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”.
Binding Nature of OTS:
The court emphasized that the OTS offer, its acceptance, and the sanction letter constitute a sufficient contract, making the OTS binding on the bank and preventing unilateral withdrawal after accepting payments.
Bank’s Actions and Court’s Response:
The court criticized the Punjab and Sind Bank’s withdrawal of the OTS as a “cryptic order, bereft of any reasons” and directed the bank to release the securities furnished by the company in the subject loan account and release charge thereon.
Loan and Multiple Banking Arrangement:
The matter pertains to a term loan of Rs 155 crore extended to Ambience by Punjab and Sind Bank for the 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 and HDFC Ltd, had also advanced loans for the project.
OTS Proposal and Acceptance:
In February 2023, Ambience made separate OTS proposals to Punjab National Bank and Punjab and Sind Bank. The OTS offer of Rs 122 crore was accepted by Punjab and Sind Bank. The company had also repaid the full loan of HDFC in July 2018.
Dispute and Resolution:
The dispute arose when the builder deposited the entire OTS amount to Punjab and Sind Bank, which then withdrew the extension of time granted to the firm and recalled the OTS, alleging deviation and concealment. However, the court rejected the bank’s stand, stating that Ambience had paid the entire OTS amount along with interest, as stipulated in the sanction, refuting the bank’s allegations of deviation or violation of the sanction terms.
In conclusion, the Delhi High Court’s ruling emphasizes the binding nature of the OTS offer and the bank’s obligation to honor it once accepted, providing clarity and resolution in the legal dispute over the loan settlement.
