High Court Overturns Wilful Defaulter Tag for Businessman Ratul Puri

The Delhi High Court has ruled in favor of businessman Ratul Puri, setting aside a decision by Bank of Baroda that declared him a wilful defaulter. This decision has wider implications for loan defaulters and the responsibilities of banks.

Key Points:

• Bank's Justification: Bank of Baroda claimed Puri, formerly associated with Moser Baer India Ltd (MBIL), had diverted funds to subsidiaries, justifying his classification as a wilful defaulter.
• Court's Reasoning: The court found the bank's reliance on a forensic audit report flawed as it didn't establish the source of funds or prove diversion from MBIL.
• Crucial Requirement: The court emphasized that for the "wilful defaulter" tag to apply, the diverted funds must be proven to be borrowed funds.
• Bank's Duty: The court highlighted the bank's responsibility to assess a borrower's genuine financial difficulty and avoid misinterpreting strategic investments as "diversion."
• Wider Implications: This judgment sets a precedent for other "wilful defaulter" cases, requiring banks to conduct thorough investigations and avoid relying solely on circumstantial evidence.

Additional Information:

• Puri, chairman of Hindustan Power Projects Pvt Ltd, maintains he has never defaulted on any loans from the company.
• The court also ruled in favor of Puri's mother, Nita Puri, in a separate case involving Punjab National Bank.
• This case highlights the importance of due process and meticulous investigation in loan default situations.