August 13, 2026

This appeal arose from a judgment of the High Court of Orissa at Cuttack, which had mistakenly accepted a self-serving statement of account produced by a debtor trust and scaled down loan dues based on an isolated bank certificate. The Supreme Court examined the standard accounting practices of banking institutions—specifically the maintenance of suspense accounts for interest accrued post-NPA classification—and corrected the financial ledger calculations, ultimately setting aside the High Court’s orders and restoring the order passed by the Debts Recovery Appellate Tribunal (DRAT), Kolkata. Loan Disbursal and NPA Classification: United Bank of India (predecessor of Punjab National Bank/PNB) sanctioned a loan of 5 crore to the Trust on 27.06.2011, which later became a non-performing asset (NPA) on 30.06.2017. Proceedings Before the DRT: The bank filed O.A. No. 258 of 2018 before the Debts Recovery Tribunal (DRT), Cuttack, to recover outstanding dues. On 05.02.2021, the DRT allowed the application directing recovery of a specified residual sum. Appellate Intervention (DRAT): Upon appeal, the DRAT, Kolkata, factored in subsequent deposits and calculated the total dues payable by the Trust as 54,90,413/-, along with pendente lite and future simple interest at 9% per annum from 05.02.2018 until realization. PNB accepted this appellate order. High Court Error: The Trust challenged the DRAT order before the High Court via W.P. (C) No. 32036 of 2023. The High Court relied heavily on a certificate dated 24.12.2020 issued by PNB and reduced the liability to 29,55,678.02 paisa, subsequently dismissing PNB’s recall application. Supreme Court’s Analysis of Accounts: The Supreme Court evaluated the statement of account and noted that as of 30.06.2017 (the NPA date), the principal loan amount plus interest stood at 1,25,30,842/-. Following banking norms, interest after NPA classification is maintained separately in a suspense account and does not vanish. Rejection of Debtor’s Calculation: The Supreme Court held that the Trust’s attempt to present a self-serving statement showing a negative balance and claiming an excess refund was patently erroneous and mischievous. Final Ruling: The Supreme Court allowed the appeals, set aside the High Court’s orders dated 11.01.2024 and 14.05.2024, and fully restored the DRAT’s order dated 01.09.2023 determining the dues at 54,90,413/- with 9% simple interest. 2026 INSC 836 Punjab National Bank v. M/s. Allied Educational Trust & Ors. (D.O.J. 12.08.2026)

August 13, 2026 9:58 pm

This appeal arose from a judgment of the High Court of Orissa at Cuttack, which had mistakenly accepted a self-serving statement of account produced by a debtor trust and scaled down loan dues based on an isolated bank certificate. The Supreme Court examined the standard accounting practices of banking institutions—specifically the maintenance of suspense accounts for interest accrued post-NPA classification—and corrected the financial ledger calculations, ultimately setting aside the High Court’s orders and restoring the order passed by the Debts Recovery Appellate Tribunal (DRAT), Kolkata. Loan Disbursal and NPA Classification: United Bank of India (predecessor of Punjab National Bank/PNB) sanctioned a loan of 5 crore to the Trust on 27.06.2011, which later became a non-performing asset (NPA) on 30.06.2017. Proceedings Before the DRT: The bank filed O.A. No. 258 of 2018 before the Debts Recovery Tribunal (DRT), Cuttack, to recover outstanding dues. On 05.02.2021, the DRT allowed the application directing recovery of a specified residual sum. Appellate Intervention (DRAT): Upon appeal, the DRAT, Kolkata, factored in subsequent deposits and calculated the total dues payable by the Trust as 54,90,413/-, along with pendente lite and future simple interest at 9% per annum from 05.02.2018 until realization. PNB accepted this appellate order. High Court Error: The Trust challenged the DRAT order before the High Court via W.P. (C) No. 32036 of 2023. The High Court relied heavily on a certificate dated 24.12.2020 issued by PNB and reduced the liability to 29,55,678.02 paisa, subsequently dismissing PNB’s recall application. Supreme Court’s Analysis of Accounts: The Supreme Court evaluated the statement of account and noted that as of 30.06.2017 (the NPA date), the principal loan amount plus interest stood at 1,25,30,842/-. Following banking norms, interest after NPA classification is maintained separately in a suspense account and does not vanish. Rejection of Debtor’s Calculation: The Supreme Court held that the Trust’s attempt to present a self-serving statement showing a negative balance and claiming an excess refund was patently erroneous and mischievous. Final Ruling: The Supreme Court allowed the appeals, set aside the High Court’s orders dated 11.01.2024 and 14.05.2024, and fully restored the DRAT’s order dated 01.09.2023 determining the dues at 54,90,413/- with 9% simple interest. 2026 INSC 836 Punjab National Bank v. M/s. Allied Educational Trust & Ors. (D.O.J. 12.08.2026)

Stpl law August 13, 2026