A bank cannot unilaterally withdraw an accepted One Time Settlement after full payment has been made, unless misrepresentation is clearly established.

MINI PUSHKARNA, J:

1. The present petition has been filed seeking to set aside the letter dated 1st August, 2023 issued by the Punjab and Sind Bank (“respondent-bank”)

vide Email dated 2nd August, 2023, by which the One Time Settlement (“OTS”) Scheme entered between the parties, was recalled/withdrawn by the respondent-bank.

2. Facts in brief are as follows: 2.1 The petitioner no. 1-company (“the petitioner-company”) was granted a Term Loan of ₹ 125 Crores and an additional Term Loan of ₹ 30 Crores, totaling to ₹ 155 Crores (“subject loan”) by the respondent-bank towards part financing for the construction and development of a Real Estate Project at Sector-50, Noida (“Noida Project”), under Multiple Banking Arrangement on 14th March, 2013.

2.2 Other lenders for the said Noida Project were HDFC Limited, which advanced loan of ₹ 25 Crores, and erstwhile, Oriental Bank of Commerce, now Punjab National Bank (“PNB”), which advanced an amount of ₹ 124 Crores to the company. Initially the loans were sanctioned and disbursed by the participating member banks under Multiple Banking Arrangement. Later on, consortium was formed amongst the participating banks, wherein, PNB (formerly Oriental Bank of Commerce) was appointed as the lead bank. It is undisputed that the petitioner-company repaid the full loan of HDFC Limited with respect to Noida Project, in July, 2018.

2.3 The respondent-bank, on the request of petitioner-company had granted another Term Loan of ₹ 150 Crores for Panipat Project on 28th November, 2013 by way of Multiple Banking Arrangement.

2.4 Similarly, another credit facility in the nature of ODP (“Overdraft Privilege”) of ₹ 100 Crores was granted by respondent-bank on 1st June, 2007, to meet working capital requirements of the construction division of petitioner-company.

2.5 However, the company failed to adhere to the sanctioned terms and repayment commitments, resulting into classification of the above said loan accounts as Non Performing Asset (“NPA”) on 31st March, 2019 by the respondent-bank.

2.6 During the period from 2020-2022, the company suffered Corporate Insolvency Resolution Process (“CIRP”), which was ultimately set aside by National Company Law Appellate Tribunal (“NCLAT”) on 2nd August,

2022.

2.7 Subsequently, with a view to pay off its debts, the petitioner-company approached the respondent-bank for settling its accounts. With regard to Panipat Project, an OTS amount of ₹ 122 Crores was approved by respondent-bank vide Sanction Letter dated 17th August, 2022. The said OTS amount of ₹ 122 Crores was paid by the company to the respondent- bank. Accordingly, Term Loan account with regard to Panipat Project, stood adjusted/closed on 28th October, 2022. There is no dispute in respect of the Panipat Project.

2.8 As regards the Term Loan for the Noida Project, which is subject matter of the present petition, the company made a proposal vide letter dated 4th October, 2022, to settle the entire outstanding Principal Loan Account, as on the date of declaring the loan account as NPA, i.e., on 1st April, 2019, along with interest.

2.9 This was followed by another letter dated 9th December, 2022 by the company to settle the account in the sum of ₹ 111.21 Crores as OTS. Pursuant to the said letter, the respondent-bank issued an Email dated 14th December, 2022, wherein, it sought certain clarifications from the petitioner-company. It further requested the petitioner-company to offer right to recompense in case any better settlement was made with the lead bank subsequently.

2.10 In reply to the aforesaid clarification, as sought by the respondent- bank, the company vide its letter dated 16th December, 2022, inter-alia, stated that it shall improve its offer, in case it offers any better terms of OTS to PNB, the lead bank.

2.11 Subsequently, vide letter dated 29th December, 2022, the company enhanced the amount of OTS to ₹ 113.84 Crores. However, by its Email dated 13th January, 2023, the respondent-bank rejected the OTS prop