Mumbai, October 7, 2026: The Bombay High Court has ruled in favour of Punjab National Bank (PNB) in a 42-year-old dispute over a Cuffe Parade flat, holding that a 1982 transaction was a genuine agreement to sell and not merely security for a loan.
Justice Sharmila Deshmukh overturned a 2023 City Civil Court decree favouring the original owner, M/s Mohan Gandhi & Company, and directed specific performance of the agreement, paving the way for PNB to secure the property after paying the balance Rs 1 lakh.
Dispute Over Cuffe Parade Flat
The dispute concerns Flat No. A/1 in Cuffe Castle Co-operative Housing Society. In July 1982, the partnership firm agreed to sell the flat to the then New Bank of India, which later merged with PNB, for Rs 15 lakh.
PNB’s advocates Shanay Shah and Anuj Loya submitted that the bank paid Rs 14 lakh and was handed possession, with the balance payable upon execution of the sale.
The firm later challenged the transaction, claiming the flat had been given as collateral security for a Rs 14 lakh loan taken by Argee Textiles Pvt Ltd, a company associated with one of its partners. Its advocate Prasad Pathare argued that the property was to be returned after repayment of the loan.
Court Rejects Security Claim
The firm also alleged that the agreement was executed late at night under pressure and without proper legal advice, and questioned the validity of signatures of two minor partners.
Rejecting the claims, Justice Deshmukh relied on bank records, payment vouchers and Debt Recovery Tribunal proceedings. The court noted that the Rs 14 lakh paid by PNB was directly credited towards reducing Argee Textiles’ loan liability on the firm’s instructions.
The court held that the payment, coupled with transfer of possession, indicated consideration towards sale.
“The agreement when read holistically indicates that the agreement between the parties was a transaction of sale of flat for total consideration of Rs. 15 lakhs,” the court observed, adding that possession after receipt of substantial consideration was a “strong indicia of sale transaction”.
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PNB Directed To Pay Balance
The court also rejected the contention that the bank manager could enter into an informal arrangement concerning the property.
The High Court dismissed the firm’s suit and directed PNB to pay the remaining Rs 1 lakh, with 12% annual interest from June 30, 1987, within four weeks.
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