India, March 30 -- The Bombay High Court has set aside the Union Bank of India's decision to declare businessman Puneet Agarwal, a former director and personal guarantor of Promart Retail India, as a "wilful defaulter". The court said the bank did not follow the proper procedure required under Reserve Bank of India (RBI) guidelines.

According to the bank's petition, it had given Promart a loan of Rs.40 crore. At the time, Agarwal had signed a personal guarantee for the loan. However, in January 2014, he resigned as director of the company and sold his shares to new promoters. In October 2014, the bank pointed out irregularities in Promart's cash credit (CC) account and by December, classified it as a Non-Performing Asset (NPA).

In 2015,...