Mohanlal Patidar Vs Bank of Maharashtra (Madhya Pradesh High Court, Jabalpur)
Facts- The Petitioner had borrowed a loan from the Respondent and intended to repay it in terms of One Time Settlement (OTS). The Bank communicated to the Petitioner that as per the settlement formula given in the scheme, the OTS amount was quantified to be Rs. 36,50,000/-. The Petitioner, in furtherance thereof, deposited Rs.35,00,000/- with the Bank.
However, in its correspondence later, the Bank informed the Petitioner that his proposal was put up before the competent authority, which sanctioned the compromise proposal on certain terms, whereby the OTS amount was increased to Rs.50.50 Lakhs as full and final settlement of the dues.
The Petitioner argued that after he deposited maximum amount within the stipulated time, the only option left with the Bank was to proceed further after the stage of issuance of ‘intimation letter, and if he was to be found eligible, issue a ‘sanction letter’.
Conclusion- The Court held that the Bank could not have unilaterally changed the quantified OTS amount to Rs.50,50,000/- after correctly quantifying the OTS amount to be Rs.36,50,000/-. The same would be against the principles of natural justice, and also runs contrary to the doctrine of Legitimate Expectation.
Held the decision of the Bank to be irrational as it correctly quantified the amount to be Rs.36,50,000/- as per the formula under the scheme but enhanced the amount to Rs.50,50,000/- without justifying the same, which ran contrary to the scheme.
Observed that the Bank’s decision suffered from illegality and procedural impropriety. Bank enhanced the amount without making the Petitioner party to its decision-making process. Further, Bank made a one-sided presumption of acceptance in a matter of this nature where no acceptance was ever given by the Petitioner, directly or indirectly, to pay Rs.50,50,000/-.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
This common order will dispose of W.P. Nos.22127/2021 & 22131/2021.
2. The facts are taken from W.P. No.22127/2021. The admitted facts between the parties are that the petitioner – a borrower, obtained a loan and intended to repay it in terms of One Time Settlement (OTS). During the correspondence made for this purpose between the petitioner and the Bank, the Bank issued the letter dated 09.03.2021 (Annexure A/1) to the petitioner. In this letter, the amount of OTS was quantified as Rs.36,50,000/- by mentioning that it is “as per settlement formula given in the scheme”. The petitioner, in furtherance thereof, deposited Rs.35,00,000/- with the Bank.
3. The petitioner is aggrieved by communications dated 25.08.2021 (Annexure P/4) and 22.09.2021 (Annexure P/13). By communication dated 25.08.2021, the Asset Recovery Branch of the Bank informed the petitioner that the proposal of petitioner was put up before the competent authority which has sanctioned the compromise proposal of the petitioner on certain terms. The first term was that petitioner will be required to deposit Rs.50.50 lakhs as full and final settlement of the dues. Aggrieved, the petitioner preferred representation dated 13.09.2021 (Annexure P/5) followed by communication through e-mail. The respondents, in turn, sent another letter dated 13.09.2021 and informed the petitioner that on 25.08.2021, the petitioner was informed about acceptance of the proposal. The Bank has neither received the petitioner’s express acceptance nor denial of the petitioner. Thus, it was presumed that the petitioner has accepted the proposal and in turn, the petitioner was directed to deposit the remaining amount as per OTS sanction. This was followed by another letter of similar effect dated 17.09.2021 (Annexure P/7).
4. Shri Wajid Hyder, learned counsel for the petitioner submits that the petitioner sent a legal notice dated 29-01-2021 and apprised the Bank that Bank is not justified in asking the amount over and above Rs.36,50,000/-mentioned in communication dated 09-03-2021 (Annexure A/1). The petitioner also sent an e-mail regarding the aforesaid stand of the petitioner. Lastly, the respondent sent the impugned letter dated 22-09-2021 and informed the petitioner again that OTS has been sanctioned by the competent authority for Rs.50.50 lakhs only. The petitioner was directed to follow up with Zonal Office, Jabalpur/ARB Jabalpur for further clarification. It is argued that when Bank did not accede to petitioner’s request, petitioner promptly filed this petition on 05-10-2021. This petition is filed immediately after receiving the communication dated 22-09-2021.
5. Learned counsel for the petitioner submits that a careful reading of the letter dated 09-03-2021 shows that the petitioner was required to pay minimum 10% of the OTS amount within stipulated time. The petitioner deposited Rs.35,00,000/- out of Rs.36,50,000/- within the stipulated time. The only option left with the Bank was to proceed further after the stage of issuance of ‘intimation letter’ and if the petitioner was eligible, issue a ‘sanction letter’. The respondents have miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally. This runs contrary to the OTS scheme. The OTS scheme is binding, submits Shri Wajid Hyder, on the basis of Sardar Associates and Ors. Vs Punjab and Sind Bank and Ors [2009 (8) SCC 257]. It is submitted that since OTS scheme is binding, the Bank could not have enhanced the amount nor by any stretch of imagination can treat that the offer which was duly accepted as elapsed.
6. A Division Bench judgment of this Court reported in AIR 2007 MP114 (Laxmi Grih Udyog and Another vs State of Madhya Pradesh and Another) is relied upon to bolster the submission that once an amount for OTS is quantified in pursuance to an offer given by the Bank and the said amount is deposited, the Bank cannot take a different stand, enhance the amount or treat the document Annexure P/1 as only an ‘intimation letter’. In fact, it should be treated to be accepted and respondents are bound by the principles of ‘estoppel’ flowing from Section 115 of Indian Evidence Act.
7. No doubt, Shri Wajid Hyder submits that the receipt of the letter Annexure P/5 (at page-26) mentions the name of sender as Rukmani Devi Public School, fact remains that apart from the said letter, the e-mails for the same purpose were sent by the petitioner not accepting the enhancement of amount to Rs.50.50 lakhs. There is no denial about those e-mails sent by the petitioner. The said school is also run by the petitioner and therefore, the concerned clerk/peon has erroneously mentioned the name of the school in lieu of name of the petitioner, which will not make any difference. In nutshell, Shri Wajid Hyder submits that petitioner has fulfilled the requirement of letter dated 09-03-2021. The petitioner cannot be said to be ‘ineligible’. The formula prescribed in the scheme is fulfilled and the amount quantified in the letter dated 09-03-2021 is in consonance with clause-4 of the scheme. The ‘ledger amount’ as per affidavit of Shri Aditya Prakash, General Manager of the Bank is Rs. 0.50 Crores. The petitioner was required to pay 40% of that amount whereas Rs.50.50 lakhs quantified by them is almost equal to the complete ‘ledger amount’. Thus, said quantification of Rs.50.50 lakhs runs contrary to the OTS scheme.
8. Shri Abhijit C.Thakur, learned counsel for the respondent/Bank has taken a diametrically opposite stand by contending that :-
(a) No assurance was given that OTS of Rs.36.50 lacs will be accepted.
(b) It was clarified that OTS will be processed subject to eligibility of the scheme.
(c) It was specifically mentioned in the said intimation letter that the said letter is only an intimation letter and the said letter should not be construed as sanction letter.
(d) It was also clarified that on receipt of written application with requisite down payment, the proposal will be processed and approval amount by competent sanctioning authority in eligible cases will be conveyed by sanction letter.
(e) By mentioning the words “eligible cases”, it was made clear that inspite of moving application for OTS, it will be sanctioned in eligible cases and not in all cases.”
9. To elaborate, learned counsel for the respondent/Bank submits that letter dated 09.3.2021 is only a letter of ‘intimation’ and not letter of ‘sanction’. The petitioner is misconstruing the same, which is impermissible.
10. Neither the letter dated 09.3.2021 nor the OTS scheme has any binding effect. The petitioner has not deposited the entire amount of Rs.36,50,000/-, indeed deposited only Rs.35,00,000/- on 19.3.2021, which was realized by the Bank on 16.9.2021. Thus, the conditions mentioned in the letter dated 09.3.2021 are not satisfied.
11. Shri Thakur has taken pains to contend that the letter allegedly written by the petitioner and filed alongwith the petition were never served on the Bank. He indirectly doubted the genuineness of the said document by placing reliance on the receipt wherein the name of the sender is mentioned as ‘Rukmani Devi Public School, Bhopal’ and not the name of the petitioner.
12. The next limb of argument of Shri Thakur is based on the letter of the bank dated 25.8.2021, wherein it was clearly mentioned that compromise proposal of petitioner is accepted for Rs.50.50 lacs. Thereafter, by letter dated 13.9.2021, it was made clear that it is presumed that petitioner has accepted the proposal. A reference is made to clause-7 of the OTS Scheme, wherein it is mentioned that OTS is valid for two months from the date of sanction. If borrower fails to comply for repayment within two months, the OTS will automatically expire after two months of sanction or 31.3.2022 whichever is earlier. Thus, by operation of this provision itself, the OTS came to an end automatically after two months from 25th of August 2021.
13. Furthermore, it is submitted that the Apex Court in Bijnour Urban Cooperative Bank Vs. Minal Agrawal (Civil Appeal No.7411/21) opined that the OTS scheme does not have any binding force. In the impugned judgment therein, the High Court has materially erred and exceeded its jurisdiction in issuing writ of mandamus against the Bank. The Division Bench Judgment of Allahabad High Court reported in AIR 2004, All. 164, (Mahalaxmi Floor Mills Pvt. Ltd. Vs. State of U.P.) was relied upon to contend that OTS scheme is not binding and the borrower has no right whatsoever to get a writ of mandamus from this Court.
14. The parties confined their arguments to the extent indicated above.
15. We have heard the parties at length and perused the record.
16. It is apposite to quote the document dated 09.3.2021, (Annexure A-1) in toto, which is foundation for the case set up by the petitioner :-
Without Prejudice
“To,
Shri Mohanlal Patidar
206, Kharkheda, Teh-Shyampur
Dist : Sehore (M.P.)
Dear Sir,
Scheme for One Time Settlement – Maha Samadhan Yojana 2020-21 Intimation Letter
CIF No.40129973884_ Branch Asset Recovery branch, Jabalpur.
1. Bank of Maharashtra has come out with a scheme for One Time Settlement (OTS) of Non-Performing assets as on 31st March 2020 in some eligible categories. In this connection, we would like to advise you to contact the Bank for eligibility under MAHA SAMADHAN YOJANA 2020-21 scheme :
Outstanding Balance as on:
