In a civil writ petition filed before the Delhi High Court seeking quashing of an order dated 30-09-2026 as well as a show cause notice dated 29-01-2024 by Karur Vysya Bank, a Single Judge Bench of Justice Jasmeet Singh stayed the impugned order till the next date of hearing.
The petitioner was a former director of RCI Industries and Technology Ltd. and on 13-11-2019, the loan account of RCI Industries was declared to be a Non-Performing Asset. Thereafter, the company was also admitted under corporate insolvency resolution process. On 29-01-2024, Karur Vysya Bank issued a show cause notice to the petitioner asking him to show cause as to why he should not be declared as a fraud.
After a detailed reply to the said notice, on 05-04-2024, the Bank declared the loan account of the RCI Industries as fraud. Subsequently, a writ petition by the petitioner was disposed of by an order dated 21-01-2026 and after some correspondence was exchanged, the impugned order was passed, declaring the petitioner as fraud.
In the present petition, an application was filed by the petitioner under Section 151 of the Code of Civil Procedure, 1908 (CPC) seeking stay on the operation of the impugned order.
The Court perused the impugned order and found the same to be cryptic as it did not consider or deal with any of the petitioner’s objections. It was stated that the principles of natural justice require the adjudicating authority to address the objections raised before it, apply its mind to them, and to give reasons for its conclusions.
It was held that the petitioner had prima facie made out a case and that irreparable loss would be caused to him if no interim relief was granted since a declaration of fraud carries serious consequences. Thus, the Court stayed the impugned order till the next date of hearing.
