The Bombay High Court has invalidated the Bank of India's designation of Pune Buildtech Pvt Ltd as 'fraud' and its related blacklisting, which restricted the firm's credit access. Additionally, the court ordered the bank to remove Pune Buildtech from its 'wilful defaulter' list and retract any reports sent to Credit Information Companies. This decision followed the firm's full settlement of INR 703.35 crore with the bank in June 2024, after which the bank issued a 'No Dues Certificate.' Despite this, the bank maintained the 'fraud' label, prompting the court to emphasize the importance of honoring consent terms, particularly after a one-time settlement (OTS) was reached. This ruling clears Pune Buildtech's path to restore its reputation and reaccess credit, highlighting the critical role of transparency and adherence to agreements in banking.
The Bombay High Court has rendered the Bank of India's designation of Pune Buildtech Pvt Ltd as 'fraud' null and void, as well as any related communications that blacklisted the firm from accessing institutional credit. In a separate ruling, the court instructed the bank to remove Pune Buildtech from its 'wilful defaulter' list and retract any information shared with Credit Information Companies regarding this designation.
The division bench, comprising Justice BP Colaba Walla and Justice Somasekhar Sundaresan, noted that the entire settlement amount of INR 703.35 crore had been settled by Pune Buildtech with the Bank of India in June 2024. The court questioned how the bank could continue proceedings labelling the firm as wilful defaulters after having issued a 'No Dues Certificate'.
Representatives for Pune Buildtech argued that the firm was only verbally informed of its 'fraud' designation and had not received any formal communication. They also contended that a show cause notice issued in May 2020, regarding its classification as wilful defaulters, had only reached the company in July 2020.
The court observed that both parties had entered into consent terms earlier this year regarding a one-time settlement (OTS). Under these terms, upon receipt of the settlement amount, the bank was to withdraw any proceedings or actions taken against Pune Buildtech. The case originated from a term loan provided by a consortium of lenders, including the Bank of India, in 2013. Following the OTS agreement in March 2024, Pune Buildtech claimed that, despite full payment and the issuance of a no-due certificate, the bank continued to label the account as 'fraud' and 'wilful defaulter'.
The outcome of this ruling is significant for Pune Buildtech, as it seeks to clear its name and regain access to credit facilities. The case highlights the importance of adhering to consent agreements and the responsibilities of financial institutions in maintaining transparency with borrowers.
In conclusion, this ruling marks a pivotal moment for Pune Buildtech, potentially restoring its reputation and enabling access to credit facilities. The case underscores the necessity for transparency and adherence to legal agreements in the financial sector.
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