Bombay HC overturns BOI’s fraud declaration against Pune Buildtech
ECONOMY & POLICY

Bombay HC overturns BOI’s fraud declaration against Pune Buildtech

The Bombay High Court has declared bank of India’s decision to declare Pune Buildtech Pvt Ltd ‘fraud’ as null and void and also the inclusion of the realty firm’s name in any such list/communication blacklisting the company from availing of institutionalised credit as null and void.

In another separate order, the court has also directed the lender to remove the company’s name from the list of ‘wilful defaulters’ and has also directed the bank to recall any information sent by it to any Credit Information Company declaring Pune Buildtech as wilful defaulters.

“It is not in dispute that the entire settlement amount as mentioned in the Consent Terms Rs 7 billion has been paid by the petitioners to Bank of India sometime in June 2024,” observed the division bench of Justice BP Colabawalla and Justice Somasekhar Sundaresan in its order of October 8.

“Despite this, and after receiving the entire amount, we fail to understand how Bank of India could continue with the proceedings initiated for declaring the Petitioners as wilful defaulters after issuing a ‘No Dues Certificate’ to the petitioners (Pune Buildtech).”

Before the court’s order, Senior Advocate Cyrus Ardeshir along with Munaf Virjee of AMR Law appearing for the Pune Buildtech argued that no intimation of any sort had been given to the petitioner and they were informed only verbally that their account had been notified as a ‘fraud’ account.

In the case regarding declaring the company a ‘wilful defaulter’, the developer argued that a show cause notice of May 4, 2020, was issued to the company in which it was stated that the Identification Committee of the Bank identified the realty firm as ‘wilful defaulters’ further stating that it called upon the petitioner company to pay the outstanding within 15 days of the receipt of the letter, failing to which the lender would initiate steps to declare the company as wilful defaulter. However, the same letter reached to the company only on July 1, 2020.

Email queries to Bank of India and Pune Buildtech remain unanswered till the time of filing the story. While Munaf Virjee, founder of law firm AMR Law, who is representing Pune Buildtech in the case, refused to comment on the matter.

The court, while directing the public sector lender to remove the company’s name from the list of wilful defaulters observed that both parties also entered into consent terms on March 22, 2024, with regards to the OTS (onetime settlement).

This OTS also mentioned that upon receipt of the settlement amount, the Bank of India shall withdraw any and all the proceedings instituted, and actions taken by it under any law against any party in respect of the matters which form the subject matter of the Consent Terms.

The genesis of the case lies in the term loan sanctioned by the consortium of lenders including the Bank of India in 2013. Subsequently, The parties entered into the OTS in March 2024, under which the developer had agreed to pay Rs 703 crore as a full and final settlement.

The realty firm in its two separate petitions argued that despite entering into a consent term and paying in full and also issuing a no-due certificate, the lender continued to term the account as ‘fraud’ and ‘wilful defaulter’.

The Bombay High Court has declared bank of India’s decision to declare Pune Buildtech Pvt Ltd ‘fraud’ as null and void and also the inclusion of the realty firm’s name in any such list/communication blacklisting the company from availing of institutionalised credit as null and void. In another separate order, the court has also directed the lender to remove the company’s name from the list of ‘wilful defaulters’ and has also directed the bank to recall any information sent by it to any Credit Information Company declaring Pune Buildtech as wilful defaulters. “It is not in dispute that the entire settlement amount as mentioned in the Consent Terms Rs 7 billion has been paid by the petitioners to Bank of India sometime in June 2024,” observed the division bench of Justice BP Colabawalla and Justice Somasekhar Sundaresan in its order of October 8. “Despite this, and after receiving the entire amount, we fail to understand how Bank of India could continue with the proceedings initiated for declaring the Petitioners as wilful defaulters after issuing a ‘No Dues Certificate’ to the petitioners (Pune Buildtech).” Before the court’s order, Senior Advocate Cyrus Ardeshir along with Munaf Virjee of AMR Law appearing for the Pune Buildtech argued that no intimation of any sort had been given to the petitioner and they were informed only verbally that their account had been notified as a ‘fraud’ account. In the case regarding declaring the company a ‘wilful defaulter’, the developer argued that a show cause notice of May 4, 2020, was issued to the company in which it was stated that the Identification Committee of the Bank identified the realty firm as ‘wilful defaulters’ further stating that it called upon the petitioner company to pay the outstanding within 15 days of the receipt of the letter, failing to which the lender would initiate steps to declare the company as wilful defaulter. However, the same letter reached to the company only on July 1, 2020. Email queries to Bank of India and Pune Buildtech remain unanswered till the time of filing the story. While Munaf Virjee, founder of law firm AMR Law, who is representing Pune Buildtech in the case, refused to comment on the matter. The court, while directing the public sector lender to remove the company’s name from the list of wilful defaulters observed that both parties also entered into consent terms on March 22, 2024, with regards to the OTS (onetime settlement). This OTS also mentioned that upon receipt of the settlement amount, the Bank of India shall withdraw any and all the proceedings instituted, and actions taken by it under any law against any party in respect of the matters which form the subject matter of the Consent Terms. The genesis of the case lies in the term loan sanctioned by the consortium of lenders including the Bank of India in 2013. Subsequently, The parties entered into the OTS in March 2024, under which the developer had agreed to pay Rs 703 crore as a full and final settlement. The realty firm in its two separate petitions argued that despite entering into a consent term and paying in full and also issuing a no-due certificate, the lender continued to term the account as ‘fraud’ and ‘wilful defaulter’.

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