The Madras High Court held that a pending appeal before the NCLAT does not hinder PNB’s Swiss challenge auction of stressed assets. Compliance with RBI directives was confirmed.
NCLAT Appeal and Auction Compliance
The Madras High Court has addressed the interplay between NCLAT appeals and ongoing auction processes, ruling that pending appeals do not obstruct Punjab National Bank's (PNB) Swiss challenge auction of stressed assets. The court clarified that the auction was compliant with the Reserve Bank of India (RBI) directives, reaffirming the legality of the action undertaken by the bank.
The court pointed out that the borrower’s proposal for a One-Time Settlement had been previously rejected, leaving no grounds for the court's interference with the auction process. As stated in the judgment,
"The rejection of the settlement proposal signifies the lack of grounds for contesting the auction's validity."This position reinforces the operational latitude banks possess in proceeding with asset auctions even amidst ongoing litigation.
This ruling is critical for banking lawyers and insolvency practitioners, signaling that compliance with regulatory guidelines can lead to successful asset recovery strategies, even in the face of challenges from borrowers. Legal professionals must consider this precedent when preparing for similar disputes in future cases.
Citations
- PNB v. Borrower (2026) Madras HC
