Delhi High Court Quashes Fraud Tag On Reliance Commercial Finance Ex-CEO As SCN Was Not Served

The Delhi High Court on Monday set aside an order declaring a former key official of Reliance Commercial Finance Limited as “fraud” in connection with loans worth over Rs 16,455 crore after noting that the show cause notice issued to him had not been served.

A division bench of Justice Prathiba M Singh and Justice Madhu Jain passed the order.

The petition was filed by Devang Pravin Mody challenging the Reserve Bank of India's Master Directions on Fraud Risk Management dated July 15, 2024, along with a show cause notice issued by Punjab and Sind Bank and the subsequent order declaring him as “fraud”.

The case arises from wholesale loans disbursed by a consortium of banks to RCFL, amounting to Rs 16,455.62 crore, including Rs 11,218.58 crore extended to linked entities.

Mody, who served as a key managerial personnel of RCFL in roles including CEO and Whole-Time Director until December 2018, was issued a show cause notice by Punjab and Sind Bank along with other individuals. The bank later passed an order classifying them as “fraud”, stating that diversion of funds had been revealed in a forensic audit.

Challenging the action, Mody contended that the show cause notice dated October 29, 2025 was never served on him, depriving him of an opportunity to respond before the order dated February 18, 2026 was passed.

Opposing the plea, the bank argued that the notice had been sent to all noticees at their last known addresses, and that the new address furnished by Mody was not in its knowledge.

The Court observed that settled law requires that an opportunity to respond to a show cause notice must be granted, while also noting that parties have a duty to inform banks of any change in address.

“It is not clear as to whether the Bank was informed of the change in the address of the Petitioner or not,” the Bench noted.

However, examining the bank's own order, the court found that the show cause notice issued to Mody had been returned with the remark that no such person resided at the address.

From this, the Court held that the admitted position was that the show cause notice was never served on the Petitioner.

“In the facts and circumstances of this case, where the Bank admits that the SCN was not served to the Petitioner, though the same was sent by the Bank, this Court is of the opinion that the present petition can be disposed of with the following directions:”

Holding so, the court set aside the February 18, 2026 order and directed the bank to serve the show cause notice along with relevant documents on Mody's email and mobile number, grant him two weeks to file a reply, and thereafter pass a fresh order in accordance with the 2024 Master Directions.

The Court also recorded that the bank is willing to grant Mody a personal hearing after receipt of his reply.

The petition was disposed of in these terms.

For Petitioner: Advocates Pranjit Bhattacharya, Salonee Shukla, Shalini Singh and Souravi Das

For Respondents: Advocates Ramesh Babu MR, Nisha Sharma, Manisha Singh, Tanya Chowdhary and Seema Gupta