, failure to deposit sale proceeds as required, and non-recovery of receivables from related entities. These facts, according to Respondent, clearly meet the parameters of willful default under the RBI Master Circular.

               2.3. Respondent No. 1 finally submits that this Writ Petition was filed only with the intention of circumventing statutory ineligibilities arising under Section 29A(b) of the IBC, as persons classified as willful defaulters are barred from submitting resolution plans. The Bank therefore, contends that the petition is an attempt to evade statutory consequences, lacks merit, and is liable to be dismissed with costs as no grounds exist for interference with the classification.

3. Heard Sri Dharmesh D.K. Jaiswal, learned counsel for petitioners, Smt. Kalpana Ekbote, learned counsel for the 1st respondent, M/s N Legal Hyderabad, learned counsel for the 3rd respondent, Sri G.P. Yash Vardhan, learned counsel for the 2nd respondent.

4. Upon considering the pleadings, rival submissions, and material placed on record, the chronology of events demonstrates that willful defaulter proceedings began with issuance of show cause notice dated 22.01.2015, followed by the subsequent notice dated 20.02.2016. Petitioners were later informed through the communication dated 28.05.2019 that Identification Committee had classified them as willful defaulters on 05.06.2018, and such classification was thereafter, published in newspapers on 15.06.2019. Despite these events having occurred years earlier, Petitioners approached this Court only in 2025. The explanation submitted for the delay, including withdrawal of Writ Petition No. 27759 of 2024 on 30.12.2024 with liberty, does not satisfactorily account for the prolonged period of inaction.

5. Petitioners have raised several objections regarding the validity of the proceedings, including that the show cause notices were not issued by the Identification Committee, were unsigned, lacked reasons, and were unsupported by any Committee deliberations. They assert that material documents such as forensic audit report were not furnished, thereby denying them a fair opportunity to respond. They further contend that the company's defaults were attributable to a severe drought, non-release of sanctioned working capital by lenders, inability to obtain Pre-CDR PD funding, delay in approval of the CDR package, and failure of the banks to release the required Rs. 15 crores for packing and marketing seeds. They also maintain that there was no dishonest diversion of funds; that transactions with group companies were genuine and known to lenders; and that routing of funds through Bank of Baroda and RBL Bank occurred only because consortium accounts had been attached by the Income Tax Department. They therefore, assert that the classification is arbitrary, violative of natural justice, and contrary to the RBI Master Circular.

6. Respondent No. 1, on the other hand, placed on record that Petitioners submitted several replies in 2015 and 2016;  the  Identification  Committee  considered  the  material placed before it and recorded findings of diversion of funds and related-party issues; and that all steps were undertaken in accordance with the Master Circular. The Bank submits that extensive recovery proceedings were instituted, including OA No. 417 of 2016 (later renumbered as TA No. 2556/2017), and that standalone suits resulted in decrees, including a decree dated 11.05.2018 in favour of Punjab National Bank for Rs. 76.78 crores. Respondent No. 1 contends that Petitioners failed to avail the remedy of review available under the RBI Circular, chose instead to engage in repeated litigation, and now seek to reopen settled issues after an inordinate delay. The Bank also asserts that Petitioners' attempt to challenge the willful defaulter classification is motivated by their desire to overcome ineligibility under Section 29A(b) of the IBC.

7. With respect to the scope of judicial review, this Court is guided by the principle that though action of banks taken pursuant to binding RBI directions may be subject to judicial scrutiny, as recognized in Sardar Associates v. Punjab & Sind Bank, the Court's jurisdiction is supervisory in nature. Judicial review does not entail re-appreciation of factual findings or substitution of the Court's conclusions for those of the expert committees constituted under the Master Circular. Interference is warranted only where there exists a jurisdictional error, a substantial violation of mandatory procedure, or perversity in the decision-making process.

8. Examining the matter on merits, this Court finds no material to indicate that Identification Committee acted without jurisdiction; Petitioners were denied an opportunity of responding to the notices, or that the Committee's conclusions were unsupported by the material placed before it. Petitioners' allegations regarding drought, non-release of funds by lenders, and historical functioning of group companies pertain to factual issues that were already within their knowledge at the time of the proceedings and were capable of being placed before the Committee. Petitioners have not produced material demonstrating that the Committee disregarded their replies, considered extraneous factors, or failed to consider relevant aspects. The mere assertion that notices were unsigned or that documents were not furnished is insufficient to establish procedural illegality of such magnitude as to vitiate the entire proceedings, particularly when Respondent No. 1 has shown that notices were issued and replies were received contemporaneously.

9. The aspect of delay and laches further weighs heavily against the Petitioners. Petitioners were aware of the classification  communicated  on  28.05.2019  and  of  the publication on 15.06.2019. They did not challenge these actions within a reasonable time. The contention that declaration constitutes a continuing wrong cannot revive or extend the limitation for challenging proceedings that attained finality years ago. Petitioners have not demonstrated any diligence or compelling reason for their prolonged silence.

10. In view of the above and upon a comprehensive assessment of the facts, submissions and materials placed on record, this Court finds no jurisdictional infirmity, no substantial procedural irregularity, and no perversity in the decision-making process. Petitioners failed to establish any ground warranting interference with the action taken by Respondent No. 1 under the RBI Master Circular.

11. For the reasons discussed hereinabove, this Court is of the view that Petitioners failed to establish any jurisdictional infirmity, substantive procedural violation, or perversity in the proceedings undertaken by Respondent No. 1. The challenge is vitiated not only by the absence of merit but also by the unexplained and considerable delay in approaching this Court. Petitioners have not demonstrated any legal ground warranting interference in exercise of supervisory jurisdiction under Article 226 of the Constitution of India.

12. Accordingly, the Writ Petition stands dismissed. No costs.

13. Consequently, the miscellaneous Applications, if any shall stand closed.