In a writ petition filed before the Delhi High Court seeking an order or direction quashing a Notice dated 21-05-2026 and a Declaration dated 30-09-2026 by IndusInd Bank Ltd under the RBI Master Directions, 2025, as illegal, invalid as well as null and void, a Single Judge Bench of Justice Jasmeet Singh stayed the effect and operation of the impugned order till the next date of hearing.
The petitioner also sought an order or direction for quashing any steps/action by IndusInd Bank pursuant to classification of the petitioner’s accounts as ‘wilful defaulter’ by IndusInd Bank under the RBI Master Directions, 2025. The petitioner also filed an application seeking interim directions.
The petitioner was appointed as a Non-Executive Director of Aviom India Housing Finance Pvt. Ltd. (Aviom) on 28-01-2021, but was not involved in the day-to-day operations or financial management of the same. He was served a Show Cause Notice (SCN) dated 21-05-2026 requiring the petitioner to show cause as to why he should not be declared a wilful defaulter. On 24-07-2026, the petitioner replied in detail, disputing any involvement in the alleged transactions.
It was submitted that the petitioner was only a non-executive director of Aviom, and that the Forensic Audit Report neither contained any allegation against the petitioner nor disclosed any link between the petitioner and any instance of wilful default. The petitioner also contended that the Identification Committee was not constituted in accordance with Clause 3(1)(ix) of the Reserve Bank of India (Commercial Banks – Treatment of Wilful Defaulters and Large Defaulters) Directions, 2025.
Upon perusing the impugned order, the Court found that the respondents had dealt with all factual and legal arguments raised by the petitioner in his reply in a single para. It was noted that the para merely recorded that the Review Committee, after due deliberation, had arrived at the conclusion that the account was fit to be classified as a wilful defaulter. The Court was unable to find any other para which dealt with the specific defences raised by the petitioner.
The Court stated that a show-cause notice is not a mere paper formality, but a requirement for compliance with the principles of natural justice. It was said that the speaking order passed pursuant to a SCN and its reply, is required to deal with the defence raised by the notice and if the order is cryptic, the giving of SCN and calling for a reply becomes a meaningless exercise, which cannot be countenanced.
It was stated that since a declaration as a wilful defaulter carries serious civil consequences, contentions raised by the petitioner must be considered and dealt with in a reasoned and speaking order. The Court said that if it disagrees with the petitioner’s contentions after the counter-affidavit is filed, the impugned order can be given effect after the hearing. Noting that the petitioner would suffer irreparable loss and injury if the impugned order is allowed to operate, the Court stayed the effect and operation of the impugned order till the next date of hearing.
The Court directed the matter to be listed on 18-01-2027.
Kunal Sikka v. IndusInd Bank Ltd