PUNJAB NATIONAL BANK VS. M/S. SHREE JYOTI EDUCATION AND MANAGEMENT TRUST WORLD

2026 INSC 836Non-reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. ............. & ............. of 2026

(@ Special Leave Petition (C) Nos. 27363-27364 of 2024)

Punjab National Bank … Appellant

versus

M/s. Shree Jyoti Education and

Management Trust World and others … Respondents

J U D G M E N T

SANJAY KUMAR, J

1. Leave granted.

2. Punjab National Bank1, the appellant, is aggrieved by the orders dated

11.01.2024 and 14.05.2024 passed by a Division Bench of the Orissa High

Court. By the order dated 11.01.2024, the Division Bench directed PNB to

receive a sum of ₹29,55,678.02 paisa from M/s. Shree Jyoti Education and

Management Trust World2, a charitable trust, and Tara Prasad Satpathy, its

managing trustee, respondent Nos. 1 and 2 herein, in full and final settlement

of their dues so as to close their loan account, and disposed of Writ Petition

1 For short, ‘PNB’

2 For short, ‘the Trust’

passed in I.A. No. 2279 of 2024 in W.P. (C) No. 32036 of 2023, the Division

Bench dismissed the recall/modification application filed by PNB in the

context of the earlier order dated 11.01.2024.

3. Facts relevant to this adjudication unfurl thus: United Bank of India, the

predecessor-in-interest of PNB, sanctioned a loan of ₹5 crore to the Trust,

vide letter dated 27.06.2011, for construction of a college building. Tara

Prasad Satpathy, its managing trustee, and other trustees, viz., respondent

Nos. 2, 3, 4 and 5, stood as guarantors for the loan. The loan amount was

disbursed over a period of two years. On 22.06.2017, United Bank of India

issued a confirmation letter to the Trust informing it that, as on that day, the

balance loan amount due and payable by it stood at ₹1,27,33,669/-. The loan

account of the Trust was, however, classified as a non-performing asset on

30.06.2017. United Bank of India, thereupon, filed O.A. No. 258 of 2018

before the Debts Recovery Tribunal3, Cuttack, Odisha, for recovery of its

outstanding dues, amounting to ₹75,56,680/- as on 04.05.2018, along with

future interest. Therein, the bank explained that the balance, in terms of the

loan account, came to ₹64,25,915/-, with interest calculated up to

29.06.2017, and the other component was the interest, calculated at the rate

3 For short, ‘the DRT’

of 12.90%, from 30.06.2017 to 05.05.2018, which came to ₹11,30,765/-. The

total dues claimed, accordingly, came to ₹75,56,680/-.

4. During the pendency of the proceedings before the DRT, United Bank

of India was amalgamated with PNB on 01.04.2020. PNB issued certificate

dated 24.12.2020, titled ‘To Whom It May Concern’, stating that the Trust had

paid ₹93,31,842/- since the date its loan account became a non-performing

asset, i.e., from 30.06.2017 till 13.10.2020, and that, as on 13.10.2020, the

outstanding amount of the loan was ₹31,99,000/-.

5. While so, by judgment dated 05.02.2021, the DRT allowed O.A. No.

258 of 2018 only to the extent of permitting PNB to recover a sum of

₹1,83,268/-, along with pendente lite and future simple interest @ 10% per

annum. A recovery certificate was directed to be issued under Section 19(2)

of the Recovery of Debts due to Banks and and Financial Institutions Act,

19934 (now, renamed as the Recovery of Debts and Bankruptcy Act, 1993).

6. We may note that the DRT took into account the fact that the Trust and

its trustees, the defendants before it, had paid ₹93,88,516/- after the account

became a non-performing asset and arrived at the figure of ₹1,83,268/- as

the amount still due and payable by them. The calculation done by the DRT,

as set out by it in its judgment dated 05.02.2021, reads as under:-

4 For short ‘The Act of 1993’

“The detailed calculation sheet is given below –

(i) Originally the OA Is filed for recovery of Rs. 75,56,680.00 along with interest

calculated upto 05/05/2018

(ii) The applicant bank is entitled to [sic] interest from 06/05/2018 till 05/02/2021

@10% p.a. simple

(iii) Interest on the amount of Rs.75,56,680.00 p.a. @10% p.a. - Rs.7,55,668.00

(iv) Interest per month - Rs.62,972.00 (Rs. 7,55,668.00/12)

(v) Interest for 32 months, i.e., from 06/05/2018 to 05/02/2021

Rs.62,972.00 X 32 = Rs.20,15,104.00

Total amount payable by the defendants –

(i) Amount claimed by the applicant bank - Rs 75,56,680.00

(ii) Interest calculated @10% p.a. simple - Rs.20,15,104.00

Total amount to be paid - Rs.95,71,784.00

Less paid by the defendants - Rs.93,88,516.00

______________

Balance amount to be paid by the defendants Rs. 1,83,268.00”

7. Assailing this determination by the DRT of the amount to be paid, PNB

filed Appeal No. 16 of 2021 before the Debts Recovery Appellate Tribunal5

at Kolkata. Before the Appellate Tribunal, PNB filed affidavit dated

07.08.2023 stating that, after adjusting the amounts paid towards the loan

account and interest, the dues of the Trust as on 05.02.2021 stood at

₹56,87,774.02 paisa. The Appellate Tribunal partly allowed the appeal, by

order dated 01.09.2023, and determined that the Trust and the trustees were

liable to pay ₹54,90,413/- along with pendente lite and future simple interest

@ 9% from 05.02.2018 till the date of realization.

5 For short, the Appellate Tribunal’

8. We may note that the Appellate Tribunal took into account the fact that,

after the DRT’s judgment dated 05.02.2021, a sum of ₹34,70,236/- was paid

by the Trust, whereupon the dues came down to ₹40,86,444/- . PNB filed an

affidavit before the Appellate Tribunal on 07.08.2023 stating that, after giving

credit to the amounts paid by the Trust till that date, the amount due and

payable as on 05.02.2021 stood at ₹56,87,774.02/-. The Appellate Tribunal

noted that a sum of ₹1,84,000/- was deposited by the Trust after 05.02.2021

which would also carry interest and, accordingly, determined the dues of the

Trust as on the date of its order to be ₹54,90,413/-. PNB was held entitled to

pendente lite and future simple interest at the rate of 9% per annum on the

said decretal amount from 05.02.2018 till the date of realization.

9. PNB accepted the DRAT’s order, but the Trust and Tara Prasad

Satpathy, its managing trustee, approached the High Court challenging the

said order by way of WP (C) No. 32036 of 2023. Dealing with the said writ

petition, the Division Bench relied heavily upon the certificate dated

24.12.2020 issued by PNB confirming that the outstanding loan amount, as

on 13.10.2020, stood at ₹31,99,000/-. The Bench then noted that after the

said date, the Trust had deposited ₹59,321.98 paisa on 28.12.2020 and

₹1,84,000/- on 11.02.2021, in all, a sum of ₹2,43,321.98 paisa and accepted

the plea of the Trust that, after deduction of such amount, the dues stood

reduced to ₹29,55,678.02 paisa. The Division Bench, accordingly, directed

the Trust and Tara Prasad Satpathy, its managing trustee, to pay the said

amount within four weeks in full and final settlement of their dues and for

closure of their loan account. Thereupon, PNB filed I.A. No. 2279 of 2024 in

WP (C) No. 32036 of 2023 seeking recall/modification of the order dated

11.01.2024. However, by its later order dated 14.05.2024, the Division Bench

opined that there was no error apparent in its earlier order and dismissed the

I.A. Hence, these appeals.

10. The Chief Manager of PNB, Circle SASTRA Centre, Cuttack, filed

affidavit dated 03.12.2024 along with a statement of account of the Trust with

United Bank of India from 22.02.2012 onwards. Therein, we find that, as on

the date of classification of the Trust’s loan account as a non-performing

asset, i.e., on 30.06.2017, the principal loan amount due, along with interest

payable thereon calculated upto the said date, stood at ₹1,25,30,842/-. We

may also note that as per the affidavit dated 03.12.2024, interest was to be

applied only till the date the account was classified as a non-performing

asset, i.e., 30.06.2017. This is in accordance with the accounting system

followed by banks, as per applicable guidelines. After such date, i.e., from

01.07.2017, the bank maintained a separate suspense account for the

interest due on the outstanding loan amount. Therefore, the interest

component no longer found reflection in the loan account statement. In

keeping with this system, as on the date of filing of the O.A. before the DRT,

i.e., 04.05.2018, the dues in the loan account stood at ₹64,25,915 and the

interest payable, in the suspense account, stood at ₹11,30,765/-, adding upto

₹75,56,680/-, as claimed by the United Bank of India. The certificate dated

24.12.2020, therefore, had to be understood in the light of the accounting

system as the figure of ₹31,99,000/- mentioned therein did not take into

account the interest component, reflected in the suspense account.

11. Oversimplification of calculation by the High Court with respect to the

amount payable, ignoring the existence of the suspense account for the

interest component since the date of classification of the loan account as a

non-performing asset, and giving effect only to the figure mentioned in the

PNB’s certificate dated 24.12.2020, viz., ₹31,99,000/-, thereby accepting the

plea of the Trust that the sum of ₹2,43,321.98 paisa paid by it needed to be

deducted therefrom reducing its dues to ₹29,55,678.02 paisa, is therefore

clearly unsustainable. The Trust and its trustees cannot blithely ignore the

accounting system followed by banks and come up with different calculations

at different points of time to suit their own interests. The statement of account

filed by them before us, claiming that the principal amount due as on

29.06.2017 was ₹64.25,915/-, is contrary to their running account statement,

produced by the bank, which shows that the principal amount along with

interest calculated upto that date, stood at ₹1,25,30,842/-. We may also note

that, before the DRT, their stand, as reflected in their written arguments, was

that the rate of interest charged was on the higher side and that they were

due and liable to pay ₹32,63,899.65 paisa and not the claimed amount of

₹57,01,917.32 paisa. However, in WP (C) No. 32036 of 2023, they ignored

their earlier stand and relied upon the certificate dated 24.12.2020 to claim

that only a sum of ₹29,55,678.02 paisa was payable by them!

12. In this regard, we may note that Section 2(g) of the Act of 1993 defines

‘debt’ to mean, amongst other things, any liability (inclusive of interest) which

is claimed as due from any person by a bank or a financial institution.

Therefore, there can be no dispute as to the interest component being part

of the debt due to PNB. Further, Section 19(20) of the Act of 1993 empowers

a Debts Recovery Tribunal, while dealing with an application made to it by a

bank or financial institution, to pass an interim or final order, which may

include an order for payment of interest from the date on which payment of

the amount is found due up to the date of realisation or actual payment. On

a parallel, Section 21A of the Banking Regulation Act, 1949, dealing with

rates of interest charged by banking companies, provides that a transaction

between a banking company and its debtor shall not be re-opened by any

Court on the ground that the rate of interest charged by the banking company

in respect of such transaction is excessive.

13. In Central Bank of India vs. Ravindra and others6, a Constitution

Bench observed that, in view of the law settled by it and the directives of the

Reserve Bank of India, banks must make an averment in the plaint that

interest/compound interest has been charged at such rates, and capitalised

at such periodical rests, as are permitted by, and do not run counter to, the

directives of the Reserve Bank of India. It was observed that a statement of

account should be filed in Court, showing details and giving particulars of

debit entries, and if a debit entry relates to interest, then setting out the rate

of, and the period for which, the interest had been charged. It was concluded

that, subject to a binding stipulation in a voluntary contract between the

parties and/or an established practice or usage, interest on loans may be

charged on periodical rests and capitalised on the remaining unpaid and the

principal sum coupled with the interest on periodical rests so capitalised, is

capable of being adjudged as the principal sum on the date of the suit. In

Union of India vs. Association of Unified Telecom Service Providers of

India and others7, a 3-Judge Bench of this Court applied this principle.

6 (2002) 1 SCC 367

7 (2020) 3 SCC 525

14. The attempt on the part of the Trust and its trustees in coming up with

a self-serving statement of account, showing the principal amount due as on

29.06.2017 as ₹64,25,915/-, contrary to the record, so as to arrive at a

negative balance of ₹93,981.40 paisa as on 04.06.2018, whereupon they

claimed that they paid in excess to the tune of ₹57,12,857/- and that the said

sum is liable to be refunded to them by PNB, is patently erroneous and

mischievous.

15. PNB is entitled to claim the interest due, which was calculated and

maintained in a separate suspense account, in addition to the outstanding

principal loan amount and, therefore, the calculation in that regard by the

Appellate Tribunal, in its order dated 01.09.2023 in Appeal No. 16 of 2021,

would have to be acted upon. In terms of the said order, which was accepted

without demur by PNB, the rate of pendente lite and future simple interest

chargeable by PNB would have to be scaled down to 9% per annum on the

decretal amount of ₹54,90,413/- from 05.02.2018 till the date of realization.

The appeals are accordingly allowed, setting aside the order dated

11.01.2024 in W.P. (C) No. 32036 of 2023 and the order dated 14.05.2024 in

I.A. No. 2279 of 2024 in W.P. (C) No. 32036 of 2023, passed by the High

Court of Orissa at Cuttack, and restoring the order dated 01.09.2023 passed

by the Debts Recovery Appellate Tribunal, Kolkata, in Appeal No. 16 of 2021.

The appellant, Punjab National Bank, is entitled to seek recovery of its dues

in terms thereof by way of appropriate proceedings, after giving credit to the

amounts paid by the Trust and its trustees after the said date, if any, in

accordance with law.

Parties shall bear their own costs.

..............................., J.

SANJAY KUMAR

..............................., J.

SANJEEV SACHDEVA

August 12, 2026

New Delhi.