Delhi High Court
Idbi Bank Ltd vs P D Gupta And Company on 14 August, 2025
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 29.07.2025
Judgment pronounced on: 14.08.2025
+ CO.APP.26/2023 & CM APPL.56799/2023 (for stay)
IDBI BANK LTD .....Appellant
Through: Mr. Praful Jindal and Mr.
Sidhartha Barua, Advocates
versus
P D GUPTA AND COMPANY .....Respondent
Through: Mr. Vivek Gupta, Mr. Ankit
Verma and Mr. Govind Gupta,
Advocates
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Company Appeal has been preferred under Section
483 of the Companies Act, 19561, read with Rule 9 of the Companies
(Court) Rules, 1959, challenging the Order dated 21.07.20232 passed
by the learned Single Judge of this Court in Co. Appl. 1004 of 2014
titled as “IDBI vs. P.D. Gupta & Company” in Co. Pet. 72 of 1997.
2. By the Order impugned herein, the learned Single Judge has
directed the Appellant to refund a sum of Rs. 1 Crore along with
simple interest at the rate of 7% from the date of deposit till the date
1
Companies Act
2
Impugned Order
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 1 of 9
Signing Date:14.08.2025
17:19:02
of its payment, to the Respondent herein. It has also been directed that
the said payment be made by the Appellant herein within a period of
two months. The relevant portion of the Impugned Order reads as
follows:
“CO.APPL. 1004/2014 (for impleadment and permission)
2. This is an application where the Applicant-P.D Gupta &
Company is seeking refund of the amount of Rs.1 crore which was
deposited with IDBI along with interest. The Applicant also prays
for impleadment as a Respondent, and permission to participate in
the present petition.
3. Ld. Counsel for the Applicant relies upon a similar order
dated 3rd April, 2013 which was passed by ld. Single Judge
wherein refund of an amount was directed from IDBI. The said
order reads as follows:
“The question that has now arisen is whether IDBI can be
permitted to retain the said amount or should it be asked
to refund it to the Applicant. The stand of IDBI is that
since the payment was made to it by MSL, if is not obliged
to return the money to RSCL. It is, however, not denied by
IDBI that it did receive the money from RSCL. Its stand is
that it has no obligation to return the money to RSCL
since the payment was made on behalf of MSL.
8. The stand of Official Liquidator is that since the
payment made by RCSL is not pursuant to any scheme
sanctioned by the Court and, in any event, the claims of
the secured lenders will be dealt with in accordance with
law pursuant to the orders that the Court may pass from
time to time.
9. The above stand of IDBI is untenable for the simple
reason that IDBI admittedly encashed the cheque by MSL
only as a lead institution participating in an OTS along
with other secured lenders. The OTS admittedly has not
gone through with IFCI not agreeing to it. In the
circumstances, there can be no justification for IDBI to
continue to hold the amount of Rs. 2.25 crores. The
Court has not approved the OTS in the present
proceedings and so the question of the Court permitting
IDBI to retain the said sum does not arise. Further, as
regards the dues of the secured creditors, the funds
generated through the sale of the properties of MSL
pursuant to the orders of the Court will be distributed
amongst the secured creditors on a pro rata basis. That
will sufficiently account for the interests of all the
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 2 of 9
Signing Date:14.08.2025
17:19:02
secured creditors. IDBI is not entitled to a treatment
different from other secured lenders”.
4. In the present application, A ‘One Time Settlement’ („OTS‟)
was agreed upon by the secured creditors following a
Memorandum of Understanding („MOU‟) dated 30th March 2001.
This MOU was between the potential buyers and representatives of
the secured creditors, specifically MSL and IDBI. However, the
potential buyer failed to make the necessary payments to the
secured creditors. Consequently, the Applicant assumed the role of
the potential buyer and agreed to purchase the total land of the
Petitioner-company in liquidation for a sum of Rs. 6 crore in 2005.
The case of the Applicant is that pursuant to OTS which was
agreed, the Applicant had paid a sum of Rs. 1 crore which was
deposited with IDBI. In pursuance of the Applicant‟s offer, it is
stated the Applicant submitted various DD‟s to fulfil its obligation
to pay the OTS amount before the end of October 2005. At the time
of payment of the OTS amount it is stated that the Applicant was
unaware of a dispute over the ownership of the subject land.
5. Thereafter, the Applicant made a request to the Petitioner-
Company and IDBI for the return of their deposited amount of Rs.
1 crore plus interest, as the OTS was not sanctioned by all the
banks and due to pending civil cases on the subject land, it was
stated by the Applicant that it found it impossible to pursue their
OTS proposal. Subsequently, the Applicant sent a legal notice on
20th October 2008 to IDBI, stating that the bank was liable to
return the Rs.1 crore to the Applicant. The Applicant also claimed
that the IDBI was wrongfully withholding their money, and
demanded a return of the advanced deposit amount of Rs. 1 crore,
plus interest at 1.8% from 21st October 2005 until the date of
payment.
6. Thus, under such circumstances, the refund is being sought
of the amount being deposited. In the reply dated 21st March 2015,
the only stand of IDBI appears to be that the refund cannot be
sought in the present petition. It is not disputed in the reply filed by
IDBI that the amount was indeed paid by the Applicant.
7. Under such circumstances, there appears to be no
justifiable reason for the IDBI to argue that the amount ought not
to be refunded. Since the OTS has not gone through, the amount of
the Applicant which was deposited towards the finalisation of the
OTS cannot be appropriated in this manner by IDBI.
8. The same is accordingly directed to be refunded along with
simple interest @ 7% from date of deposit till the date of payments.
The entire payment be made by IDBI within two months.
9. In the above terms, the present application is disposed of.”
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 3 of 9
Signing Date:14.08.2025
17:19:02
3. Learned counsel for the Appellant apprised this Court of the
entire historical background of the dealings between the Appellant-
Bank and one Moradabad Syntex Limited3. Following the
recommendation of the Board for Industrial and Financial
Reconstruction under Section 20(1) of the Sick Industrial Companies
(Special Provisions) Act, 1985, for winding up MSL, a company
petition bearing Company Petition No. 72/1997 (from which the
present appeal arises) was registered before this Court.
4. MSL submitted a One-Time Settlement4 proposal to the
Appellant, which was accepted vide Sanction Letter dated 30.03.2001.
A Memorandum of Understanding5 was executed amongst MSL,
the Appellant and potential buyers. On 02.11.2001, the scheme filed
by MSL was sanctioned. However, the initial buyer failed to perform
its obligation qua the MOU. Thereafter, in 2005, the Respondent
herein offered to become a potential buyer of the total land of MSL in
liquidation for a sum of Rs. 6 crores and, in pursuance thereof, a sum
of Rs. 1 crore was paid by the Respondent to the Appellant.
5. It is the case of the Respondent that at the time of payment, the
Respondent was unaware of a dispute over the ownership of the
subject land. Upon learning that the OTS lacked all banks’ approval
and that civil disputes were pending over the land, the Respondent
requested a refund from the Appellant-Bank. Subsequently, the
Respondent sent a legal notice dated 20.10.2008 to Appellant-Bank,
claiming that Appellant-Bank has wrongfully withheld the deposit and
3
MSL
4
OTS
5
MOU
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 4 of 9
Signing Date:14.08.2025
17:19:02
demanded the return of the advanced amount along with interest from
05.10.2005 till the date of payment.
6. The Respondent herein filed a company application bearing
Company Application No. 1004/2014 in the aforementioned company
petition, seeking a refund of the amount of Rs. 1 crore as deposited
with the Appellant-Bank along with interest, which was allowed by
the Order impugned herein.
7. Against the said Order, the present appeal has been filed.
SUBMISSIONS OF THE PARTIES:
8. The crux of the Appellant’s submissions is that the Respondent
herein had, in some manner, stepped into the shoes of MSL and,
therefore, the amount paid by the Respondent herein was in the nature
of assumption of MSL’s debt by it or at least a part thereof.
9. Learned counsel for the Appellant would also contend that after
having stepped into the shoes of MSL, the Respondent herein, despite
having made a payment of Rs. 1 Crore, rescinded from the
commitment and, therefore, the payment made stood forfeited, being
not entitled to the repayment of the same.
10. This Court also notes that it has been the consistent case of the
Appellant-Bank that the amount paid by the Respondent herein was
appropriated by it, purely on the strength of a Letter dated 27.01.2006
addressed by MSL to the Appellant-Bank. The relevant part of the
said Letter is set out hereinbelow:-
“…
Dear Sir,
Please refer to your letters dated October 4, 2005 and January 14,
2006 on the above subject. The balance OTS money of Rs.285 lakh
has not been paid by the third party viz. P. D. &. Company due to
court case pending against the land in the Muradabad local courtSignature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 5 of 9
Signing Date:14.08.2025
17:19:02
and the titles of the land could not be cleated. The next hearing on
the said case is on 1st February 2006 and we hope the same will be
dismissed. The party had already made an advance of Rs. 1 crore
to IDBI out of the above OTS amount. We request IDBI to adjust
the amount of Rs. 1 crore kept with IDBI towards OTS against
IDBI’s dues and the balance amount of Rs 49.55 lakh payable to
IDBI would be paid by the party immediately after settlement of the
court case. In case there is further delay in court settlement, and
payment of IDBI’s dues by PD & Co., I personally undertake to
pay this amount of Rs.49.55 Lakh to IDBI before February 27,
2006. I further request IDBI to kindly waive the interest on OTS
amount from December 1, 2005 to February 27, 2006. This would
help me to settle the amount with IDBI. The balance amount for
payment to other institutions will be followed separately since the
case is not finalized.”
11. The Appellant would also seek to refer to and rely upon a
document dated 13.02.2015 addressed by Mr. Arun Kumar Swarup,
the Director/Promoter of MSL and in particular, paragraph No. 6
thereof along with alleged bank statement supporting the said letter, to
resoundingly claim that the said letter conclusively proves that the
amount of Rs.1 Crore was paid to the Appellant-Bank by MSL, and
therefore, no claim can be maintained against the Bank. Paragraph No.
6 of the letter reads as follows:
“…
6. That M/s Chauhan & Co. defaulted in paying the remaining
amount under the MOU. Thereafter, MSL brought a new purchaser
namely M/s P.D. & Co. (PDC), who agreed to buy the land for a
total consideration of Rs.6 crore in October 2005 and MSL
submitted the revised OTS proposal to the secured creditors. But,
despite of the prolonged discussions and negotiations, the revised
proposal was not accepted by all the secured creditors. M/s P D
Gupta & co. deposited a sum of Rs 1 Crore pursuant to the
Proposal. The said amount of Rs. 1 Crore was paid back by MSL
vide four cheques of Rs 25 lacs each. The detail of the four cheques
are as follows:-
i) Cheque bearing no. 12342 for a sum of Rs 25 lacs dated
19/06/2007.drawn on Adarsh Mahila Mercantile Coop.
Bank, Muzaffarnagar.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 6 of 9
Signing Date:14.08.2025
17:19:02
ii} Cheque bearing no. 12343 for a sum of Rs. 25 lacs
dated 20/06/2007.drawn on Adarsh Mahila Mercantile
Coop. Bank, Muzaffarnagar.
iii) Cheque bearing no. 12344 for a sum of Rs. 25 lacs
dated 22/06/2007 drawn on Adarsh Mahila Mercantile
Coop. Bank, Muzaffarnagar.
iv) Cheque bearing no. 12345 for a sum of Rs. 25 lacs
dated 23/06/2007 drawn on Adarsh Mahila Mercantile
Coop. Bank, Muzaffarnagar.
The said cheques were duly encashed by M/s P D Gupta & co, ( A
copy of the bank statement is attached).
***
In view of the above, it is humbly requested to IDBI that
payment already received may kindly be treated as payment
in full and final settlement of their dues, whatsoever, and that
the pending recovery case/s please be withdrawn by IDBI and
that the personal guarantee of the Guarantors/former
Directors may please be released, without insisting on any
further payment.”
12. Per contra, learned counsel for the Respondent has opposed the
contentions of the Appellant by stating that there is no occasion for the
Respondent to have stepped into the shoes of MSL, as claimed by the
Appellant.
13. Learned counsel for the Respondent would also contend that the
history of litigation would suggest that the Respondent herein was a
complete stranger in the transactions between MSL and the Appellant
Bank. He would contend that the Offer made by the Respondent
herein in 2005 was a standalone offer which never fructified, and as
the OTS proposal did not go through, the Respondent was entitled to
the return of the money that had been paid by it to the Bank.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 7 of 9
Signing Date:14.08.2025
17:19:02
ANALYSIS:
14. At the outset, it is of import to note that the main dramatis
personae of the entire lis appear to be the Appellant-Bank and MSL.
15. It is indeed surprising that the Appellant-Bank seeks to rely on a
Letter dated 27.01.2006 from MSL, treating it as an authorisation to
appropriate a sum of Rs. 1 Crore towards MSL’s defaulted account,
purportedly in part satisfaction of the amount MSL owed to the Bank.
There is nothing on record to indicate or substantiate that the
Respondent was either aware of or had consented to such
appropriation by the Appellant-Bank.
16. The Letter dated 13.02.2015, also issued by MSL, appears to be
self-serving and unreliable. The accompanying bank statement, filed
in support of this letter, is also sans any specific details indicating to
whom the said payment was made. In the given circumstances, it is
difficult to comprehend how the said letter, along with the vague bank
statement, could come to the aid of the Appellant-Bank.
16. This Court further notes that the contention regarding the
Respondent having stepped into the shoes of MSL appears to be a
construct of the Appellant’s counsel and finds no mention in the
pleadings. In fact, this argument is at variance with the stand earlier
taken by the Appellant-Bank before the learned Single Judge, wherein
at paragraph No. 6, it states as follows:
“6. Thus, under such circumstances, the refund is being sought of
the amount being deposited. In the reply dated 21st March 2015,
the only stand of IDBI appears to be that the refund cannot be
sought in the present petition. It is not disputed in the reply filed by
IDBI that the amount was indeed paid by the Applicant.”
17. The learned Single Judge, while directing the refund of the
money paid by the Respondent herein, has referred to and relied upon
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 8 of 9
Signing Date:14.08.2025
17:19:02
Order dated 03.04.2013 passed in Co. Appl. No. 2430 of 2011 in the
same Company Petition. The said Order pertained to a similarly
placed prospective buyer, who had been introduced by MSL after the
present Respondent’s offer was rejected, and the transaction was
abandoned due to defects in the title of the property.
18. The Appellant, through his arguments, seeks to establish that
the Court has accepted the case of the Respondent of having
momentarily stepped into the shoes of the MSL and made a payment,
and there existed no separate or independent proposal as between the
Respondent and Appellant-Bank. However, as already observed
hereinabove, this contention not only contradicts the submissions
recorded by the learned Single Judge but is also not borne out from
the pleadings in the present appeal.
19. In view of the foregoing, and considering that the Respondent
stood on similar footing as the party who entered the picture at a later
stage, this Court is of the view that the Appellant’s claims lack merit.
Accordingly, the Impugned Order does not warrant interference.
20. The appeal, along with the pending application(s), if any, stands
dismissed.
ANIL KSHETARPAL
(JUDGE)
HARISH VAIDYANATHAN SHANKAR
(JUDGE)
AUGUST 14, 2025/rk/er/va
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
CO.APP.26/2023 Page 9 of 9
Signing Date:14.08.2025
17:19:02