Court pulls up PNB for arm twisting, DLF to get back securities | india | Hindustan Times
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Court pulls up PNB for arm twisting, DLF to get back securities

india Updated: May 29, 2011 18:49 IST

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The Delhi high court has directed the Punjab National Bank (PNB) to return securities worth Rs 1,000 crore to DLF Limited and slapped a cost of Rs 20,000 on the bank for illegally withholding it.

The securities were withheld by the bank as it wanted the company to pay Rs 20 crore pre-payment charges on a loan.

Justice Rajiv Sahai Endlaw said, "The attempt of the bank in not releasing securities worth Rs 1,000 crore while its claim against DLF is of Rs 20 crore only, is nothing but an arm twisting practice adopted by loan sharks to compel it to give in to the demand for pre-payment charges."

"The demand of the bank for pre-payment on the loan is found to be without any basis and is quashed. The bank is also directed to return to DLF the securities placed by it with the bank within six weeks," said the court in its order May 27.

The court was hearing the petition filed by DLF, challenging the bank's demand of Rs 20 crore as pre-payment penalty.

"Even though the entire loan amount together with interest due thereon had been remitted by the petitioner and received by the bank, the bank was illegally withholding the securities of the petitioner of over Rs 1,000 crore for the reason of alleged default in payment of pre-payment charges of Rs 20 crore," DLF said in its petition.