The Delhi High Court has set aside Punjab and Sind Bank’s decision to withdraw its Rs 120-crore one-time loan settlement (OTS) given to real estate firm Ambience Pvt Ltd, terming it “arbitrary and unsustainable”.
“The OTS is binding on the bank and cannot be unilaterally withdrawn after accepting payments,” Justice Mini Pushkarna held in the order. “Accordingly, the letter dated August 1, 2023, issued by the bank withdrawing the OTS (one-time settlement), is hereby set aside. Consequently, the bank is directed to release the securities furnished by the company in the subject loan account, and release charge thereon.”
The OTS offer, its acceptance and the sanction letter constitute a sufficient contract, the judge said. “Thus, the Punjab and Sind Bank, which is a nationalised bank and an instrumentality of the state, cannot act arbitrarily or whimsically in matters of contract.”
The Punjab and Sind Bank (PSB) withdrawing the OTS was a “cryptic order, bereft of any reasons”, Justice Pushkarna said.
The matter pertains to a term loan of Rs 155 crore PSB extended to Ambience for construction and development of a real estate project at Sector-50, Noida under a multiple banking arrangement in March 2013. Other banks, Punjab National Bank (erstwhile Oriental Bank of Commerce) and HDFC Ltd had also advanced loans of Rs 124 crore and Rs 25 crore, respectively, for the project.
Initially the loans were sanctioned and disbursed by the banks under a multiple banking arrangement. Later on, a consortium was formed amongst the participating banks and PNB was appointed as the lead bank. The company had repaid the full loan of HDFC in July 2018.
With a view to pay off its debts, the company in February 2023 made separate OTS proposals to PNB and PSB. The company’s offer of OTS of Rs 122 crore was accepted by PSB.
In May 2023, the company had forwarded a no-dues certificate to PSB which it received from PNB, stating that the entire dues of the latter had been fully repaid in normal course without a one-time settlement. Thereafter, on August 1, last year, the builder deposited the entire OTS amount to PSB, which withdrew the extension of time granted to the firm and also recalled the OTS, alleging deviation and concealment by the builder.
PSB alleged that the company misrepresented them and had given a better offer to Punjab National Bank by making full payment to the latter.
However, the HC rejected the bank’s stand, saying Ambience had paid the entire OTS amount along with interest, stipulated in the sanction, thus, there is no question of any deviation or violation or breach of the sanction terms.
“The OTS is binding on the bank and cannot be unilaterally withdrawn after accepting payments,” Justice Mini Pushkarna held in the order. “Accordingly, the letter dated August 1, 2023, issued by the bank withdrawing the OTS (one-time settlement), is hereby set aside. Consequently, the bank is directed to release the securities furnished by the company in the subject loan account, and release charge thereon.”
The OTS offer, its acceptance and the sanction letter constitute a sufficient contract, the judge said. “Thus, the Punjab and Sind Bank, which is a nationalised bank and an instrumentality of the state, cannot act arbitrarily or whimsically in matters of contract.”
The Punjab and Sind Bank (PSB) withdrawing the OTS was a “cryptic order, bereft of any reasons”, Justice Pushkarna said.
The matter pertains to a term loan of Rs 155 crore PSB extended to Ambience for construction and development of a real estate project at Sector-50, Noida under a multiple banking arrangement in March 2013. Other banks, Punjab National Bank (erstwhile Oriental Bank of Commerce) and HDFC Ltd had also advanced loans of Rs 124 crore and Rs 25 crore, respectively, for the project.
Initially the loans were sanctioned and disbursed by the banks under a multiple banking arrangement. Later on, a consortium was formed amongst the participating banks and PNB was appointed as the lead bank. The company had repaid the full loan of HDFC in July 2018.
With a view to pay off its debts, the company in February 2023 made separate OTS proposals to PNB and PSB. The company’s offer of OTS of Rs 122 crore was accepted by PSB.
In May 2023, the company had forwarded a no-dues certificate to PSB which it received from PNB, stating that the entire dues of the latter had been fully repaid in normal course without a one-time settlement. Thereafter, on August 1, last year, the builder deposited the entire OTS amount to PSB, which withdrew the extension of time granted to the firm and also recalled the OTS, alleging deviation and concealment by the builder.
PSB alleged that the company misrepresented them and had given a better offer to Punjab National Bank by making full payment to the latter.
However, the HC rejected the bank’s stand, saying Ambience had paid the entire OTS amount along with interest, stipulated in the sanction, thus, there is no question of any deviation or violation or breach of the sanction terms.
