Justice, N. Anand Venkatesh refuses to interfere with the inclusion of Zylog Systems Director, Srikanth Parthasarathy in the willful defaulters list. The Madras High Court has refused to interfere with the inclusion of a former Director of Zylog Systems Limited in the list of loan defaulters maintained by Credit Information Bureau of India Limited (CIBIL) after the company had defaulted repayment of loans. Justice, N. Anand Venkatesh dismissed a Writ Petition filed by Srikanth Parthasarathy on finding no materials to accept his claim that he was functioning only as a Non-Executive Director of the company at the relevant point of time and had resigned from that post thereafter.
The orders were passed after Advocates, Chevanan Mohan and Rexy Josephine Mary, representing the Reserve Bank of India (RBI), brought it to the notice of the Court that a series of circulars issued by the Central Bank with respect to the issue of declaring company directors as wilful defaulters.
The case of the Petitioner was that he was appointed Director of Zylog Systems in June 2006 and resigned from Directorship in June 2013. His resignation was accepted by the Board of Directors in August 2013. In March 2013, the company and its directors had been reported as willful defaulters. The judge took note that the RBI had issued circulars in 2012, 2013 and 2015, prescribing certain guidelines to be followed by the banks, while disseminating credit information pertaining to willful defaulters to prevent the latter from availing further loans from other banks and financial institutions. The second and third circulars had insisted upon observance of principles of natural justice by giving an opportunity of hearing to the individual concerned, before declaring him/her as a willful defaulter. Accordingly, the Federal Bank had issued a Show-Cause Notice to the petitioner in June 2013.
However, the Petitioner, for reasons best known to him, did not reply to the Show Cause Notice though the records showed that the bank had removed the names of individuals from the willful defaulters list, whenever they were able to prove to have served only as Non-Executive Directors. “If the Petitioner has not chosen to defend himself and has not chosen to give his explanation to the second respondent bank, the Petitioner has to blame himself for that. Further, the materials placed before this Court would show that the Petitioner was in fact the Executive Director,” the Judge said. Pointing out the Petitioner was a member of the Company’s Audit Committee as well as Investors’ Grievance Committee, Justice Venkatesh said: “If the Petitioner was not an Executive Director, there is no need for the Petitioner to hold such important positions in the company.” He also took note that Zylog Systems had defaulted loans to as many as nine different lenders and that a Central Bureau of Investigation (CBI) probe too was launched against it as well as its directors.
Source : https://www.thehindu.com/news/national/tamil-nadu/executive-directors-can-be-included-in-cibil-list-if-company-defaults-loans-madras-high-court/article69779172.ece
