Calcutta High Court Quashes Wilful Defaulter Action Against BSCPL, Finds No Evidence

The Calcutta High Court has set aside a lender's attempt to classify BSCPL Infrastructure Ltd. and its guarantor as “wilful defaulters”, quashing a show cause notice issued after the Wilful Defaulter Identification Committee proposed such classification on December 18, 2025, holding that there was no material to satisfy the RBI framework.

Justice Krishna Rao held that the essential ingredients of “wilful default” were not made out, observing:

“This Court finds that the respondents have not shown any act of the petitioners that either the petitioners despite having sufficient means to make payment of the dues, or have disposed of immovable or movable assets provided for the purpose of securing the credit facilities without the approval of the lender. Thus, the case is not covered under the definition of “Wilful Default””

The court was dealing with a writ petition challenging a show cause notice issued on January 15, 2026 pursuant to the Committee's decision to initiate proceedings to declare BSCPL and its guarantor as wilful defaulters on allegations including misuse of funds and non-honouring of guarantees.

The dispute traces back to a 50:50 joint venture agreement dated September 17, 2010 between BSCPL and C&C Constructions Limited for infrastructure projects. C&C later defaulted on loans and was admitted into the Corporate Insolvency Resolution Process on February 14, 2019, before being ordered into liquidation on October 7, 2022.

The lender lodged claims of Rs. 146.50 crore before the liquidator, of which Rs. 18.78 crore was admitted.

Separately, the lender issued invocation notices in 2025 demanding over ₹240 crore and initiated arbitration proceedings, with arbitrators being appointed by the High Court on February 26, 2026.

Examining the material, the court found that neither the show cause notice nor the Committee's minutes disclosed any specific transactions or factual basis to support a finding of wilful default. It noted:

“In none of the notices, there is any allegation that despite of having sufficient means to make payment of dues or have disposed of movable or immovable assets provided for the purpose of securing the credit facilities. In the show cause notice, it is mentioned that certain transactions, events, facts/circumstances were identified as amounting to wilful default by the Wilful Defaulter Identification Committee in its meeting dated 18th December, 2025 but in the Minutes of Meeting, no such transactions, events, facts/ circumstances are recorded. Learned Advocate for the respondent no. 2 have only relied upon two letters dated 6th February, 2025 and 13th August, 2025 but in those letter, there is no such transactions, events and facts/ circumstances have been indicated to show that the petitioners having sufficient means to make payment of the dues or disposed of immovable or movable assets provided for the purpose of securing the credit facilities."

Holding that the case did not fall within the definition of “wilful default” under the applicable RBI directions, the court allowed the writ petition and quashed both the show cause notice and the Committee's decision