Authority: High Court of Judicature at Madras

Order Date: 22 June 2026

Case Overview

  • Parties: petitioner Reji Abraham, promoter and erstwhile Managing Director of Aban Offshore Limited, versus Punjab National Bank (PNB) Head Office.
  • Nature of proceeding: Writ petition under Article 226 of the Constitution challenging PNB’s public notice dated 06‑06‑2026 for a Swiss‑challenge auction of the loan exposure of Aban Offshore Ltd.
  • Background:
  • Aban Offshore Ltd, a listed public company engaged in offshore drilling, defaulted on loan repayments; its loan was classified as NPA on 02‑05‑2017.
  • PNB issued SARFAESI notices: notice under Sec 13(2) on 07‑05‑2018 and possession notice under Sec 13(4) on 08‑07‑2021, followed by several failed sale notices.
  • As of 15‑08‑2024, the outstanding loan balance stood at Rs. 1062,86,03,208.45/-.
  • PNB filed an insolvency petition before the NCLT, Chennai, under Sec 7 of the Insolvency and Bankruptcy Code (IBC). NCLT admitted the petition and initiated CIRP on 01‑09‑2025, appointing an Interim Resolution Professional.
  • Aban Offshore appealed to the NCLAT (Company Appeal (AT)(CH)(Ins.) No. 477/2025). The NCLAT stayed the CIRP and directed PNB to consider the One‑Time Settlement (OTS) proposal submitted by the corporate debtor.
  • NCLAT, on 26‑09‑2025, took note of the OTS proposal; on 21‑01‑2026, it directed PNB to place on record the memorandum containing its decision on the OTS and granted interim protection.
  • PNB rejected the OTS proposal; the memorandum was not placed on record. The appeal remained pending.
  • On 27‑03‑2026, NCLAT observed that the OTS proposal had been rejected and that there was “no possibility of settlement” between the parties, stating that the controversy over acceptance or rejection of the proposal no longer subsisted.
  • The appeal was listed for hearing on 10‑04‑2026 (adjourned) and again on 02‑06‑2026, subsequently adjourned to 13‑07‑2026.
  • Petitioner’s contentions:
  • The Swiss‑challenge auction violated RBI (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 and RBI (Commercial Banks – Transfer and Distribution of Credit Risk) Directions, 2025, which require a board‑approved policy and structured decision‑making.
  • The auction infringed Articles 14, 19 and 21 of the Constitution.
  • The petitioner argued that, under Clause 12 of the RBI Directions, the borrower should be allowed to match the highest bid and that the bank’s action was arbitrary.
  • Respondent’s contentions:
  • The loan exposure exceeded Rs. 1,000 crores as of 15‑08‑2024; the corporate debtor had not repaid dues despite opportunities.
  • The OTS proposal was baseless; Section 29A of the IBC disqualifies certain persons, including erstwhile management, from participating in the resolution process.
  • The auction was conducted in accordance with PNB’s internal policies.
  • Cited precedents: Sri. Devi Karumariamman Educational Trust v. Central Bank of India (2020) and Supreme Court order (28‑09‑2021) upholding the legality of the Swiss‑challenge method; Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal (2023) supporting the bank’s discretion in OTS matters.
  • The auction was scheduled for 11‑06‑2026, 11:00 AM‑12:00 PM, and by the time of the hearing the bidding process had already concluded.

Final Outcome

  • The Court held that the OTS proposal had been duly rejected, NCLAT had recorded that no settlement was possible, and the auction had already been completed, rendering the writ petition infructuous.
  • Accordingly, the writ petition was dismissed without any order as to costs, and all connected interim applications were closed.

Topics: Court Order, Insolvency Resolution, Banking Regulation