Modipon leaves PNB liability unrecognised as case remains pending

Modipon Limited has not recognised an additional Punjab National Bank liability as of September 30, 2026 because its writ petition remains pending before the Delhi High Court. The filing links that accounting treatment to a Rs 19 crore one-time settlement approved in April 2014, subsequent payments, and unresolved commercial-tax conditions.

Why has Modipon left the PNB liability unrecognised?

Modipon has left any liability beyond dues it considers settled unrecognised because the Punjab National Bank matter remains sub judice before the Delhi High Court. The filing says the court, on October 24, 2019, stayed proceedings before the Debts Recovery Appellate Tribunal and the National Company Law Tribunal that Punjab National Bank had initiated, and the writ was last heard on October 5, 2026.

Modipon says it has not considered any further liability in its books beyond dues already settled in line with the July 30, 2018 Debt Recovery Tribunal-II order. That order directed Punjab National Bank to accept Rs 65 lakh as outstanding one-time-settlement principal and Rs 2.5962 crore as interest at 10.25% simple interest under the revived settlement of July 2, 2015. The filing says the bank accepted and encashed those amounts during the appeal process.

The accounting position does not mean the amount in dispute has been finally determined. The filing says the liability recorded in Modipon’s books is higher than the one-time-settlement amount by Rs 1.839 crore, linked to commercial-tax liability, while interest on that amount cannot be quantified without documentary evidence from management and Punjab National Bank. It also says no balance confirmation was obtained for the Punjab National Bank loan account, and no consequential adjustments were made in the September 30, 2026 results.

How did Modipon’s PNB settlement terms and payments change?

Punjab National Bank initially approved a Rs 19 crore one-time settlement, or OTS, through letters dated April 2 and April 12, 2014. After an upfront payment of Rs 1.90 crore, Modipon was required to pay Rs 17.10 crore in four quarterly instalments with interest during financial year 2014-15. The filing says Modipon had paid Rs 6.30 crore by March 31, 2015.

Punjab National Bank revived the settlement on July 2, 2015 after condoning the payment delay. The revived terms required the residual Rs 12.70 crore by March 31, 2016 and total simple interest at 10.25% by June 30, 2016. Modipon says it paid Rs 12.70 crore by December 31, 2018 along with Rs 2.5962 crore of interest, and had booked the balance delayed-payment interest in the quarter ended December 31, 2018.

A further revival letter dated March 25, 2019 set an OTS amount of Rs 4.5962 crore. Its terms included appropriating fixed-deposit proceeds of Rs 65 lakh and Rs 2.5962 crore, and depositing another Rs 1.35 crore within one week. Modipon says it deposited the additional Rs 1.35 crore and that Punjab National Bank acknowledged payment under this revived OTS in its April 2, 2019 letter.

What proceedings are still pending in the PNB dispute?

The principal pending proceeding disclosed by Modipon is its Delhi High Court writ petition against the Debts Recovery Appellate Tribunal order dated August 20, 2019, which allowed Punjab National Bank’s appeal. Punjab National Bank had also pursued recovery before Debt Recovery Tribunal-II and its recovery officer in New Delhi, besides beginning a Section 7 proceeding under the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, Allahabad Bench.

The National Company Law Tribunal matter was dismissed on September 22, 2023 because Punjab National Bank, described as the financial creditor, did not appear, according to the filing. That outcome did not dispose of the High Court writ: the matter was heard on October 5, 2026 and remains pending for further hearing. Modipon does not disclose a next listing date or a final quantified claim by Punjab National Bank.

The October 24, 2019 Delhi High Court stay is the stated reason for Modipon’s current recognition approach. The filing does not say that the bank dispute has been conclusively resolved, and it separately says the financial effect, if any, of a final OTS with Punjab National Bank cannot be ascertained. A future court outcome could therefore affect whether Modipon records an additional amount.

How did commercial tax cause the OTS revival to fail?

Commercial-tax clearance was a condition of the March 25, 2019 OTS revival. Punjab National Bank said it would issue a no-dues certificate and release charges over security title deeds only after receiving the OTS amount in full and satisfactory proof that commercial-tax liability had been cleared. The revival also required the Rs 1.35 crore payment within one week of the sanction letter.

Modipon says it deposited Rs 54.94 lakh of a Rs 1.839 crore commercial-tax liability, plus Rs 3.07 lakh interest for the period from December 18, 2018 to May 2, 2019, on May 3, 2019. This followed an Allahabad High Court order of November 26, 2018 that stayed the Commercial Tax Tribunal’s August 8, 2018 order, subject to a 50% deposit and security for the remaining amount other than cash or a bank guarantee.

Punjab National Bank sought a no-dues certificate from tax authorities within three days through its May 4, 2019 letter, the filing says. After Modipon did not reply, the bank said on July 4, 2019 that the tax authorities had declared the revived OTS failed and that it would resume recovery. Modipon says the commercial-tax matter remains sub judice before the Allahabad High Court, while interest on the Rs 1.839 crore difference cannot be quantified.

Which other balances depend on the PNB outcome?

Three unsecured-loan balances associated with Ashoka Mercantile Limited remain unallocated pending successful implementation of the Punjab National Bank OTS. Ashoka Mercantile Limited is identified as a related party, and Modipon says settlement of assigned or other dues with it is linked to the Punjab National Bank settlement. The balance connected with an Abu Dhabi Commercial Bank OTS is Rs 1.5392 crore.

The filing lists a further Rs 3.392 crore balance related to a Karnataka Bank OTS payment in the year ended March 31, 2012, and Rs 2.3204 crore related to a Bank of Baroda payment in the year ended March 31, 2013. Modipon has accounted for amounts up to the respective OTS payments but has left the remaining sums under unsecured loans. It says the income or expenditure effect of a final Punjab National Bank OTS cannot be ascertained.

These balances extend the uncertainty beyond the direct Punjab National Bank loan account. The three unallocated amounts total Rs 7.2516 crore, but the filing does not state that this total is a potential charge or a final liability. Their classification and any income or expense effect remain tied to successful implementation of the Punjab National Bank settlement.

Conclusion

Modipon’s September 30, 2026 accounting leaves the Punjab National Bank position tied to payments it says were accepted under the 2018 tribunal process, while recognising no further liability during the pending Delhi High Court writ. The unresolved elements include the Rs 1.839 crore commercial-tax-related difference above the OTS amount, unquantified interest, and Rs 7.2516 crore of Ashoka Mercantile Limited-linked unallocated unsecured-loan balances.

The next disclosed event is a further Delhi High Court hearing after the matter was last heard on October 5, 2026, although Modipon gives no scheduled date. The other unresolved item is the Allahabad High Court commercial-tax matter, because Punjab National Bank treated tax clearance as a condition of the March 2019 OTS revival and declared that revival failed on July 4, 2019.