The Delhi High Court has set aside the fraud classification of bank accounts of Devang Pravin Mody, the former Chief Executive Officer of Reliance Commercial Finance Limited (RCFL) [Devang Pravin Mody Vs Reserve Bank of India]
The Court was dealing with a challenge to an order passed by Punjab & Sind Bank on February 18, 2026 declaring Mody's accounts as ‘fraud’.
In a verdict delivered on March 25, a Bench of Justices Prathiba M Singh and Madhu Jain found that the bank had not given him an opportunity to respond before passing the order.
"After having heard the ld. counsel for the parties, there can be no doubt on the basis of the various decisions passed by the Supreme Court and this Court, including ld. single-judges, that an opportunity to reply to a show cause notice (SCN) ought to be given to parties like the petitioner," the Bench said.
The case concerned loans extended by a consortium of banks to Reliance Commercial Finance Limited, amounting to ₹16,455.62 crore. Of this, over ₹11,218 crore were allegedly disbursed to linked entities.
Mody was a key managerial personnel in the company. He held positions including Additional Director, Executive Director, Whole-Time Director and CEO. He served as CEO from April 2017 and exited the company by December 31, 2018.
Banks began classifying the loan accounts of RCFL as fraud between 2020 and 2021. Simultaneously, some of the banks, which were part of the consortium, declared Mody also as “fraud”. Mody challenged these actions in multiple proceedings.
In the present case, he argued that he never received the notice and came to know of the fraud classification only through a co-noticee. Despite this, the bank passed an order on February 18, 2026 declaring Mody as fraudulent.
The Court said that a person must be given an opportunity to respond before being declared fraudulent. Since the bank itself admitted that the notice was returned undelivered, the Court held that there was no service of notice.
The Court set aside the February 18 order and directed the bank to serve the notice along with all documents on Mody through his correct email and contact details.
Mody has been given two weeks to file his reply after service. The bank has to pass a fresh order thereafter in accordance with the RBI’s 2024 Master Directions, the Court said.
The Court also recorded that Mody will be granted a personal hearing before a final decision is taken. It further noted that individuals have a duty to inform banks of any change in address.
Mody was represented by advocates Pranjit Bhattacharya, Salonee Shukla, Shalini Singh and Souravi Das.
Reserve Bank of India was represented by advocates Ramesh Babu MR, Nisha Sharma, Manisha Singh and Tanya Chowdhary.
Punjab & Sind Bank was represented by advocate Seema Gupta.
[Read Judgment]