PUNJAB FINANCIAL CORPORATION versus M/S PAULBRO LEATHERS PVT. LTD. on 7 January 2019

PUNJAB FINANCIAL CORPORATION

v.

M/S PAULBRO LEATHERS PVT. LTD.

(Civil Appeal Nos. 118-119 of 2019)

JANUARY 07, 2019

[ABHAY MANOHAR SAPRE ANDR. SUBHASH REDDY, JJ.]

Settlement – One Time Settlement (OTS) – Respondentdefaulted in repaying the loan taken from appellant-Corporation –In terms of OTS policy, matter was referred to Chartered Accountantto determine the remaining outstanding balance amount payableby the respondent to the appellant-Corporation – Dispute aroseeven after the settlement as to the liability determined and workedout by the Chartered Accountant – Demand of Rs.49 lacs raised onthe respondent – Respondent filed writ petition before the High Court,which was allowed on the ground that since the whole issue wassettled with consent and no objection was raised by the appellantat any point of time, the issue cannot be allowed to be re-opened –On appeal, held: The parties only agreed to settle the dispute interms of OTS policy of the appellant-Corporation and, therefore,one Chartered Accountant was appointed by the Court to go intothe question and submit his report – The dispute which arose out ofthe terms of the settlement was new dispute and it had to be settledon its own merits in accordance with law – It was necessary for theHigh Court to record a categorical finding on the issue as to howand on what basis the respondent had complied with the terms ofsettlement and had thus discharged its entire liability – It was notdone – Matter remitted to High Court for consideration afresh –Bank/Banking.

Allowing the appeals and remitting the matter to High Court,the Court HELD: If there was some dispute or ambiguity orclarification needed in the report of the Chartered Accountantwith a view to decide the actual liability of the respondent andhow much amount was paid by the respondent to the appellant

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Aagainst the said settlement; and the manner in which the liabilitywas worked out because the Corporation was saying one thingand the respondent was saying other, then the issue could stillbe referred to any other Chartered Accountant of repute. It is forthis reason that this was a new dispute, which had arisen out ofthe terms of the settlement, and it had to be settled on its ownBmerits in accordance with law. The issue, which was raised bythe appellant by raising a demand, was, therefore, required to beexamined on its merits before quashing the huge demand whichwas raised by the appellant against the respondent. [Paras 16-18][86-E-G]

CCIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 118-119of 2019.

From the Judgment and Order dated 14.11.2014 of the High Courtof Punjab and Haryana at Chandigarh in CM No. 12188-CWP-2014(O&M) in CWP No.15042 of 2003 and order dated 01.08.2013 in CWPDNo. 15042 of 2003 (O&M).

T. S. Deobia, Sr. Adv., Saksham Maheshwari, Jagjit Singh Chhabra,Advs. for the Appellant.

A. R. Takkar, Ajay Bansal, Md. Rashid Saeed, Advs. for theERespondent.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. Leave granted.

2. These appeals are directed against the final judgment and orderdated 14.11.2014 passed by the High Court of Punjab & Haryana atFChandigarh in CM No.12188/2014 in C.W.P. No.15042/2003 and finalorder dated 01.08.2013 in CWP No.15042/2003(O&M).

3. Few facts need mention infra for the disposal of these appealsthat involve a short issue.

4. The respondent had taken some loan from the appellant-PunjabFinancial Corporation (hereinafter referred to as “the Corporation”) fortheir business. It is not in dispute that the respondent failed to re-pay theloan in terms of the loan agreement and thus became a defaulter.

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5. The matter was accordingly settled in terms of one timeHsettlement policy of the appellant- Corporation on 01.04.2003. It is also

not in dispute that while settling the dispute, by the order of the HighCourt dated 27.04.2006, the matter was referred to the CharteredAccountant-Davinder S. Jaaj to determine the remaining outstandingbalance amount payable by the respondent against their loan account tothe appellant-Corporation and submit a report. It is Annexure-P-5.

6. Since the dispute arose even after settlement between the partiesas to what is the actual and precise liability determined and was eventuallyworked out between the parties in the settlement and against thedetermined liability, how much amount the respondent has paid, theappellant, as per their calculation, raised a demand of Rs.49,86,713/-(Annexure-P-11 to the writ petition) on the respondent and called uponthem to pay the said amount. The respondent, however, denied theirliability.

7. It is this demand, which gave rise to filing of the writ petition bythe respondent in the High Court against the appellant out of whichthese appeals arise and sought its quashing. The appellant contested thewrit petition.

8. The High Court, by impugned order dated 01.08.2013, allowedthe writ petition holding that since the parties had consented to thesettlement and pursuant thereto the entire exercise was carried out forworking out the liability, the appellant was not justified in raising thedemand in question on the respondent.

9. The appellant felt aggrieved and filed an application for reviewof the order dated 01.08.2013 but the same was also dismissed by order14.11.2014 on the ground that since the appellant - Corporation did notraise any objection before the appointed Chartered Accountant and norto the respondent and hence at such belated stage, the they are notpermitted to raise any objection on such question and nor to raise anydemand.

10. It is against these two orders, the appellant - Corporation feltaggrieved and filed the present appeals by way of special leave in thisCourt.

11. The questions, which arise for consideration in these appeals,are whether the High Court was justified in allowing the respondent’swrit petition and was, in consequence, justified in quashing the demand(Annexure-P-11 to the writ petition) raised by the appellant on the A

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Arespondent; and second, whether the High Court was justified in dismissingthe application for review filed by the appellant against the order allowingthe respondents writ petition.

12. Heard learned counsel for the parties.

13. Having heard the learned counsel for the parties and on perusalBof the record of the case, we are inclined to allow the appeals and remandthe case to the High Court for deciding the writ petition afresh on meritsin accordance with law.

14. The need to remand the case to the High Court has occasionedbecause we find that the High Court essentially proceeded to allow theCwrit petition on the ground that since the whole issue was settled withconsent and no objection was raised by the appellant at any point oftime, the issue now can not be allowed to be re-opened at this stage.

15. We do not agree with this reasoning of the High Court formore than one reason.D

16. First, parties only agreed to settle the dispute in terms of onetime settlement policy of the appellant-Corporation and, therefore, oneChartered Accountant was appointed by the Court to go into the questionand submit his report.

17. Second, if there was some dispute or ambiguity or clarificationEneeded in the report of the Chartered Accountant with a view to decidethe actual liability of the respondent and how much amount was paid bythe respondent to the appellant against the said settlement; and lastly,the manner in which the liability was worked out because the Corporationwas saying one thing and the respondent was saying other, then theFissue could still be referred to any other Chartered Accountant of repute.It is for the reason that this was the new dispute, which had arisen out ofthe terms of the settlement, and hence it had to be settled on its ownmerits in accordance with law.

18. The issue, which was raised by the appellant by raising aGdemand, was, therefore, required to be examined on its merits beforequashing the huge demand which was raised by the appellant againstthe respondent. In other words, it was necessary for the High Court torecord a categorical finding on the issue as to how and on what basis therespondent has complied with the terms of settlement and has thusdischarged its entire liability. It was not done.H

19. We accordingly allow the appeals, set aside both the orderspassed by the High Court, restore the writ petition to its original numberand request the High Court to decide the writ petition filed by therespondent afresh on merits in accordance with law.

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20. Since the issue involved public money, the High Court isrequested to decide the writ petition as expeditiously as possible preferablyBwithin a period of six months.

Devika Gujral

Appeals allowed.

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