Bombay High Court grants interim protection to Naresh Goyal, wife against RBI and SBI

The Bombay High Court on Wednesday granted interim relief to erstwhile promoters of Jet Airways, Naresh Goyal and his wife Anita Goyal, directing State Bank of India (SBI) to refrain from taking any action under criminal law against the two until further orders by the Court [Naresh Goyal v. Reserve Bank of India & Anr.]..The bench of Justices SV Gangapurwala and Madhav Jamdar granted SBI two weeks time to file their reply to pleas filed by the Goyals individually..Naresh and Anita Goyal moved the High Court challenging the SBI’s decision to club their accounts with the airline in the list of fraud accounts.The petition filed through Naik Naik & Co. stated that due to certain ‘wilful default’ by the airline in repaying credit, SBI had initially declared the airline as a fraud account and thereafter proceeded to declare Goyals also as ‘wilful defaulters’.The decision of SBI to declare the Goyals as fraud accounts was challenged on the ground that the petitioners had not been heard, or even served with notice or a communication from SBI before such declaration.The petitioners contended that Jet Airway has already undergone a successful Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). By virtue of this, Jet no longer has liabilities and if Jet is no more a fraud account, then its erstwhile promoters could not be termed as fraud accounts either, the plea said. It was submitted that under criminal law, there is no concept of vicarious liability and for any earlier conduct of the company, its promoters could not be compelled to face action.Finally, the writ petition also challenged the circular issued by the Reserve Bank of India (RBI) permitting banks to declare a company, and its directors, promoters as fraud accounts without giving them a hearing.Goyals contended that being included in the fraud list could trigger criminal proceedings against them, even though they were neither guarantors nor direct borrowers..Senior Advocates Dr Milind Sathe and Navroz Seervai and advocates Naval Agarwal and Ameet Naik briefed by Naik Naik & Co. appeared for Goyals.Advocate Aditi Pathak from Bombay Litigation and Corporate Company appeared for RBI. Advocate Rathina Maravarman appeared for CBI.