Monoranjan Roy vs. Sbi Streesed Assets Resolution Group And Ors.

IN THE HIGH COURT AT CALCUTTA (Constitutional Writ Jurisdiction) APPELLATE SIDE Present: The Hon’ble Justice Krishna Rao W.P.A. No. 978 of 2026 Monoranjan Roy Vs. SBI Stressed Assets Resolution Group & Ors. Mr. Joydip Kar, Sr. Adv. Mr. Rudraman Bhattacharyya, Sr. Adv. Mr. Biswaroop Bhattacharyya Mr. Niladri Bhattacharjee Mr. Subhrojyoti Mukherjee Ms. Deblina Chattaraj Mr. Sayan Banerjee Mr. Suman Majumdar Mr. Shraman Mukherjee ....For the petitioner. Mr. Anirban Pramanick Mr. Punarbasu Nath Ms. Bhagyasree Dey ….For the SBI. Mr. Aman Agarwal Mr. Debabrata Das Mr. Arunabha Sarkar 2 Mr. Pratick Acharjee ….For the RBI. Hearing Concluded On : 16.06.2026 Judgment Delivered On : 02.07.2026 Judgment Uploaded On : 02.07.2026 Krishna Rao, J.: 1. The petitioner has filed the present writ petition challenging the Show Cause Notice dated 2nd December, 2025, wherein the bank has directed the petitioner to show cause within 21 days as to why the account of the petitioner should not be categorized and reported as fraud as per the Reserve Bank of India (hereinafter referred to as “RBI”) Guidelines. 2. Mr. Joydip Kar, Learned Senior Advocate along with Mr. Rudraman Bhattacharyya, Learned Senior Advocate representing the petitioner submits that the bank has issued the show cause notice on the basis of the Forensic Audit report but the Forensic Audit report is not conclusive and the Auditor has mentioned in the report that the report has been prepared solely for the purpose of providing selected information on a confidential basis to which it is issued and should not be used for any other purpose without their consent. 3. Mr. Kar submits that initially on 18th November, 2025, the respondent no. 2 has issued show cause notice to the petitioner with respect to the transactions from 1st April, 2013 to 31st March, 2018, on the basis of 3 the Forensic Audit report dated 4th June, 2025. On receipt of the said notice, the petitioner has submitted a detailed reply on 29th November, 2025, stating that the M/s. Pincon Spirit Limited (hereinafter referred to as “PSL”) had been conducting its business activities with due diligence, integrity and best efforts. It was informed to the bank that the petitioner and other Directors of PSL had been arrested on 2nd November, 2017 and 19th April, 2018, respectively and all supporting documents with regard to the operation of PSL and the petitioner has been seized by the Directorate of Economic Offences (hereinafter referred to as “DEO”). It was also informed that the offices and production units of PSL along with business units of the subsidiary/associate companies were sealed by the DEO in the month of November/December, 2017, due to which it is not possible for the petitioner to provide documents with regard to transactions of the company. 4. Mr. Kar submits that it was also informed that the loan account of the company has a long satisfactory credit standing with the consortium member banks including the State Bank of India and the account of the company turning into NPA is not due to intentional or willful and malafide motive or default on the part of the management of the company. He submits that due to stoppage of production at the manufacturing units of Kolkata, the company’s revenue generation has been adversely affected. 4 5. Mr. Kar submits that the State Bank of India on 2nd December, 2025, issued a letter withdrawing the earlier show cause notice dated 18th November, 2025 and issued the impugned show cause notice though the contents are identical to the show cause notice dated 18th November, 2025. He submits that the reasons and grounds for withdrawal of the earlier show cause notice was not informed to the petitioner. 6. Mr. Kar submits that by a communication dated 11th January, 2018, issued by the SBI, IFB, Bangalore addressed to the Deputy Superintendent of Police of the Office of the DEO, Kolkata informed that the consortium banks have lent to the company after completion of due diligence on the company and its promoters as per the bank’s/RBI guidelines. He further submits that the consortium banks had itself acknowledged the bona-fide and due diligence of the company and thereafter had also acknowledged the plight of the company due to stoppage of production at the manufacturing units at Kolkata which resulted in non-servicing of loans, thus the show cause notices dated 18th November, 2025 and 2nd December, 2025, is contrary to their own statement. 7. Mr. Kar submits that during the consortium meeting held on 31st January, 2018, the DEO, West Bengal has seized the stocks at the plants of the company, despite such reports, no action was taken by the State Bank of India or any other member bank of the consortium against the DEO, West Bengal for safeguarding the stocks which were 5 hypothecated to the consortium as prime security. He submits that the company has been impleaded in a number of litigations with reference to its operation. The alleged corporate debtors have also initiated Corporation Insolvency Resolution Process (CIRP) against the company before the National Company Law Tribunal, Kolkata. The said application was taken up for consideration on 30th September, 2019, along with other applications wherein it is mentioned that the DEO, West Bengal had attached the property of the corporate debtor (PSL) as if it is the proceed of crime under the provisions of West Bengal Protection of Interests of Depositors in Financial Establishment Act, 2013. 8. Mr. Kar submits that the Tribunal by its order dated 19th February, 2020, observed that the contention that the assets attached by the respondent therein are assets obtained by the corporate debtor company out of the funds collected illegally by the group company under the contrail of Pincon Groups seems to be devoid of any merit in the absence of any supporting evidence and materials. The Tribunal also observed that the property of the corporate debtor attached by the respondent is liable to be detached and as such the DEO was directed to detach the property vide notice dated 16th April, 2018 and to restore possession thereof to the liquidator. 9. Mr. Kar submits that on perusal of the Forensic Audit report, it reveals that the said report has been prepared in the absence of all necessary documents and evidences. He submits that Forensic Audit report is an 6 incomplete document and the same cannot be the basis of issuance of the show cause notice. He further submits that the show cause notice is issued in violation of principles of natural justice. 10. Mr. Kar in support of his submissions relied upon the judgment in the case of T. Takano Vs. Securities and Exchange Board of India and Another reported in (2022) 8 SCC 162 and submits that a quasi- judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication. An ipse dixit of the authority that it has not relied on certain material would not exempt it of its liability to disclose such materials if it is relevant to and has a nexus to the action that is taken by the authority. 11. Mr. Kar further relied upon the judgment in the case of Milind Patel Vs. Union Bank of India and Others reported in 2024 SCC OnLine Bom 745 and submits that the purpose of disclosure of information is not merely individualistic, that is to prevent errors in the verdict but is also towards fulfilling the larger institutional purpose of fair trial and transparency. 12. Mr. Anirban Pramanick, Learned Advocate representing the State Bank of India submits that the show cause notice dated 18th November, 2025, was withdrawn and on 2nd December, 2025, another show cause notice was issued detailing the allegation against the petitioner. In the show cause notice, Forensic Audit report was enclosed, thus the 7 petitioner cannot say that Forensic Audit report is not served upon the petitioner. 13. Mr. Pramanick submits that the petitioner has submitted a detailed reply to the show cause notice dated 18th November, 2025. He has referred to the paragraph 4(b)(c) and (e) and submits that all the issues raised by the petitioner in the present writ petition is agitated in his reply. In the said reply, the petitioner has not prayed for supply of any documents. 14. Mr. Pramanick submits that the petitioner has submitted proposal for One Time Settlement and on receipt of the proposal of One Time Settlement, the bank requested the petitioner to submit the offer of One Time Settlement to the Official Liquidator appointed by the Tribunal. 15. Mr. Pramanik submits that as per Master Directions on Fraud Risk Management in commercial bank, reasonable time of 21 days was provided to the petitioner for submission of his reply to the show cause notice and only after receipt of notice, the bank shall consider the request of the petitioner and after giving an opportunity to the petitioner, the bank will consider whether the entities will be declared as fraud or not. He submits that instead of waiting for the decision of the bank, the petitioner has filed the instant writ petition, thus the writ petition is not maintainable. 16. Mr. Pramanik in support of his submissions, has relied upon the judgment in the case of Union of India and Another Vs. Kunisetty 8 Satyanarayana reported in (2006) 12 SCC 28 and submits that in some very rare and exceptional cases, the High Court can quash a show cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. 17. Initially the respondent bank has issued show cause notice to the petitioner on 18th November, 2025 and the petitioner has submitted his detailed reply to the same. On receipt of reply of the petitioner, the bank without any order has withdrawn the said show cause notice, and issued the impugned show cause notice on 2nd December, 2025. On receipt of the impugned show cause notice, the petitioner has sent a reply informing that the allegations made in the show cause notices dated 2nd December, 2025 and 18th November, 2025, are same and the petitioner has relied upon the reply submitted with respect to the show cause notice dated 18th November, 2025, with the option for resorting legal action in any Court of law against such unilateral and biased decision on the part of the bank. 18. The respondent bank has issued show cause notice to the petitioner on the basis of the Forensic Audit report of R. Dokania and Company dated 4th June, 2025. As per Forensic Audit report, the Bank has appointed R. Dokania and Co., Chartered Accountants to conduct a Forensic Audit of the books of accounts of the Borrower for a period from 1st April, 2013 to 31st March, 2018. As per report, the management of the Company were not reachable and due to which no details of supporting documents have been received from the Borrower. 9 19. In the report, it is mentioned that the Auditor has sent a request to the Borrower for providing several details including Cash Book/ Bank Book and Journal Book from the period 1st April, 2013 to 31st March, 2018, Audited Financial Statements of Borrower for the said period and other many information but the mail sent to the Borrower were not delivered due to blockage issue. In the report, the Auditor has scanned the message which shows that the request made by the Auditor to the PSL has been blocked. 20. In the report, it is also mentioned that the Borrower has not provided any document like books of accounts, transactions details, copy of invoices, agreement entered into with various parties. 21. Conclusion and Disclaimer and Limitations of the Forensic Audit report which reads as follows: “CONCLUSION Analysis of Management Comments The borrower, Pincon Spirit Limited (PSL), has categorically failed to provide any documentary evidence or verifiable supporting documentation in response to the observations raised during the forensic audit. The stated reason for non-submission-seizure of records by the Directorate of Economic Offences (DEO)- does not absolve the company from the responsibility of maintaining backups or duplicate records. As per standard accounting and statutory compliance practices, listed companies are required to maintain backups, digital records, audit trails, and file statutory returns (e.g., GST returns, ROC filings) which remain accessible through respective portals or backups. No such attempt to produce secondary or 10 corroborative evidence has been made by the management. The management response provides broad, generic justifications about normal business transactions but fails to address specific transaction-level observations made in the forensic audit. Statements such as "transactions were in the ordinary course of business" or "accounting lapses were inadvertent" are unsupported by verifiable facts or documentation. Despite the lapse of more than seven years, the management has not pursued any legal remedy to regain access to its own records from DEO, nor taken steps to reconstruct the books of accounts - a minimum expected effort from a listed entity. The continued inaction indicates wilful negligence or a deliberate attempt to avoid scrutiny. The reply admits that operations have come to a standstill, but fails to clarify the current status of compliance with regulatory authorities like MCA, SEBI, BSE/NSE, GST, or Income Tax. The absence of updated filings or regulatory disclosures further adds to concerns regarding the continuity and authenticity of financial operations. Conclusion on the basis of review of limited documents made available to us by the lenders Further, we have received very limited documents like bank statements, sanction letter, valuation report, etc. for the purpose of conducting forensic audit of the Borrower. The lenders have provided us with such documents for our review. We have reviewed the documents made available to us by the lenders and have done proper web search to identify the irregularities done by the Borrower. Our investigation reveals multiple high-value, unjustifiable financial transactions which are serious and prima facie indicative of fraudulent intent, fund diversion and deliberate misrepresentation on the part of the Borrower. The following key findings underscore this conclusion: A) Payment to suspected shell entities 11 The Borrower had made payment aggregating to Rs. 27.03 crores to entities whose current status is showing as 'Strike off” and has not filed the financial statements since their incorporation or has not filed the financial statements from last few years. Furthermore, the directors of these entities are found to be common across multiple ‘Strike Off’ entities, indicating a deliberate creation of a web of shell companies to facilitate fund diversion. The Borrower has failed to produce any agreements, invoices, proof of delivery of goods/services, or rationale justifying these payments. The summary of payment done to such shell entities has been shown below: Sr. No. Name of the party Amount (Rs.) 1. Confitech Dealtrade Private Limited 1,57,49,517 2. Mayukh Commodities Private Limited 49,99,903 3. Polpik Traders Private Limited 2,49,82,522 4. Slice Trading India Private Limited 96,49,850 5. Jagwani Creations Private Limited 24,99,900 6. Gurpreet Sales Private Limited 54,99,937 7. Dhanganga Traders Pvt. Ltd. 42,49,893 8. Gajgamini Mercantile Pvt. Ltd. 1,33,24,878 9. Gajrup Markcom Pvt. Ltd. 24,99,870 10. Mahavir Tradimpex Pvt. Ltd. 74,99,815 11. Jai Santoshi Tradimpex Private Limited 29,99,970 12. D L S Export Private Limited 8,13,49,300 13. Vaibhavlaxmi Distributors Private Limited 7,00,18,884 14. Venera Property Private Limited 2,50,17,848 Total 27,03,42,087 Such payments without any visible economic rationale or documentation and directed towards non-operational, non-compliant and defunct entities represent a classis typology of fund 12 siphoning and fraudulent activity conducted on the part of the Borrower. B) Questionable Payments to a Former Director: It has been observed that the Borrower have paid amount aggregating to Rs.40.00 lakhs to Mr. Raj Kumar Roy within a period of 5 days. The summary of payment made to him has been shown below: Date Amount Paid (Rs.) Amount Received (Rs.) Remarks 15-09-2017 10,00,000 - HDFC Bank 15-09-2017 10,00,000 - HDFC Bank 18-09-2017 10,00,000 - HDFC Bank 18-09-2017 10,00,000 - HDFC Bank Total 40,00,000 - Mr. Raj Kumar Roy was a director of the Company for the period 06.08.2011 – 06.03.2014. No documentary justification or business rationale has been provided for these payments. In light of the Borrower's default and absence of corresponding entries or documentation, these transactions appear to be in violation of principles of fiduciary responsibility and indicative of unauthorized siphoning of funds. C) Disproportionate Increase in Trade Receivables vs. Trade Payables and lack of debtor confirmations It has been observed that the Borrower has reported an aggregate increase of ₹17,703.06 lakhs in trade receivables over the period from 01.04.2012 to 31.03.2017. In contrast, trade payables have increased only by ₹8,284.38 lakhs during the same period. This results in a significant mismatch between receivables and payables growth, raising concerns regarding the genuineness of the trade receivables reported in the financial statements. In view of the absence of adequate supporting documents, lack of debtor confirmations, and non- cooperation from the Borrower, it prima facie 13 appears that the trade receivables may have been artificially inflated by the Borrower. This creates a reasonable ground to suspect that funds may have been diverted to non-genuine or related parties under the guise of trade receivables, in violation of fiduciary responsibilities and applicable laws. D) Payments to Entities Unrelated to the Core Business During the course of review, it was observed that the Borrower made huge payments to multiple entities during FY 2015-16 to FY 2017-18, whose line of business and activities do not appear to have any direct or indirect nexus with the Borrower's core operations. These entities include Vinayak Research, Todi Investors, RR Creations, HM Creations, Cellcom, Payal Commodities, etc. These entities, prima facie, appear to be engaged in businesses such as investment advisory, commodity trading, textile business and unrelated research services which are not required in the normal course of business of a liquor manufacturing company. This pattern of payment, in the absence of business rationale and supporting documentation, suggests possible diversion of funds or accommodation entries, and may fall under the ambit of fraudulent transactions E) Absence of Key Records & Obstruction in Audit Process: There are various suspicious transactions observed by us which could not be completely unearthed due to the absence of books of accounts. The Borrower has not provided its statutory books of accounts, ledger records, transactional invoices, agreements, etc. This non- cooperation hinders the transparency and traceability of financial conduct and itself raise red flags under forensic and regular scrutiny. FINAL OPINION In view of the foregoing, it is our categorical and professional opinion that the Borrower has engaged in a well-orchestrated scheme of financial misrepresentation, fraud and fund diversion, 14 through a network of shell entities and through unauthorized individual payments, with the sole intention of defrauding institutional lenders. This conclusion is based on evidence available as on the date of this report and is subject to further findings upon production of the complete financial records and cooperation by the Borrower. DISCLAIMER & LIMITATIONS This report is to be read in totality, and not in parts, in conjunction with the relevant documents referred to in this report. While utmost care has been taken in carrying out the assignment, there are certain limitations of its use; our report is subject to the following: The scope of work is not equivalent to an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls, or other attestation or review services or services to perform agreed upon procedures in accordance with the standards established by The Institute of Chartered Accountants of India. Further, given the nature of the assignment, the procedures followed may not comprehend all matters relating to Company that might be pertinent or necessary to the client's evaluation. Accordingly, though we have carried out the work as per the scope of work given, we make no representation to the sufficiency of our procedures for the users. Our verification cannot be relied upon to reveal all material issues (known and/or unknown), which may have an impact on the opinion of the Lender(s). We did not independently verify all matters discussed and consequently, we have relied on the records and documents produced before us. We have considered following key assumptions while carrying out the assignment:  Information and explanations and representation received are materially correct. 15  Documents such as bank statements, sanction letters, etc. provided to us are Genuine. No technical or economic viability study or market survey was conducted for the purpose of this assignment. No responsibility is assumed for matters of a legal nature. We were not required to carry out a legal audit/review. With respect to the documents and information required for conducting forensic audit, we have mailed our preliminary requirement list to the lenders and borrower and have received very limited documents which have been mentioned in the report. We have carried out the audit based on the limited information and explanations to the extent made available to us by the lenders and from the sources indicated elsewhere in this report. Our firm shall by indemnified with respect to any legal cost & expenses, if any required to be incurred by us in this assignment due to any future litigations against us by any party. We have no obligation to update this report or revise our opinion because of events or transactions occurring subsequent to the date of this report. This report has been prepared solely for the purpose of providing selected information on a confidential basis to which it is issued and should not be used for any other purpose without our consent in writing. FOR R DAKONIA & CO. CHARTERED ACCOUNTANTS Sandeep Agarwal SANDEEP AGARWAL Dated: 04.06.2025 UDIN: 25064912BMMIIB9150.” 16 22. Directorate of Economic Offences, West Bengal, has initiated investigation with regard to the transactional operation of the PSL and seized the stocks and plants of the PSL. The DEO, filed an application before the Tribunal being CA (IB) No. 577/KB/2019 and prayed for dismissal of the CIRP proceeding initiated against the petitioner being C.P. (IB )No. 93/KB/2018. The Learned Tribunal by an order dated 30th