Order 1. A Public Limited Company and its Chairman-cum-Managing Director, have come up with two writ petitions each, challenging in one set of writ petitions, the Resolutions of the Grievance Redressal Committee of the second Respondent Bank to declare the petitioners as wilful defaulters and challenging in the second set of writ petitions, the threat issued by the second Respondent Bank to publish the photographs of the Chairman and Managing Director as well as the guarantor in newspapers as wilful defaulters. 2. Heard Mr.P.S.Raman, learned Senior Counsel appearing for the writ petitioners, Mr.AR.L.Sundaresan, learned Senior Counsel appearing for the second Respondent and Mr.S.Sethuraman, learned counsel appearing for the third Respondent. 3. The petitioners availed an Invoice Bill Discounting facility to the extent of Rs.40 Crores from the second Respondent Bank, against supplies to be made to two customers of the petitioners. This happened in the year 2011. Under the terms and conditions of the sanction of loan, the facility was to be used exclusively for the purpose of supplying Pharma ingredients to two named companies and that the receipts under the Invoices were to be utilised for the repayment of the dues. 4. But, it appears that instead of remitting the receipts into the second Respondent Bank, the petitioners used the money received from the purchaser for other purposes and thereby committed a breach of the terms and conditions of sanction of loan. 5. Therefore, the second Respondent Bank filed an application on the file of the Debts Recovery Tribunal-I, Chennai, in O.A.No.102 of 2013 for recovery of dues. In the application, the second Respondent Bank also sought interim orders to direct the writ petitioners herein to furnish security to the extent of their claim and to maintain status quo with regard to the assets of the petitioners company. The grievance of the second Respondent was that the writ petitioner had entered into a business deal with one of the customers, by the name Hospira Health Care India Private Limited and that if the deal was allowed to go through, all the assets would get alienated. 6. The Debts Recovery Tribunal granted an interim order on 21.06.2013. Consequently, the deal between the writ petitioners and their customer could not go through. 7. 6. The Debts Recovery Tribunal granted an interim order on 21.06.2013. Consequently, the deal between the writ petitioners and their customer could not go through. 7. In the meantime, since the writ petitioners also had commitments to nearly about 25 other banks and Financial Institutions, those institutions initiated a move for the Restructuring of the Corporate Debt. Incidentally, the second Respondent Bank was a subscriber to Inter Creditor Agreement for participating in their Corporate Debt Restructuring Schemes of large Corporates. Therefore, the second Respondent Bank also participated in the deliberations of the CDR. Though all the other 25 institutions had an identity of mind with regard to the CDR Scheme, the second Respondent Bank did not agree. 8. Therefore, the writ petitioners moved the Debts Recovery Tribunal for vacating the interim order of status quo granted in O.A.No.102 of 2013. The State Bank of India which was appointed as a Monitoring Institution, under the CDR, also jumped into the fray by moving an application for impleadment before the Debts Recovery Tribunal. By an order dated 17.6.2014, the Debts Recovery Tribunal rejected the application of the State Bank of India for impleadment. However, the Tribunal modified the interim order of status quo, to a limited extent, by permitting the sale of the assets, under the CDR package. 9. Aggrieved by the dismissal of their impleadment application, the State Bank of India filed an appeal before the Debts Recovery Appellate Tribunal. Similarly, the second respondent bank also filed an appeal before the Debts Recovery Appellate Tribunal, challenging the modification of the interim order of status quo. The Debts Recovery Appellate Tribunal allowed the appeal of the State Bank of India and remitted the matter back to the Debts Recovery Tribunal for a fresh disposal after hearing the State Bank of India, as it happened to be the Monitoring Institution under the CDR package. 10. While things were moving before the Debts Recovery Tribunal and the Appellate Tribunal, the second respondent bank first issued a show cause notice to the writ petitioners for classifying them as wilful defaulters. To this notice dated 08.4.2014, the petitioners submitted their objections. Thereafter, a personal hearing was granted by the Grievance Redressal Committee of the second Respondent Bank. 11. While things were moving before the Debts Recovery Tribunal and the Appellate Tribunal, the second respondent bank first issued a show cause notice to the writ petitioners for classifying them as wilful defaulters. To this notice dated 08.4.2014, the petitioners submitted their objections. Thereafter, a personal hearing was granted by the Grievance Redressal Committee of the second Respondent Bank. 11. But, after considering the materials on record and the submissions made by the writ petitioners, the Grievance Redressal Committee passed resolutions, deciding to declare the petitioners as wilful defaulters and also deciding to report the matter to the Credit Information Bureau (India) Limited. These resolutions were communicated by the Chief Risk Officer of the second Respondent Bank, by a letter dated 14.5.2014. Challenging the said communication dated 14.5.2014, the Company has come up with the writ petition W.P.No.20448 of 2014. The Chairman and Managing Director has come up with a separate writ petition in W.P.No.20450 of 2014, challenging the same communication. 12. Pursuant to the resolutions of the Grievance Redressal Committee, the bank also issued a communication dated 22.7.2014, threatening to publish the photographs of the Chairman and Managing Director and the guarantor of the company in newspapers as wilful defaulters. Therefore, the Company and Chairman and Managing Director have come up with two more writ petitions namely W.P.Nos. 20449 and 20451 of 2014 questioning the communication dated 22.07.2014. 13. The main ground on which the petitioners challenge the decision of the second respondent bank to declare them as wilful defaulters is that one bank, whose stakes constitute just 2% of the borrowings of the petitioner company, cannot sabotage the CDR package approved and put in place by a group of about 25 banks and financial institutions, having about 98% stakes in the borrowings of the company. Since mutual rights and obligations of all the creditors of huge Corporates are governed and regulated by an Inter Creditor Agreement, to which the second Respondent bank was also a party, the petitioners claim that the second Respondent bank should have either exercised an "exit option" or filed an appeal against CDR package. Without exercising the options available under the Inter Creditor Agreement, the second Respondent Bank cannot be permitted, according to the writ petitioners, to derail the CDR package by declaring the petitioners as wilful defaulters. Without exercising the options available under the Inter Creditor Agreement, the second Respondent Bank cannot be permitted, according to the writ petitioners, to derail the CDR package by declaring the petitioners as wilful defaulters. It is also the contention of the petitioners that once the petitioners are declared as wilful defaulters, the CDR package will fail and the entire Board of Directors may have to go out, leading to the collapse of the company to the detriment of all, including workers, 25 other financial institutions and the investor public. Such a consequence will be contrary to public interest. 14. The second Respondent bank has filed a counter affidavit along with a set of documents. The main contentions of the second Respondent bank are: (i) that once the parameters laid down in the Master Circular of the Reserve Bank of India are satisfied, for declaring a borrower as a wilful defaulter, the right of the Bank to proceed with the declaration cannot be scuttled solely on the ground that the consequences will be disastrous for the borrower; and (ii) that the CDR package was not actually a well thought out package, but was evolved only to enable the petitioner company to clinch the clandestine deal with one of their customers who bought a huge plant owned by the petitioner company in Gujarat. According to the second Respondent bank, the other bankers, who have accepted the CDR package, have not looked into the conduct of the petitioners and have overlooked the fact that the petitioners were guilty of violation of the terms and conditions of sanction of the loan. 15. I have carefully considered the rival submissions. 16. At the outset, I should point out that but for the existence of some special facts, all the four writ petitions deserve to be thrown out without any mercy, at least for two reasons. 15. I have carefully considered the rival submissions. 16. At the outset, I should point out that but for the existence of some special facts, all the four writ petitions deserve to be thrown out without any mercy, at least for two reasons. They are (a) the conduct of the petitioners in utilising short term working capital for long term purposes, whether by way of diversion or by way of siphoning off or by whatever name called, was a clear violation of the terms and conditions of the sanction of the loan; and (b) the repeated assurances given by the company that payments due from its customers would be remitted towards repayment of dues to the second Respondent Bank and the ultimate disclosure of the fact that instead of routing the payments directly to the second Respondent, the petitioner had taken the receipts for themselves, clearly indicate that the petitioner had taken the second Respondent for a ride. Therefore, the conduct of the petitioners, in so far as their relationship with the second Respondent bank is concerned, makes the petitioners ineligible for the grant of any equitable remedy or discretionary relief from this Court under Article 226. 17. Moreover, one set of writ petitions (two out of four) challenge the threat held out by the second Respondent bank to publish the photographs of the Managing Director in newspapers as a wilful defaulter. The right of a bank to publish the photograph of defaulters, was already considered by me in great deal in K.J.Doraisamy v. Assistant General Manager, State Bank of India, Erode Branch [ 2006 (4) MLJ 1877 ]. The view taken by me was also confirmed by the Division Bench of this Court. 18. Therefore, under normal circumstances, all these four writ petitions would have been dismissed by me, without any detailed enquiry. But, I am unable to do it for the simple reason that today, a CDR package has been put in place by a group of 25 banks and financial institutions and the fate of these institutions is also inextricably intertwined with the fate of the petitioners herein. Therefore, it has become necessary for me to consider the rival contentions, keeping in mind the larger public interest that is also at stake, along with the private interest of the petitioners. 19. Therefore, it has become necessary for me to consider the rival contentions, keeping in mind the larger public interest that is also at stake, along with the private interest of the petitioners. 19. The question as to who is a wilful defaulter, has to be decided only in the light of Master Circular dated 01.7.2013 issued by the Reserve Bank of India. As seen from the first paragraph of the Master Circular, the purpose of defining who a wilful defaulter is and for declaring a person to be a wilful defaulter, is "to put in place a system to disseminate credit information pertaining to wilful defaulters for cautioning banks and financial institutions so as to ensure that further bank finance is not made available to them". 20. The said Master Circular defines the wilful default in para 2.1 as follows:- "2.1 Definition of wilful default:- The term "wilful default" has been redefined in supersession of the earlier definition as under: A "wilful default" would be deemed to have occurred if any of the following events is held:- (a) The unit has defaulted in meeting its payment /repayment obligations to the lender even when it has the capacity to honour the said obligation. (b) The unit has defaulted in meeting payment/repayment obligations to the lender and has not utilised the finances from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. (c) The unit has defaulted in meeting its payment/repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilised for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets. (d) The unit has defaulted in meeting its payment/repayment obligations to the lender and has also disposed off or removed the movable fixed assets or immovable property given by him or it for the purpose of securing a term loan without the knowledge of the bank/lender." 21. As seen from the definition, the Master Circular merely creates a deeming fiction under which a wilful default would be deemed to have occurred if any one of the four events listed therein had taken place. As seen from the definition, the Master Circular merely creates a deeming fiction under which a wilful default would be deemed to have occurred if any one of the four events listed therein had taken place. Unfortunately for the second Respondent bank, the first contingency indicated in 2.1(a) is not satisfied, since it is not the case of the second Respondent bank that the petitioners defaulted in meeting repayment obligations, even though it had the capacity to honour the commitment. Two conditions are to be fulfilled for a case to fall under clause (a). The first is that the unit ought to have defaulted and the second is that the default was made even when the unit had the capacity to honour the obligations. The second limb of clause (a) is not satisfied here. Clause (b) of para 2.1 of the Master Circular deals with diversion of funds for other purposes and clause (c) deals with siphoning off the funds for other purposes. The specific case of the second Respondent bank is that the funds lent by the bank were utilised by the petitioners to discharge their external commercial borrowings. But, the response of the petitioners is that had it not been done, the company would have collapsed. 22. What is "diversion" is indicated in para 2.2.1 of the Master Circular. Similarly, what is "siphoning off" is indicated in para 2.2.2. Though there were arguments on both sides as to whether what was done by the petitioners was a diversion of funds or siphoning off, I do not think that there is any necessity to enter into the controversy. While diversion of funds is an event indicated in clause (b), siphoning off is an event indicated in clause (c) in para 2.1, to hold that a wilful default had occurred. 23. However, the Master Circular describes one condition in the last part of paragraph 2.2.2, for the identification of wilful default. It reads as follows:- "The identification of the wilful default should be made keeping in view the track record of the borrowers and should not be decided on the basis of isolated transactions/incidents. The default to be categorised as wilful must be intentional, deliberate and calculated." 24. Therefore, every default is not considered to be a wilful default and the bank should be satisfied that the default was intentional, deliberate and calculated. 25. The default to be categorised as wilful must be intentional, deliberate and calculated." 24. Therefore, every default is not considered to be a wilful default and the bank should be satisfied that the default was intentional, deliberate and calculated. 25. The fact remains that the petitioners have failed to comply with their repayment obligations, not only to the second Respondent bank, but also to 25 other institutions. All of them have jointly vetted a CDR package, giving an indication thereby that they did not consider the default to be intentional, deliberate and calculated. I am just making this observation, not really to record a finding whether the petitioners are wilful defaulters or not. The determination as to whether someone is a wilful defaulter or not, has to be made only by a bank/financial institution and I do not think that the Court is entitled to sit in judgement over the wisdom of the banker. But, I am just taking note of the fact that in the eyes of 25 other lending institutions, the petitioners are not to be deemed as wilful defaulters. 26. The State Bank of India, which had been appointed as a Monitoring Institution under the CDR package, has filed a counter affidavit supporting the case of the petitioners. The facts brought out in the counter affidavit filed by the State Bank of India, may be necessary for resolving the questions on hand. Therefore, these facts culled out from the counter affidavit of the State Bank of India are extracted briefly as follows:- (a) The petitioner company had availed credit limits to the tune of Rs.2100 Crores and had also availed external commercial borrowings to the extent of 161 million US Dollars from the Consortium of Banks. (b) The petitioners company had also availed credit limits from several other banks including the second Respondent, outside the Consortium. (c) The second Respondent bank had sanctioned unsecured working capital limits of Rs.40 Crores to the petitioners in September 2001. (d) The petitioner company defaulted in payment to the Consortium as well as to the other banks and hence, submitted a proposal in June 2013 to the CDR cell for restructuring of the debt. (e) In a meeting of the lenders, in which the second Respondent's representative also participated, an overwhelming majority resolved to restructure the debt and to appoint the State Bank of India as the Monitoring Institution. (e) In a meeting of the lenders, in which the second Respondent's representative also participated, an overwhelming majority resolved to restructure the debt and to appoint the State Bank of India as the Monitoring Institution. (f) The Financial Institutions consented to a CDR package with the cut-off date as 01.4.2013. The package was admitted by the CDR Empowered Group. This was due to the fact that the package had support of what is known as "super majority" of lenders, on the ground that the unit was viable. (g) The CDR package also contained a proposal for the sale of a business asset of the company in Aurangabad and Sholinganallur. (h) In the meetings of the lenders held on 24.12.2013 and 24.01.2014, the CDR package was discussed and a letter of approval was issued on 10.3.2014 by the Empowered Group. Consequently, a collective No Objection Certificate was issued by all the consented lenders for the sale of the Aurangabad unit and the other unit at Sholinganallur. The sale consideration was agreed to be credited to the Trust and Retention Account, to be maintained by the State Bank of India. (i) The second Respondent bank was unhappy with the CDR and hence, moved an application before the Debts Recovery Tribunal and obtained an interim order of status quo. Therefore, as the Monitoring Institution, the State Bank of India had to intervene to get the order of staus quo vacated, pursuant to which, the sale of the Aurangabad and Sholinganallur units went through. (j) After failing in their attempt to stall the sale of the plants at Aurangbad and Sholinganallur, the second Respondent bank has taken recourse to the Master Circular of the Reserve Bank of India to declare the borrower as a wilful defaulter. 27. In paragraph 8 of the counter affidavit, the State Bank of India has stated very fairly that in normal circumstances, the State Bank of India cannot have a say in the matter. But, taking into consideration the fact that a CDR scheme has been put in place, the State Bank of India chose to file a counter, as the declaration of the borrower as a wilful defaulter will be detrimental to the restructuring programme. 28. The State Bank of India has made a reference to the Circular issued by the Reserve Bank of India with regard to CDR schemes, in the case of wilful defaulters. 28. The State Bank of India has made a reference to the Circular issued by the Reserve Bank of India with regard to CDR schemes, in the case of wilful defaulters. Paragraph 5 of the Reserve Bank of India Circular referred to by the State Bank of India in para 9 of their counter affidavit indicates the procedure to be followed for referring the cases of wilful defaulters to CDR. A careful look at the same would show that there is no bar for considering even the case of a wilful defaulter to a CDR scheme. If the reason for declaring a borrower as a wilful defaulter was the diversion of funds, the referring institution should follow a particular course of action stipulated in para 5.6 of the Reserve Bank of India Circular. Paragraph 5.9 stipulates that once the approved package is implemented, the lenders should withdraw the name of the borrower from the list of wilful defaulters. 29. It is interesting to note that the Reserve Bank of India Circular provides for considering the cases of wilful defaulters for CDR packages. But there is no provision in the Reserve Bank of India Circular, which deals with the procedure to be followed for declaring a borrower as a wilful defaulter, after the implementation of a CDR package. In other words, the Reserve Bank of India Circular entitles a declared wilful defaulter to be eligible for a CDR package. But, it does not prescribe the procedure for declaring a borrower as a wilful defaulter after the implementation of a CDR package. On the contrary, it obliges the lenders to remove the name of the borrower from the list of wilful defaulters, once a CDR package is put in place. 30. Therefore, what the second Respondent bank is attempting to do, appears to be contrary to the larger interest of the whole body of creditors. I see no reason as to why a large body of creditors numbering about 25 whose dues constitute about 98% of the total dues of the company, should support the borrower, if the unit was not viable. I am unable to accept the contention that a large body of creditors was guilty of failure to carry out due diligence. 31. Even admittedly, the second Respondent bank is an unsecured creditor. Under the CDR package, some amount of security is assured to the second Respondent Bank. I am unable to accept the contention that a large body of creditors was guilty of failure to carry out due diligence. 31. Even admittedly, the second Respondent bank is an unsecured creditor. Under the CDR package, some amount of security is assured to the second Respondent Bank. Today even the petitioners do not seek to prevent the second Respondent from proceeding with the steps already initiated for recovery of the dues. A declaration that the petitioners are wilful defaulters, is not going to place the second Respondent bank in a much better position than where they are today. It is also not going to accelerate the enquiry by the Debts Recovery Tribunal into the application of the second Respondent for recovery of money. In other words, the second Respondent Bank is not going to gain any added advantage by declaring the petitioners as wilful defaulters. The declaration is not going to make any value addition for the second Respondent. 32. On the contrary, the declaration will hit several lending institutions who are parties to the CDR package. Out of the sale proceeds of the two units, the Monitoring Institution is now holding about Rs.300 Crores, from out of which oxygen is supplied to the petitioner company. Once the declaration of a wilful defaulter is made, the ventilator has to be removed and the company would automatically become dead. Even then, the second Respondent may not get anything, as it is an unsecured creditor. In other words, the second Respondent cannot even share the spoils, when such a disaster strikes the company. 33. As pointed out earlier, the only purpose of declaration of a borrower as wilful defaulter, is disseminating information to all other banks and other financial institutions, so that they do not advance any money to such a person. That purpose is already achieved in this case, in view of the prohibition imposed under the CDR package restraining the petitioners from borrowing any money from any institution. Therefore, I see no reason as to why the second Respondent is so anxious to declare the petitioners as wilful defaulters. 34. To summarise the whole things, the declaration of the petitioners as wilful defaulters will not bring any benefit to the second Respondent, but it will be detrimental to the interest of the petitioners as well as other lenders. Therefore, I see no reason as to why the second Respondent is so anxious to declare the petitioners as wilful defaulters. 34. To summarise the whole things, the declaration of the petitioners as wilful defaulters will not bring any benefit to the second Respondent, but it will be detrimental to the interest of the petitioners as well as other lenders. Hence, I am of the view that the petitioners are entitled to the relief sought, at least in the interest of a large body of creditors. 35. In view of the above, the writ petitions are allowed and the impugned orders are set aside. No costs. Consequently, connected Miscellaneous Petitions are closed.