Banks cannot be directed to grant benefit of Onetime Settlement Scheme under Article 226: SC

State Bank of India Vs Arvindra Electronics Pvt. Ltd (Supreme Court of India)

Conclusion: Supreme Court held that no borrower can, as a matter of right pray for a grant for the benefit of one­time settlement scheme and writ of mandamus cannot be issued by the High Court in exercise of Article 226 of the Constitution of India, directing the financial institution/bank to positively grant a benefit of OTS to a borrower.

Facts: In the said case, the appellant feeling aggrieved and dissatisfied with the impugned judgment and order dated 10.03.2022 passed by the High Court of Punjab and Haryana at Chandigarh in CWP No.12953 of 2018 by which in exercise of powers under Article 226 of the Constitution of India the High Court has granted further six weeks’ time to the original writ petitioner to make the payment of balance amount (Rs.2.02 crores with interest) as per the sanctioned letter of One time settlement [OTS] dated 21.09.2017, the State Bank of India has preferred the present appeal.

The appellant sanctioned a cash credit in favour of the respondent. In 2012, the account of the borrower was classified as NPA in 2015. The Bank came out with one time settlement dated 01.09.2017. OTS specifically provided for making payment as settled under the OTS scheme within six months from the date of sanction, else infructuous. The Bank sent OTS offer to the borrower for OTS and ledger outstanding as on 31.03.2017 was Rs. 13,99,89,273.99. The amount payable under the OTS was Rs. 10,53,75,069.74. The borrower accepted the OTS offer and deposited an amount of Rs. 1.40 crores with the Bank on 31.10.2017. The Bank sanctioned OTS and confirmed receipt of Rs. 1.40 crores. Under the sanctioned OTS the borrower was required to deposit 25% of the OTS amount by 21.12.2017 and the balance amount to be deposited within six months from the date of letter upto 2 1.05.2018 with interest. The borrower was also informed that on non­ payment of the aforesaid amount within the time stipulated under the OTS, the OTS will be rendered infructuous. The borrower requested extension of 8 to 9 months for repayment of the balance amount of Rs.2.50 crores which was declined by the bank. Feeling aggrieved the borrower filed the writ petition before the High Court for extension of 8 to 9 months to pay the outstanding amount of Rs.2.52 crores beyond 21.05.2018. By the impugned judgment and order the High Court has granted further six weeks’ time from the impugned judgment and order passed by the High Court to the borrower to make the payment of Rs.2.02 crores with interest as per the OTS sanctioned letter dated 21.09.2017.

Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High Court granting further six weeks’ time to the borrower to make the payment of balance amount under the OTS Scheme, the Appellant Bank has preferred the present appeal.

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