Smith is a Swiss national and also the Managing Director (MD) of Front India Ltd. The said company had obtained loan from consortium of banks to a tune of ₹12,000 crore. There are about 9 banks involved in providing the

The said matter is to be examined whether it would fit into the definition of "Willful default". A "willful default" would be deemed to have occurred if any of the following events is noted: The company has defaulted in meeting its payment/repayment obligations to the lender even when it has the capacity to honour the said obligations. The company has defaulted in meeting its payment/repayment obligations to the lender and has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. The company has defaulted in meeting its payment/repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilised for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets. In order to prevent the access to the capital markets by the willful defaulters, a copy of the list of willful defaulters (non-suit filed accounts) and list of willful defaulters (suit-filed accounts) are forwarded to SEBI by RBI and Credit Information Bureau (India) Ltd. (CIBIL) respectively. In the given case, Smith has borrowed money on behalf of the Company and nowhere it is stated that it was utilised other than purpose for which it was borrowed. Also the Company has sufficient assets to repay the loan and the Board of Directors can always dispose the assets to pay the liabilities. Non Payment of the salary to the employees or the MD's disappearance from India, can not be ground in declaring a Company a "wilful defaulter". With these facts in place, the consortium of banks will not succeed in their claim before the Court of Law.