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Madhya Pradesh High Court
M/S Mahalaxmi Investment And Trading ... vs Punjab National Bank Through Its ... on 13 January, 2026
NEUTRAL CITATION NO. 2026:MPHC-IND:1102
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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PAVAN KUMAR DWIVEDI
ON THE 13th OF JANUARY, 2026
WRIT PETITION No. 50240 of 2025
M/S MAHALAXMI INVESTMENT AND TRADING PVT. LTD
THROUGH DIRECTOR SHRI TRILOK JHALANI
Versus
PUNJAB NATIONAL BANK THROUGH ITS AUTHORISED OFFICER
Appearance:
Shri Ajay Bagadiya, learned Senior Advocate assisted by Shri Arpit
Kumar Oswal - Advocate for the petitioner.
Shri Gaurav Chhabra - Advocate for the respondent.
ORDER
This petition under Article 226 of the Constitution of India has been
filed by the petitioner, in essence, for enforcement of One Time Settlement
(OTS) sanctioned by the respondent/Bank vide letter dated 26.12.2024, with
a further prayer for extension of period of OTS as also for release of
mortgaged properties.
2. The petitioner is a company incorporated under the provisions of
the Companies Act, 1956. It is engaged in the manufacture of metal
components used in electrical distribution infrastructure. The manufacturing
unit of the petitioner company is situated at Ratlam (Madhya Pradesh) and
Akola (Maharashtra). The respondent is a Bank. It is a body corporate
originally incorporated in the year 1895 and stood nationalised in the year of
1970 in terms of the provisions of Banking Companies (Acquisition and
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Transfer of Undertakings) Act, 1970.
3. The petitioner contends that the respondent being a banking
company within the meaning of Banking Regulation Act, 1949 is statutorily
bound to act in accordance with the directions, circulars, guidelines, etc.
issued by the Reserve Bank of India from time to time.
4. The factual aspects of the case are that the respondent bank
sanctioned various credit facilities to the petitioner in the year 2005 which
were renewed and reviewed periodically. In the year 2014, said facilities
were substantially enhanced to an aggregate limit of Rs. 3077 lakhs.
However, in the year of 2017, said cash credit limit was revised to an
aggregate of Rs. 2961.72 lakhs. Apart from this, the petitioner in the year of
2020 further availed WCTL/GECL and FITL facilities. For grant of these
facilities, the petitioner created mortgage and security interests in favour of
the respondent bank on several of its immovable properties which are
detailed in paragraph 3 of the preliminary objections filed by the respondent
bank.
5. The petitioner company due to different factors, commercial as
well as economic, suffered financial stress incurring losses. Thus, the
petitioner could not regulate the credit facility which resulted in declaration
of its account as Non Performing Asset (NPA), as it appears from the
material available on record. However, discussions were held between the
petitioner and the respondent bank pursuant to which a formal request was
made by the petitioner on 21.11.2024 seeking settlement of its loan liabilities
under the One Time Settlement mechanism. The offer was for settling the
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dues for an amount of Rs. 14.05 crores.
6. The respondent bank approved the proposal submitted by the
petitioner. As such, the OTS was accepted for an amount of Rs. 14.05 crores
against total outstanding dues of approximately Rs. 21.17 crores. As it
appears from the OTS sanction letter (Annexure P/2), the entire amount of
Rs. 14.05 crores was required to be paid within one year from the date of
conveying sanction of OTS to the petitioner and upfront an amount of Rs.
1.25 crore was to be kept in no-lien account which was to be appropriated
immediately on conveying of sanction. The balance amount of Rs. 12.80
crores were to be paid within one year along with delayed period interest at
MCLR (1 year) + 1% on full OTS amount from the date of conveying
sanction of OTS. It was further stipulated in the sanction of OTS that in case
of sale of IPs mortaged with the bank, a tripartite agreement may be executed
between borrower, prospective purchaser of mortgaged IP and the bank. The
entire sale proceeds were to be directed in the coffers of the bank. The NOC
for sale of IPs mortgaged with the bank were to be issued and the request for
release of charge on specific property was to be considered after receipt of
market value of that property as per the latest valuation report. Amongst
others, these were the broad conditions of the OTS.
7. Learned Senior Counsel for the petitioner contends that the
petitioner duly honored these conditions. He points out that an amount of
Rs. 1.25 crores was deposited upfront in a no-lien account which was
adjusted upon sanction of OTS. He further contends that the petitioner
through prospective purchasers deposited total amount of Rs. 2.35 crores by
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the date of 31.03.2025 and simultaneously requested for release of Flat No.
102, First Floor, East View, Santacruz (East), Mumbai which was valued at
Rs. 1.20 crores and diverted land situated at Survey no. 1692/1/3, Gram
Dhamnod, District Ratlam having market value of Rs. 1.15 crore. However,
the respondent bank failed to release the said properties or to execute the
tripartite agreement. It has further been argued by the learned Senior
Counsel that the OTS proposal was subject to certain terms and conditions
specifically the sale of mortgaged properties with sale proceeds to be directly
credited to the respondent bank. He submits that once the petitioner had
deposited an initial amount of Rs. 1.25 crores and subsequent amount thus
total of Rs. 2.35 crores, there was no occasion for the bank to withhold
release of the property which was requested vide Annexure P/4 and P/5. He
submits that this resulted in loss of confidence of the prospective buyers
which created impediment in repayment of agreed amount under OTS. He
submits that repeated requests were made for release of the aforesaid
properties. However, the same were not released. Learned Senior Counsel
further submits that on 07.10.2025 request was made for release of the
properties and was also requested that a draft tripartite agreement be
provided as the prospective buyers were ready to proceed prior to Diwali and
it was cautioned by the petitioner that continued inaction will erode
stakeholders' confidence damaging petitioner's good will. But it is only on
28.10.2025 that the respondent bank supplied draft format of the
supplementary agreement and consent decree. As such, the petitioner vide
letter dated 01.11.2025 sought amendment in the OTS as due to inordinate
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delay attributable to the bank, the OTS implementation period cannot and
should not be reckoned from 26.12.2024. However, despite repeated
reminders in terms of Annexure P/11 and P/12, the respondent bank did not
respondent. Learned Senior Counsel for the petitioner further submits that
vide these documents Annexure P/11 and P/12, details of prospective buyers
were also furnished.
8. Learned Senior Counsel for the petitioner then submits that
instead of acceding to the request made by the petitioner, the respondent
bank unilaterally issued a fresh valuation report on 27.11.2025 of the
mortgaged property thereby revising its value higher than the same valued at
the time of acceptance of the OTS and on 06.12.2025, the respondent bank
made it clear that it will not release any property unless the entire OTS
amount was deposited. According to the learned Senior Counsel, the stand
of the respondent bank is ex facie contrary to the OTS terms against which
the petitioner responded vide its reply dated 16.12.2025. When no response
was forthcoming from the bank, a legal notice was issued vide Anenxure
P/17. In this background of the facts, learned Senior Counsel for the
petitioner submits that because acceptance of OTS created a legitimate
expectation that the bank would facilitate sale of assets and perform its
reciprocal obligation, as such the petitioner acted as per the terms of
the OTS and requested for release of mortgaged property. However, in
absence of release and issuance of NOC, sale could not be effected which
caused delay and this delay is wholly on the part of the respondent bank. He
thus, submits that not only the OTS has to be enforced but time of repayment
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is also to be extended commensurate to the period which has been wasted by
the bank because of its inaction without any reason or rhyme. He further
submits that unilateral upward revision in the market value of mortgage
properties by the respondent bank is also not sustainable in view of the fact
that the market value was not only ascertained and communicated but it was
agreed between the parties at the time of sanction of OTS. Thus, in view of
the settled terms of the OTS, it has become binding upon the respondent
bank and it can always be enforced upon the respondent bank in view of the
settled position of law.
9. In support of his contentions, learned Senior Counsel for the
petitioner has placed reliance on an order passed by this Court in case of Shri
Mohanlal Patidar vs. Bank of Maharashtra & Anr. on 21.02.2022 in Writ
Petition No. 22127/2021 as well as on an order passed by the jurisdictional
High Court of Delhi in case of Ambience Private Limited & Anr. vs. Punjab
and Sind Bank & Ors. on 03.07.2024 in W.P.(C) 13438/2023.
10. Per contra, raising preliminary objection on the maintainability
of the present petition, learned counsel for the respondent bank points out
that the relief as sought by the petitioner is not only to enforce OTS but also
to extend the period of OTS which would amount to re-writing of contractual
terms as the OTS is nothing but a contract between two parties and the terms
of the contract are settled with the consent between the parties. Thus,
revision of the terms of OTS in a proceeding instituted under Article 226 of
the Constitution of India is not tenable. He further points out that in fact, the
OTS has already lapsed on completion of one year period on 25.12.2025. He
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points out that the main thrust of argument of the learned Senior Counsel for
the petitioner is that the petitioner could not sale the mortgaged properties in
absence of their release and issuance of NOC by the respondent bank.
However, he points out that vide Annexure P/8, petitioner itself stated that
the tripartite agreement is not compulsory. Learned counsel for the
respondent bank by referring to Annexure P/8 submits that in point No. 3 of
the said letter the petitioner stated that, a tripartite agreement may be
executed, is the term which has been used in the OTS which is completely
optional. It is further stated in the said point that it is primarily applicable
when the property is sold and where there is no sale involved and the bank's
security interest is fully protected by deposit of market value, the tripartite
agreement is not a mandatory pre requisite for title deed release. He thus
submits that in fact the OTS, in essence, was for payment of Rs. 14.05 crores
within a period of one year from the date of conveying sanction of OTS to
the party. He submits that sanction of OTS was conveyed to the petitioner
on 26.12.2024 and the amount was required to be paid within one year from
the said date which expired on 25.12.2025. The petitioner miserably failed
in depositing the OTS amount.
11. Learned counsel for the respondent bank further submits that it
has wrongly been represented that the payment of OTS amount was
dependent on sale of mortgaged properties. He submits that in fact those
immovable properties which are mortgaged with the bank were to be
released under an arrangement of tripartite agreement so as to ensure that in
case of sale, proceeds i.e. sale consideration comes directly to the bank and it
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was an arrangement for securing repayment of amount. However, the main
requirement of OTS of deposit of entire amount of Rs. 14.05 crores within
the stipulated period of one year was the essence of OTS. He submits that as
the petitioner failed to deposit the said amount, he cannot now come back
and pray for re-writing the OTS proposal in exercise of writ jurisdiction.
12. Learned counsel for the respondent bank places reliance on the
judgment of the Hon'ble Apex Court rendered in the case of State Bank of
India vs. Arvindra Electronics Private Limited reported in (2023) 1 SCC
540. He submits that in fact this petition for enforcement of OTS and
extension of OTS period is not maintainable and thus, prays for dismissal of
the same.
13. Heard learned counsel for the parties. Perused the record of the
case file.
14. A perusal of the sanction letter of OTS dated 26.12.2024
(Annexure P/2) would show that the terms and conditions of the OTS would
provide that the OTS was approved for an offer of Rs. 14.05 crores against
the total outstanding of Rs. 21.17 crores. The terms provided that the
petitioner was required to pay the OTS amount of Rs. 14.05 crores within
one year from the date of conveying sanction of OTS to the party. As the
sanction was conveyed on 26.12.2024 itself, the outer limit for payment of
the entire amount was up to 25.12.2025. The sale of IPs mortgaged with the
bank starts with the sentence 'in case of sale of IPs'. It is thus clear that it
was not a condition precedent for payment of OTS amount that sale has to
be effected and for that NOC has to be issued and tripartite agreement was to
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be executed. The sale of IPs was a separate and distinct facet of OTS in
addition to the period of one year which is provided in terms of conditions
No. 1, 2 and 3. In any case, the preliminary objection filed by the bank states
that in fact there was no failure on the part of the respondent bank in
releasing NOC or executing tripartite agreement in as much as no particulars
of any prospective purchaser were furnished by the petitioner to the bank.
This submission of the counsel for the respondent bank appears to be correct
as from a perusal of the documents it is clear that the petitioner has not, at
any stage of the proceedings, requested for execution of tripartite agreement
by pointing out any particular prospective buyer with respect to any of the
mortgage property. As such in the considered view of this Court, it was not
the respondent bank which obstructed sale of property but the conduct of the
petitioner which resulted in no sale.
15. Learned Senior Counsel for the petitioner while referring to
Sections 51 and 52 of the Indian Contract Act submitted that steps which
were required to be taken by the petitioner were dependent on the steps
which were to be taken by the respondent bank. However, from perusal of
the terms of the OTS, this is not apparent at all. Payment of OTS amount
was not dependent or subject to sale of property which is a clear mandate of
sanction of OTS as evident from Annexure P/2. As observed hereinabove,
the entire amount of Rs. 14.05 crores was to be repaid within one year which
the petitioner failed to do.
16. The facts of the case as relied upon by the petitioner in case of
Shri Mohanlal Patidar (supra) are distinguishable from the facts of the
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present case. In the said case, there was an offer by the bank, the bank
issued letter dated 09.03.2021 to the petitioner therein quantifying the OTS
amount to the tune of Rs. 36,50,000/-. The petitioner therein promptly
deposited Rs. 35 lakhs with the bank. However, the bank vide
communication dated 25.08.2021 stated that OTS amount is revised to Rs.
50.50 lakhs. In such circumstances, the Court held that once the proposal
given by the bank, accepted by the borrower and borrower has taken steps
pursuant to the same, then the Bank cannot revert back from the proposal.
The Court held that the OTS scheme is binding on the bank. There is no
quarrel on the proposition that OTS scheme is binding on the bank and even
on the proposition that OTS once accepted by the bank, it cannot repudiate
from the same arbitrarily. However, in the present case facts are completely
different, the OTS which was sanctioned by the bank could not be performed
by the petitioner as it failed to deposit Rs. 14.05 crores within one year. The
petitioner justifies this non-deposition by stating that respondent bank did not
release the properties. However, as is apparent from the terms of the OTS,
the payment of OTS amount was not contingent upon sale of immovable
properties which are mortgaged with the bank. As such, this Court will not
be able to hold that the respondent bank has committed default and the OTS
has to be enforced upon the bank with extended period as prayed for in the
writ petition.
17. In the considered view of this Court, the case is squarely covered
by the decision of the Hon'ble Apex Court as rendered in the case of
Arvindra (supra) . The Hon'ble Apex Court in para 22 of the said judgment
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has held as under :
''22. Even otherwise as rightly submitted on behalf of the Bank directing the
Bank to reschedule the payment under OTS would tantamount to
modification of the contract which can be done by mutual consent
under Section 62 of the Indian Contract Act. By the impugned judgment and
order rescheduling the payment under the OTS Scheme and granting
extension of time would tantamount to rewriting the contract which is not
permissible while exercising the powers under Article 226 of
the Constitution of India.''
18. In view of the above discussion, extension of time if granted by
this Court for repayment under the OTS then the same will amount to re-
writing the terms of the contract which is not permissible while exercising
jurisdiction under Article 226 of the Constitution of India.
19. There is one more aspect of the matter, a close scrutiny of
dispute would show that in the present case dispute is not about the One
Time Settlement Scheme (OSS) or its binding nature but the real dispute is
that what were the terms of the OTS (and not OSS) and who has breached
those terms. As we already understand OTS is a contract between two
parties as such present is a case of dispute on the terms of the contract
between two parties. The Hon'ble Apex Court while considering scope of
interference in contractual matters in the case of Union of India & Ors. vs.
Puna Hinda, reported in (2021) 10 SCC 690 held in para 18 and 24 as under :
''18. Mr. Nataraj also placed reliance on the judgment of this Court reported
as Joshi Technologies International Inc v. Union of India & Ors., (2015) 7 SCC
728 wherein the following was held:
"55. Law in this aspect has developed through catena of judgments
of this Court and from the reading of these judgments it would
follow that in pure contractual matters the extraordinary remedy of
writ under Article 226 or Article 32 of the Constitution cannot be
invoked. However, in a limited sphere such remedies are available
only when the non-Government contracting party is able to
demonstrate that it is a public law remedy which such party seeks
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to invoke, in contradistinction to the private law remedy
simpliciter under the contract. Some of the case law to bring home
this cardinal principle is taken note of hereinafter.
xx xx xx
59. On the basis of these facts, this Court observed that the
aforesaid observations of the High Court relying upon Ramana
Dayaram Shetty vs. International Airport Authority of India,
(1979) 3 SCC 489) were not correct. Thus observed the Court,
speaking through Ratnavel Pandian, J. (Barelily Development
Authority vs. Ajai Pal Singh, (1989) 2 SCC 116, paras 21-22)
"21. This finding in our view, is not correct in the light of the facts
and circumstances of this case because in Ramana Dayaram Shetty
(supra) case there was no concluded contract as in this case. Even
conceding that the BDA has the trappings of a State or would be
comprehended in 'other authority' for the purpose of Article 12 of
the Constitution, while determining price of the houses/flats
constructed by it and the rate of monthly instalments to be paid,
the 'authority' or its agent after entering into the field of ordinary
contract acts purely in its executive capacity. Thereafter the
relations are no longer governed by the constitutional provisions
but by the legally valid contract which determines the rights and
obligations of the parties inter se. In this sphere, they can only
claim rights conferred upon them by the contract in the absence of
any statutory obligations on the part of the authority (i.e. BDA in
this case) in the said contractual field.
22. There is a line of decisions where the contract entered into
between the State and the persons aggrieved is non-statutory and
purely contractual and the rights are governed only by the terms of
the contract, no writ or order can be issued under Article 226 of
the Constitution of India so as to compel the authorities to remedy
a breach of contract pure and simple -- Radhakrishna Agarwal v.
State of Bihar, (1977) 3 SCC 457, Premji Bhai Parmar v. DDA,
(1980) 2 SCC 129 and Divl. Forest Officer v. Bishwanath Tea Co.
Ltd., (1981) 3 SCC 238.
xx xx xx
69. The position thus summarised in the aforesaid principles has to
be understood in the context of discussion that preceded which we
have pointed out above. As per this, no doubt, there is no absolute
bar to the maintainability of the writ petition even in contractual
matters or where there are disputed questions of fact or even when
monetary claim is raised. At the same time, discretion lies with the
High Court which under certain circumstances, it can refuse to
exercise. It also follows that under the following circumstances,
"normally", the Court would not exercise such a discretion:
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69.1. The Court may not examine the issue unless the action has
some public law character attached to it.
69.2. Whenever a particular mode of settlement of dispute is
provided in the contract, the High Court would refuse to exercise
its discretion under Article 226 of the Constitution and relegate the
party to the said mode of settlement, particularly when settlement
of disputes is to be resorted to through the means of arbitration.
69.3. If there are very serious disputed questions of fact which are
of complex nature and require oral evidence for their
determination.
69.4. Money claims per se particularly arising out of contractual
obligations are normally not to be entertained except in
exceptional circumstances."
24. Therefore, the dispute could not be raised by way of a writ petition on the
disputed questions of fact. Though, the jurisdiction of the High Court is wide
but in respect of pure contractual matters in the field of private law, having no
statutory flavour, are better adjudicated upon by the forum agreed to by the
parties. The dispute as to whether the amount is payable or not and/or how
much amount is payable are disputed questions of facts. There is no admission
on the part of the appellants to infer that the amount stands crystallized.
Therefore, in the absence of any acceptance of Joint Survey Report by the
competent authority, no right would accrue to the writ petitioner only because
measurements cannot be undertaken after passage of time. Maybe, the resurvey
cannot take place but the measurement books of the work executed from time
to time would form a reasonable basis for assessing the amount due and
payable to the writ petitioner, but such process could be undertaken only by the
agreed forum i.e., arbitration and not by the Writ Court as it does not have the
expertise in respect of measurements or construction of roads.''
20. In the present case, there is a clause in sanction letter which
provides that in case of failure in complying with the time line for payment
of non-compliance or terms and conditions of OTS, the concessions shall
lapse and bank will be entitled to recover the entire outstanding dues.
However, as per the pleadings in the petition and in the preliminary
objections of the respondent bank there are several factual assertions
levelling and counter levelling breach on each other. This Court is not
inclined to carry out factual survey and decide all those disputed facts in
exercise of its jurisdiction under Article 226 of the Constitution of India.
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21. In view of the above, the petition being bereft of merits is hereby
dismissed.
22. However, before parting with the case, this Court would like to
observe that during the course of argument learned Senior Counsel submitted
that petitioner is ready and willing to settle the dispute and for that it is ready
to submit a fresh proposal before the bank. It is for the petitioner and the
respondent bank to discuss the same and if they are willing to re-negotiate
terms of settlement or even fresh OTS, they can always do so but this Court
refrains from making any comment on that issue.
(PAVAN KUMAR DWIVEDI)
JUDGE
vidya
