Supreme Court rules suspense account interest recoverable as debt

The core issue is whether interest accumulated in a suspense account after NPA classification is recoverable as part of the 'debt' and whether the High Court's calculation of the outstanding dues was correct.

Who it concerns: Appellant: Punjab National Bank (PNB); Respondents: M/s. Shree Jyoti Education and Management Trust World and Tara Prasad Satpathy (Managing Trustee); Bench: Justice Sanjay Kumar.

What the court decided

• Allowed the appeals filed by PNB.
• Set aside the orders dated 11.01.2024 and 14.05.2024 passed by the Division Bench of the Orissa High Court.
• Restored the order dated 01.09.2023 passed by the Debts Recovery Appellate Tribunal (DRAT), Kolkata.
• Held that PNB is entitled to claim interest maintained in a separate suspense account in addition to the outstanding principal.
• Directed that the rate of pendente lite and future simple interest be scaled down to 9% per annum on the decretal amount of ₹54,90,413/- from 05.02.2018 till the date of realization.

Also in the document

• The Court held that the High Court's calculation was unsustainable because it ignored the existence of a suspense account for interest after the loan was classified as an NPA.
• The Court noted that Section 2(g) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, defines 'debt' to include interest.
• The Court observed that the Trust's attempt to use a self-serving statement of account to claim a refund was 'patently erroneous and mischievous'.