Facts
The Petitioner, an MSME partnership firm, was sanctioned loan facilities by Respondent No. 1 (Punjab National Bank) in 2016
Source reference: p. 2Due to the COVID-19 pandemic, the Petitioner's account was declared an NPA in March 2021
Source reference: p. 3Subsequently, the Petitioner was granted a One-Time Restructuring (OTR) scheme on 16.08.2021
Source reference: p. 3Following a default and a recovery notice under the SARFAESI Act, the Petitioner sought permission to sell its mortgaged Goa property to clear all dues
Source reference: p. 4By 31.03.2024, the Petitioner’s statement of account showed a zero balance after paying approximately ₹36.93 crores
Source reference: p. 5However, the Bank refused to release title deeds or issue a No-Dues Certificate (NDC), claiming it had unilaterally withdrawn OTR concessions due to the Petitioner's alleged defaults, thereby creating a fresh outstanding demand of ₹8.43 crores
Source reference: p. 9-10Issues
1. Whether the Respondent Bank could unilaterally withdraw OTR concessions and charge higher interest rates without prior intimation to the borrower
Source reference: p. 112. Whether the Petitioner is entitled to the release of title deeds and an NDC upon the statement of account showing zero balance
Source reference: p. 15Law Applied
Clause 10 of the "Overall Terms and Conditions" of the OTR Sanction Letter dated 16.08.2021, which requires the Bank to intimate the borrower of any modifications or withdrawals of sanctioned conditions
Source reference: p. 12Clause 10 and 11 of the "Additional Stipulations," which reserved the Bank's right to withdraw concessions without assigning reasons based on credit deterioration
Source reference: p. 12RBI Master Circular on Prudential Norms (01.07.2014) regarding recompense amounts
Source reference: p. 9-10RBI Circular dated 13.09.2023 regarding the timely release of movable/immovable property documents after loan closure
Source reference: p. 7Reasoning
The court found that while Clause 10 of the "Additional Stipulations" allowed the Bank to withdraw concessions "without assigning any reason," this did not exempt the Bank from the requirement under the "Overall Terms" to actually intimate the borrower of such withdrawal
Source reference: p. 13The Bank failed to produce any documentation proving that it had informed the Petitioner of the withdrawal or the subsequent re-calculation of interest before the account was closed
Source reference: p. 13Furthermore, the court rejected the Bank's plea of "inadvertent error" in showing a zero balance, noting that internal communications (email dated 01.04.2024) between Bank branches explicitly confirmed that the "total memoranda has been deposited" and requested the release of securities
Source reference: p. 16-17The court held that the Bank could not unilaterally rewrite the accounts after the Petitioner had acted upon the Bank's permission to sell the property and settle the calculated dues
Source reference: p. 15Holding
The court answered the issues in the affirmative for the Petitioner, holding that the OTR concessions could not be withdrawn retrospectively without notice
The court directed Respondent No. 1 to: (i) issue a No-Dues Certificate for Account No. 4904008700000633; (ii) release the original title deeds of the Verna Industrial Estate property; and (iii) update the Petitioner's credit score with Respondent No. 2. The Bank was ordered to comply within one week
Source reference: p. 17-18Original Court PDF
M A EnterprisesvsPunjab National Bank & Anr.
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