Calcutta High Court Sets Aside Bank of Baroda's Fraud Notice Grounded on Inconclusive Forensic Audit Report
Case Overview
Monoranjan Roy Vs Bank of Baroda & Ors. (Calcutta High Court)
The Calcutta High Court's Division Bench recently delivered a significant ruling in a matter arising from a challenge to fraud classification proceedings initiated by Bank of Baroda against a borrower company already undergoing liquidation. The Division Bench reversed the decision of the learned Single Judge and set aside the show cause notice issued by Bank of Baroda, along with all actions taken in furtherance thereof, including the reporting of the account as fraud to the Reserve Bank of India.
Background and Factual Matrix
The present appeal emerged from a judgment dated 02.07.2026, wherein a writ petition filed by the appellant — Monoranjan Roy — had been dismissed by the learned Single Judge. The underlying writ petition challenged two specific actions:
- A show cause notice dated 04.07.2025 issued by Bank of Baroda, directing the appellant to explain within 21 days why the loan account ought not to be classified and reported as fraud under the RBI Guidelines.
- A subsequent decision dated 18.09.2025, by which the bank resolved to formally report the account as fraud to the Reserve Bank of India.
The learned Single Judge dismissed the writ petition on a narrow procedural ground — that since the appellant had already filed a reply to the show cause notice, the challenge to the notice itself was not maintainable before the writ court.
Company's Insolvency Background
The borrower company had been admitted into Corporate Insolvency Resolution Process (CIRP) as far back as 2018, following which it proceeded into liquidation in 2019. Upon commencement of the CIRP, the Board of Directors stood suspended and the erstwhile management ceased to have any control over the company's operations or financial records. A liquidator was duly appointed by the adjudicating authority under the Insolvency and Bankruptcy Code (IBC).
Compounding matters further, the company's books of accounts and financial records had been seized by the Directorate of Economic Offences (DEO) even prior to the initiation of CIRP proceedings. The liquidator had been separately seeking to retrieve these records from the investigating agency without success.
Arguments Advanced by the Appellant
Senior Advocate Mr. Kar, appearing on behalf of the appellant, pressed the following principal submissions:
The show cause notice issued by Bank of Baroda was entirely founded upon a forensic audit report prepared by R. Dokania and Company, Chartered Accountants, covering the period from 1st April 2013 to 31st March 2018. This report was neither complete nor conclusive.
The forensic audit report itself carried express disclaimers and limitations, acknowledging that the audit had been conducted on the basis of limited information and documents made available by the lenders, without access to the borrower's own books of accounts, transactional records, invoices, or agreements.
The final opinion section of the report explicitly stated that its conclusions were contingent upon further findings and remained subject to revision upon the production of complete financial records and cooperation by the borrower.
Since the company was in liquidation, the appellant had no control over or access to the company's books, which were either in the custody of the liquidator or had been seized by the DEO. Attributing non-cooperation to the borrower was therefore erroneous and unjust.
Bank of Baroda, instead of relying upon an incomplete report, ought to have approached the liquidator or moved the National Company Law Tribunal (NCLT) to procure the necessary documents.
Most critically, the same learned Single Judge had, by a judgment dated 02.07.2026 in WPA 978 of 2026, already set aside a show cause notice issued by the State Bank of India — the lead bank of the consortium — which had relied upon the very same forensic audit report. The appellant contended that once the foundational basis of the report had been declared inconclusive in those proceedings, the Bank of Baroda's notice, resting on the identical document, could not survive independently.