Delhi HC overturns Punjab & Sind Bank's Rs 1.2 billion OTS withdrawal
ECONOMY & POLICY

Delhi HC overturns Punjab & Sind Bank's Rs 1.2 billion OTS withdrawal

The Delhi High Court has nullified Punjab and Sind Bank's decision to withdraw a Rs 1.2 billion one-time loan settlement (OTS) offered to real estate firm Ambience Pvt Ltd for a residential project in Noida, Uttar Pradesh. The court deemed the bank's action "arbitrary and unsustainable."

The High Court stated that an OTS offer, its acceptance, and the sanction letter together form a binding contract. Therefore, Punjab and Sind Bank, as a nationalised bank and instrumentality of the State, cannot act arbitrarily in contractual matters. The court further emphasised that once payments are accepted, the OTS is binding and cannot be unilaterally revoked.

"Accordingly, the letter dated August 1, 2023, issued by the bank withdrawing the OTS 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," Justice Mini Pushkarna stated, describing the withdrawal of the OTS as a "cryptic order, bereft of any reasons."

Citing Supreme Court precedents, the judge clarified that the terms of sanction alone are final and binding on the parties. Any pre-sanction negotiations or subsequent additions not reflected in the Sanction Letter are not binding.

Ambience had secured a term loan of Rs 1.55 billion from Punjab & Sind Bank in March 2013 for a real estate project in Sector-50, Noida, under a Multiple Banking Arrangement. Other banks involved included Punjab National Bank (PNB) and HDFC Ltd, which provided loans of Rs 1.24 billion and Rs 250 million, respectively. Initially, the loans were managed under a Multiple Banking Arrangement, which later evolved into a consortium with PNB as the lead bank. Ambience repaid HDFC in full by July 2018.

In February 2023, Ambience made separate OTS proposals to PNB and Punjab & Sind Bank to settle its debts. The OTS proposal of Rs 1.22 billion was accepted by Punjab & Sind Bank. In May 2023, Ambience forwarded a no-dues certificate to Punjab & Sind Bank from PNB, indicating full repayment of the latter's dues without an OTS. Subsequently, on August 1, 2023, Ambience deposited the entire OTS amount to Punjab & Sind Bank, which then withdrew the extension of time granted to the firm and recalled the OTS, alleging misrepresentation and concealment by the builder.

Punjab & Sind Bank accused Ambience of misrepresentation by offering better terms to PNB. However, the High Court rejected the bank?s claims, stating that Ambience had paid the entire OTS amount along with interest as stipulated in the sanction, negating any deviation, violation, or breach of the sanction terms.

(Source: ET)

The Delhi High Court has nullified Punjab and Sind Bank's decision to withdraw a Rs 1.2 billion one-time loan settlement (OTS) offered to real estate firm Ambience Pvt Ltd for a residential project in Noida, Uttar Pradesh. The court deemed the bank's action arbitrary and unsustainable. The High Court stated that an OTS offer, its acceptance, and the sanction letter together form a binding contract. Therefore, Punjab and Sind Bank, as a nationalised bank and instrumentality of the State, cannot act arbitrarily in contractual matters. The court further emphasised that once payments are accepted, the OTS is binding and cannot be unilaterally revoked. Accordingly, the letter dated August 1, 2023, issued by the bank withdrawing the OTS 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, Justice Mini Pushkarna stated, describing the withdrawal of the OTS as a cryptic order, bereft of any reasons. Citing Supreme Court precedents, the judge clarified that the terms of sanction alone are final and binding on the parties. Any pre-sanction negotiations or subsequent additions not reflected in the Sanction Letter are not binding. Ambience had secured a term loan of Rs 1.55 billion from Punjab & Sind Bank in March 2013 for a real estate project in Sector-50, Noida, under a Multiple Banking Arrangement. Other banks involved included Punjab National Bank (PNB) and HDFC Ltd, which provided loans of Rs 1.24 billion and Rs 250 million, respectively. Initially, the loans were managed under a Multiple Banking Arrangement, which later evolved into a consortium with PNB as the lead bank. Ambience repaid HDFC in full by July 2018. In February 2023, Ambience made separate OTS proposals to PNB and Punjab & Sind Bank to settle its debts. The OTS proposal of Rs 1.22 billion was accepted by Punjab & Sind Bank. In May 2023, Ambience forwarded a no-dues certificate to Punjab & Sind Bank from PNB, indicating full repayment of the latter's dues without an OTS. Subsequently, on August 1, 2023, Ambience deposited the entire OTS amount to Punjab & Sind Bank, which then withdrew the extension of time granted to the firm and recalled the OTS, alleging misrepresentation and concealment by the builder. Punjab & Sind Bank accused Ambience of misrepresentation by offering better terms to PNB. However, the High Court rejected the bank?s claims, stating that Ambience had paid the entire OTS amount along with interest as stipulated in the sanction, negating any deviation, violation, or breach of the sanction terms. (Source: ET)

Next Story
Infrastructure Transport

India’s Maha Kumbh of Road Construction

The RAHSTA Forum 2025, held on June 25 at Courtyard by Marriott, Mumbai, delivered powerful insights and dialogue on the future of India’s roads and highways sector. Organised by the FIRST Construction Council, the Forum served as the curtain-raiser to the much-anticipated RAHSTA Expo 2025, set to take place on 3rd and 4th September at the Jio Convention Centre, Mumbai.Union Minister of Roads Transport & Highways Shri Nitin Gadkari, while appreciating the efforts of FIRST Construction Council and ASAPP Info Global Group, commended the awards which recognise excellence across various..

Next Story
Real Estate

Built to Last, Designed to Impress

The construction and interior design industries stand at the confluence of functionality and aesthetics, where innovation powers the creation of enduring structures and inspiring spaces. At the heart of this process are materials and solutions that enable architects, designers, and builders to realise their visions with precision and reliability.Featuring iconic brands such as Fevicol—synonymous with adhesive solutions—Dr. Fixit, a complete waterproofing system renowned for addressing every critical area of construction, and Roff, a specialist in tile-fixing solutions, Pidilite has earned ..

Next Story
Infrastructure Energy

New Push to Cut India’s Air Pollution through Power Sector Reforms

In a significant stride toward environmental sustainability, Cummins India introduced CPCB IV+ compliant gensets to India on July 5, 2023, marking a paradigm shift in the power generation industry. These generators are engineered to adhere to the progressive emission norms set by the Ministry of Environment, Forest, and Climate Change. Being the first sets in the field, they have garnered praise for their remarkable achievements in emissions reduction and cutting-edge technology. Powerica, with its four-decade-long partnership with Cummins India Limited, is dedicated to consistently deliver th..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?