Bank/Banking: One Time Settlement Scheme (OTS) – No borrower can, as a matter of right pray for a grant for the benefit of one time settlement scheme – No writ of mandamus can be issued by the High Court in exercise of Art.226 of the Constitution of India, directing the financial institution/bank to positively grant a benefit of OTS to a borrower – The grant of benefit of OTS Scheme is subject to the eligibility criteria and the guidelines issued from time to time – In the instant case, State Bank of India sanctioned a cash credit in favour of the borrower which was classified as NPA in 2015 – Bank came out with OTS scheme which provided for making payment as settled, within 6 months – Bank sent OTS offer to the borrower which was accepted by him and certain amount was paid from time to time – However, when borrower asked for extension of time for the remaining amount, the bank refused – Borrower filed writ petition u/Art.226 of Constitution of India before High Court seeking extension of time for outstanding amount, which was granted by High Court – On appeal, held: It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS Scheme on or before the date mentioned in the sanctioned letter – Even during the pendency of writ petition, three different OTS schemes were floated by bank and offered to borrower which were refused by him – Rescheduling the payment under OTS scheme can be done only by mutual consent of borrower and bank u/s.62 of Contract Act – Order of High Court is unsustainable. Allowing the appeal, the Court
HELD: 1. In the case of Bijnor Urban Cooperative Bank Limited, Bijnor and Others vs. Meenal Agarwal, it was observed and held by this Court that, (i) no borrower can, as a matter of right pray for a grant for the benefit of one-time settlement scheme;
(ii) No writ of mandamus can 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; (iii) The grant of benefit of OTS Scheme is subject to the eligibility criteria and the guidelines issued from time to time. [Paras 6.1 and 6.4][1081-B-C]
Bijnor Urban Cooperative Bank Limited, Bijnor and Others vs. Meenal Agarwal and Others, (2021) SCC Online SC 1255 – relied on.
2. In the present case in the sanctioned letter dated 21.11.2017 it was specifically provided that the entire payment to be made by 21.05.2018. The schedule to make the payment under the instalments was also mentioned. It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS Scheme on or before the date mentioned in the sanctioned letter. The prayer of the borrower for extension of nine months came to be rejected as far as back on 16.05.2018 and the borrower was directed to make the payment of Rs.2.52 crores by 21.05.2018, the borrower failed to make the payment. At this stage, it is required to be noted that during the pendency of the writ petition there were as many as three different OTS floated by the Bank and the Bank offered the respondent borrower to settle the outstanding payment under the OTS Scheme. However, the borrower did not opt for any of the scheme. By the impugned Judgment and Order the High Court has granted further six weeks’ time from 10.03.2022 which would be beyond even the time prayed by the borrower in the year 2018. Even otherwise as rightly submitted on behalf of the Bank directing the Bank to reschedule the payment under OTS would tantamount to modification of the contract which can be done by mutual consent under Section 62 of the Indian Contract Act. By the impugned judgment and order rescheduling the payment under the OTS Scheme and granting extension of time would tantamount to rewriting the contract which is not permissible while exercising the powers under Article 226 of the Constitution of India. [Para 6.5][1081-G-H; 1082-A-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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