Declaring ‘Wilful Defaulter’ By Banks Unconstitutional: Gujarat High Court
In a major setback to the 17-member consortium of banks, which is trying to recover loans of more than Rs 8,000 crore from Vijay Mallya’s
The court, in its judgment, said
The court said the circular was in violation of the
The judgment noted, "The RBI circular is required to have the phrase ‘in public interest’ or ‘in interest of depositors’ or ‘in interest of banking policy’ and should indicate relevant materials and reasons that the circular was being issued after considering the interest mentioned.”
Most legal experts were of the view that banks have been abusing their power to declare a borrower 'wilful defaulter’ even before a court’s judgment.