Judgment : Punjab Financial Corporation V. M/s Paulbro Leathers Pvt. Ltd

Judgment Date  07 Jan 2019                                                                                         Click Here To Read Digest
Punjab Financial Corporation ….Appellant(s)
M/s Paulbro Leathers Pvt. Ltd. ….Respondent(s)

CIVIL APPEAL Nos.118¬119 OF 2019 (Arising out of S.L.P.(C) Nos. 6622¬23 of 2015)
Abhay Manohar Sapre, J.

Punjab Financial Corporation V. M/s Paulbro Leathers Pvt. Ltd

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
and final order dated 01.08.2013 in CWP

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 repay 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 Accountant­ Davinder S. Jaaj
to determine the remaining outstanding balance
amount payable by the respondent against their
loan account to the appellant ­Corporation 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

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
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
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

12. Heard learned counsel for the parties.

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
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.

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

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.



New Delhi;
January 07, 2019.

January 17, 2019

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