Punjab Financial Corporation vs M/S Paulbro Leathers Pvt. Ltd.

CIVIL APPEAL Nos.118­119 OF 2019 (Arising out of S.L.P.(C) Nos. 6622­23 of 2015)

Punjab Financial Corporation ….Appellant(s)

VERSUS

M/s Paulbro Leathers Pvt. Ltd. ….Respondent(s)

JUDGMENT

Abhay Manohar Sapre, J.

1. Leave granted.

2. These appeals are directed against the final

judgment and order dated 14.11.2014 passed by

the High Court of Punjab & Haryana at Chandigarh

in CM No.12188/2014 in C.W.P. No.15042/2003 Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2019.01.07 17:40:01 IST Reason: 1 and final order dated 01.08.2013 in CWP

No.15042/2003(O&M).

3. Few facts need mention infra for the disposal

of these appeals that involve a short issue.

4. The respondent had taken some loan from the

appellant­Punjab Financial Corporation (hereinafter

referred to as “the Corporation”) for their business.

It is not in dispute that the respondent failed to re­

pay the loan in terms of the loan agreement and

thus became a defaulter.

5. The matter was accordingly settled in terms of

one time settlement 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

High Court dated 27.04.2006, the matter was

referred to the Charted Accountant­Davinder S. Jaaj

to determine the remaining outstanding balance

2 amount payable by the respondent against their

loan account to the appellant­Corporation and

submit a report. It is Annexure­P­5.

6. Since the dispute arose even after settlement

between the parties as to what is the actual and

precise liability determined and was eventually

worked out between the parties in the settlement

and against the determined liability, how much

amount the respondent has paid, the appellant, as

per their calculation, raised a demand of

Rs.49,86,713/­ (Annexure­P­11 to the writ petition)

on the respondent and called upon them to pay the

said amount. The respondent, however, denied their

liability.

7. It is this demand, which gave rise to filing of

the writ petition by the respondent in the High

Court against the appellant out of which these

3 appeals arise and sought its quashing. The

appellant contested the writ petition.

8. The High Court, by impugned order dated

01.08.2013, allowed the writ petition holding that

since the parties had consented to the settlement

and pursuant thereto the entire exercise was carried

out for working out the liability, the appellant was

not justified in raising the demand in question on

the respondent.

9. The appellant felt aggrieved and filed an

application for review of the order dated 01.08.2013

but the same was also dismissed by order

14.11.2014 on the ground that since the appellant ­

Corporation did not raise any objection before the

appointed Charted Accountant and nor to the

respondent and hence at such belated stage, the

4 they are not permitted to raise any objection on

such question and nor to raise any demand.

10. It is against these two orders, the appellant ­

Corporation felt aggrieved and filed the present

appeals by way of special leave in this Court.

11. The questions, which arise for consideration in

these appeals, are whether the High Court was

justified in allowing the respondent's writ petition

and was, in consequence, justified in quashing the

demand (Annexure­P­11 to the writ petition) raised

by the appellant on the respondent; and second,

whether the High Court was justified in dismissing

the application for review filed by the appellant

against the order allowing the respondents writ

petition.

12. Heard learned counsel for the parties.

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13. Having heard the learned counsel for the

parties and on perusal of the record of the case, we

are inclined to allow the appeals and remand the

case to the High Court for deciding the writ petition

afresh on merits in accordance with law.

14. The need to remand the case to the High Court

has occasioned because we find that the High Court

essentially proceeded to allow the writ petition on

the ground that since the whole issue was settled

with consent and no objection was raised by the

appellant at any point of time, the issue now can

not be allowed to be re­opened at this stage.

15. We do not agree with this reasoning of the

High Court for more than one reason.

16. First, parties only agreed to settle the dispute

in terms of one time settlement policy of the

appellant­Corporation and, therefore, one Chartered

6 Accountant was appointed by the Court to go into

the question and submit his report.

17. Second, if there was some dispute or

ambiguity or clarification needed in the report of the

Chartered Accountant with a view to decide the

actual liability of the respondent and how much

amount was paid by the respondent to the appellate

against the said settlement; and lastly, the manner

in which the liability was worked out because the

Corporation was saying one thing and the

respondent was saying other, then the issue could

still be refereed to any other Chartered Accountant

of repute. It is for the reason that this was the new

dispute, which had arisen out of the terms of the

settlement, and hence it had to be settled on its own

merits in accordance with law.

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18. The issue, which was raised by the appellant

by raising a demand, was, therefore, required to be

examined on its merits before quashing the huge

demand which was raised by the appellant against

the respondent. In other words, it was necessary

for the High Court to record a categorical finding on

the issue as to how and on what basis the

respondent has complied with the terms of

settlement and has thus discharged its entire

liability. It was not done.

19. We accordingly allow the appeals, set aside

both the orders passed by the High Court, restore

the writ petition to its original number and request

the High Court to decide the writ petition filed by

the respondent afresh on merits in accordance with

law.

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20. Since the issue involved public money, the

High Court is requested to decide the writ petition

as expeditiously as possible preferably within a

period of six months.

………...................................J. [ABHAY MANOHAR SAPRE]

....……..................................J. [R. SUBHASH REDDY] New Delhi;

January 07, 2019.

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