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 OTS dated 21.09.2017, the State Bank of India has preferred the present appeal.
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 21.05.2018 with interest.
3 That thereafter the Bank floated another OTS Scheme for settlement of outstanding payment of Rs.9,48,39,614/- for an amount of Rs.4,48,79,711/-. By the impugned judgment and order the High Court has set aside the communication dated 24.02.2021 rejecting the OTS offer of Rs.2.05 crores made by the borrower and 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. Shri Sanjay Kapur, learned counsel appearing on behalf of the Bank has vehemently submitted that the High Court has committed a very serious error in granting further six weeks’ time to the borrower to make the payment of balance amount due and payable under the OTS which was due and payable in the year 2017, in exercise of powers under Article 226 of the Constitution of India. It is submitted that therefore the High Court in exercise of powers under Article 226 of the Constitution of India ought not to have granted any further time de hors the sanctioned scheme and/or the sanction letter dated 21.11.2017 and that too in exercise of powers under Article 226 of the Constitution of India. It is submitted that apart from the fact that the issue involved in the case of Sardar Associates (supra) was entirely different, the decision in the case of Bijnor Urban Cooperative Bank Limited (supra) is subsequent and on the point the same was binding upon the High Court and the High Court ought to have followed the same. 1 Learned Advocate appearing on behalf of the borrower has submitted that the appellant being a State is duty bound to act in a fair, transparent and non-discriminatory manner and any arbitrary action of the Bank is amenable to the writ jurisdiction of the High Court. It is submitted that the same is contrary to the spirit of the guidelines of the Reserve Bank of India, especially since one of the Scheduled Banks have already set a criterion of such nature which has also been dealt with by the High Court in the case of Anu Bhalla and Another vs.
7 It is further submitted by learned Advocate appearing on behalf of the respondent that the High Court has rightly observed that the decision of this Hon’ble Court in the case of Bijnor Urban Cooperative Bank Limited (supra) is distinguishable since it deals with the issue of grant of OTS and not extension of time once OTS has already been granted and acted upon by the parties. INR 8,01,45,000/- within the stipulated time by selling its residential establishment; (ii)
In addition to the above, the cleared pending mortgage lien of INR 3,50 crores to the appellant – bank; (iii) the respondent – borrower sold 31% of its share in commercial establishment and used the advance of INR 3.50 crores to repay the OTS amount to the appellant – bank; (iv) the remaining amount had to come by the sale of the other property and therefore the extension was sought on this ground alone which was in the knowledge of the officials of the bank; (v) the respondent – borrower is an MSME and does not have the requisite legal framework which is as efficient/effective as the SARFESI Act to retrieve its dues from defaulting parties; 4.9 It is submitted that the respondent has paid the entire amount with interest and is ready to pay further reasonable interest with this Hon’ble Court or the Bank deem fit to impose which would balance both the appellant – bank and that of the respondent – borrower. 1
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Therefore, the short question which is posed for consideration of this Hon’ble Court is whether in the facts and circumstances of the case the High Court is justified in extending the period to make the payment of balance amount under sanctioned OTS Scheme beyond the time granted under the sanctioned OTS Scheme, while exercising the powers under Article 226 of the Constitution of India? 3
In the case of Bijnor Urban Cooperative Bank Limited (supra) this Court answered the following two questions: “(i) Whether benefit under the OTS Scheme can be prayed as a matter of right?; (ii) Whether the High Court in exercise of powers under Article 226 of the Constitution of India can issue a writ of mandamus directing the Bank to positively consider the grant of benefit under the OTS Scheme and that too de hors the eligibility criteria mentioned under the OTS Scheme?” 4 On a detail analysis of the OTS Scheme, it is 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. Though the decision of this Court in the case of Bijnor Urban Cooperative Bank Limited (supra) was specifically pressed in service on behalf of the Bank and was pointed out to the High Court, the High Court instead following the binding decision of this Court in the case of Bijnor Urban Cooperative Bank Limited (supra) has not followed the same by observing that the earlier decision of this Court in the case of Sardar Associates (supra) is more elaborate. 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. 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. In the letter dated 21.11.2017
it was specifically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21.05.2018, otherwise OTS would be rendered infructuous.
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The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS Scheme still it be granted further extension as a matter of right. However, in the facts and circumstances of the case there shall be no order as to costs.
Case Title: STATE BANK OF INDIA Vs. ARVINDRA ELECTRONICS PVT. LTD. (2022 INSC 1168)
Case Number: C.A. No.-006954-006954 / 2022
