JUDGMENT By the Court.—We have heard Shri A.N. Singh, learned counsel appearing for the petitioners. Shri P.K. Singhal appears for respondents-bank. 2. The petitioner-company was granted financial assistance of Rs. 45.6 lacs as term loan, and Rs. 24 lacs as working capital loan on 22.11.2005. It was required to re-pay the loan amount beginning from the year 2007. Since the unit became functional only in 2007, the respondents-bank rescheduled the repayment to start from 2009. The petitioner defaulted in payment of the amount, on which on 30.9.2009, the loan account was declared as non-performing asset. The petitioner negotiated for one time settlement, of the defaulted amount, and dissatisfied with the process, is challenging invocation of proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to recover the recalled unpaid loan amount from the mortgaged assets. 3. Shri A.N. Singh, learned counsel appearing for the petitioner submits that the bank has deviated from the mandate of the circulars issued by the Reserve Bank of India, laying down the guidelines for rehabilitation of the small scale industries, and that without finalising the OTS proposal, the notice under Section 13 (2) of the SARFAESI Act, 2002 was sent for recovery of Rs. 1, 40, 49, 825/- worked out on the total outstanding liability towards SOD; OSL-1; OSL-II and WCTL loans as on 31.12.2012, giving rise to this writ petition. 4. Shri A.N. Singh submits that the bank had accepted the OTS proposal of Rs. 106 lacs and the petitioner had acted on the proposal and deposited Rs. 5, 30, 000/-. He has relied upon a judgment of Supreme Court in Sardar Associates and others v. Punjab & Sindh Bank, 2010 (1) AWC 158 (SC), in which the Supreme Court had set aside the judgment of the High Court, and had held that the circulars and guidelines issued by the Reserve Bank of India for OTS are binding on the nationalised banks under Sections 21, 35-A and 46 (5) of the Banking Regulations Act, 1949. 5. It is submitted by Shri A.N. Singh that the Reserve Bank of India has issued a Circular dated May 4, 2009 to all Scheduled Commercial Banks in respect of credit delivery to the Micro and Small Enterprises Sector, to frame a proposal for OTS. 5. It is submitted by Shri A.N. Singh that the Reserve Bank of India has issued a Circular dated May 4, 2009 to all Scheduled Commercial Banks in respect of credit delivery to the Micro and Small Enterprises Sector, to frame a proposal for OTS. The guidelines were issued in recognition of the problems faced by Micro and Small Enterprises sector, particularly with respect to rehabilitation of potentially viable sick units, after considering the recommendations of Working Group under the Chairmanship of Dr. K.C. Chakrabarti, Chairman & Managing Director, Punjab National Bank. Paras 8, 9 and 10 of the directions issued in the circular provided: “8. The Group has also recommended that Reserve Bank of India may announce a One Time Settlement Scheme (OTS) for the MSME sector. However, any policy on settlement of non-performing loans is essentially a management function to be exercised by individual banks, based on their commercial judgment. It is necessary that the banks have their own non-discretionary OTS policy, which enables their officials to make quick and judicious decisions on OTS. As such, banks are advised to put in place a suitable OTS for this sector. 9. Accordingly, in the light of the recommendations of the Group and the Banking Codes Standards Board of India’s Code of Commitment for the MSE borrowers, your bank may undertake a review and put in place the following policies for the MSE sector, duly approved by the Board of Directors: (i) Loan policy governing extension of credit facilities. (ii) Restructuring/Rehabilitation policy for revival of potentially viable sick units/enterprises. (iii) Non-discretionary One Time Settlement scheme for recovery of non-performing loans. 10. Please acknowledge receipt and forward an Action Taken Report by June 30, 2009. Yours faithfully, (B.P. Vijayendra) Chief General Manager” 6. It is submitted by Shri A.N. Singh that inspite of repeated directions issued by this Court, the bank has not produced the revised policy for OTS worked out on the guidelines of RBI, in its Circular dated 4.5.2009. The petitioner had calculated the amount payable by him under OTS Scheme, worked out on the basis of parameters given to him by the bank, and in which the penal interest was not to be calculated. The petitioner had calculated the amount payable by him under OTS Scheme, worked out on the basis of parameters given to him by the bank, and in which the penal interest was not to be calculated. The bank has not followed the guidelines of the Reserve Bank of India in framing a special non-discriminating OTS scheme for non-performing accounts under Micro and Small Enterprises sector, causing serious discrimination with the heavy and medium industries. He further submits that the Bank had agreed to the amount of Rs. 106 lacs and thereafter gone back on its promise to show better result in recoveries. The bank has acted in an arbitrary and discriminatory manner in treating the petitioner. Instead of rehabilitating the unit and giving it a helping hand, the bank has tried to extract a larger amount from the petitioner. In case the bank gives reasonable time, and acts in accordance with the guidelines issued by the Reserve Bank of India, the petitioner is still ready and willing to pay the OTS amount. 7. Shri P.K. Singhal, learned counsel appearing for the respondents-bank submits that the Syndicate Bank had considered the circulars issued by the Reserve Bank of India and has framed a special non-discriminatory OTS scheme for non-performing accounts under the Micro and Small Enterprises sector vide Circular dated 24.9.2009. The circular is applicable, where the original advance limit is upto Rs. 50 lacs. So far as the advances of more than Rs. 50 lacs is concerned, the bank has decided to go alongwith the existing recovery policy guidelines with the other terms and conditions laid down in the policy to be adhered by the bank. 8. It is submitted by Shri Singhal that the account was declared as non-performing asset on 30.9.2009. The petitioner is not willing to pay the amount. It did not accept the OTS offered by the bank worked out at Rs. 114 lacs. In case it was actually willing to accept the offer, there was not much difference between Rs. 106 lacs admitted by the petitioner and Rs. 114 lacs. The petitioner has paid only Rs. 5, 30, 000/- and had delayed the matter for its advantage for about two and half years. 114 lacs. In case it was actually willing to accept the offer, there was not much difference between Rs. 106 lacs admitted by the petitioner and Rs. 114 lacs. The petitioner has paid only Rs. 5, 30, 000/- and had delayed the matter for its advantage for about two and half years. Shri Singhal submits that the value of the mortgaged asset has increased and keeping in view of the recoverability of the dues, for which the bank was willing to accept the OTS for Rs. 114 lacs in the year 2009, and looking into the conduct of the petitioner, the bank decided to proceed with the rights given to it under the SARFAESI Act, 2002. 9. So far as the events of negotiation are concerned, it will be useful to quote paragraphs 21, 22, 23, 24, 25, 26, 27 and 28 of the counter-affidavit of Shri B.M. Satyarthi, Chief Manager, Syndicate Bank, Mathura as follows : “21. That the contents of paragraphs 13 and 14 of the writ petition are wrong and are denied. OTS proposal is not subject to calculation on simple rate or so, that too by the borrower. It is an internal exercise of the bank, based on various parameters. The letter Annexure-4 is the own creation of the petitioner. The specific offer from the side of borrower for consideration of proposal under OTS was required and accordingly it was asked vide bank letter dated 18.11.2010 (Annexure-5) to deposit 25% of minimum offer of Rs. 112.00 lacs, recommendable from branch level to the competent authority without any committee. But the borrower at his own offered as offer of amount of Rs. 106.00 lacs and at his own deposited the 5% of the same under no lien account. The borrower kept on pursuing consistently through many number of rounds of letters and talks including contacting at Corporate Office. On other hand bank also made efforts so that the offer should improve to the extent as permitted under the OTS norms of the bank. In case the petitioner come up to the bare minimum level of offer of Rs. 112.0 lacs, they were required to deposit 25% as the down payment being 28.00 lacs. On other hand bank also made efforts so that the offer should improve to the extent as permitted under the OTS norms of the bank. In case the petitioner come up to the bare minimum level of offer of Rs. 112.0 lacs, they were required to deposit 25% as the down payment being 28.00 lacs. However in case the petitioners did not have arrangement instantly they could represent for lower percentage of the down payment which could have been considered by the competent authority but they did not do so and again kept insisting for offer of Rs. 106. 00 lacs. Therefore any guidelines on the percentage of down payment @ 25% though laid down cannot be a reason for accepting or rejecting the OTS. Though it was asked for Rs. 112.00 lacs (Annexure 5) by the Branch without any commitment. However, the Regional Office, Agra of the Bank was of the view that the minimum offer should be of Rs. 114.00 lacs. Accordingly it was advised to improve the offer vide bank letter dated 11.12.2010 to Rs. 114.00 lacs deposit initial amount of 25% of the amount (Annexure 6 to the writ petition) which could be considerable offer for sanction as per bank guidelines. 22. That the contents of paragraph 15 of the writ petition are wrong and are denied. The petitioners at their own met with the Executive Director of the Bank at Agra when the Executive Director was on his tour to Branches/Regions on 6.1.2011. As per the own version of the petitioners, the Executive Director has directed to the respondent No. 4 to finalise the OTS proposal afresh, hence there was no commitment on the part of bank for any amount as stated by the petitioners. 23. That the contents of paragraphs 16 to 20 of the writ petition are not admitted except that the bank had issued notice dated 4.1.2011 under Section 13 (2) to the petitioner. Bank never accept the proposal of the petitioner of OTS at an amount of Rs. 106 lakhs. The allegations of the petitioner in the paragraphs under reply are totally false. The Bank being the custodian of public money cannot afford to consider any OTS proposal by compromising on the basic parameters which are necessarily required to be taken into account while sacrificing interest through OTS to borrowers who by their way of actions are a willful defaulter. The allegations of the petitioner in the paragraphs under reply are totally false. The Bank being the custodian of public money cannot afford to consider any OTS proposal by compromising on the basic parameters which are necessarily required to be taken into account while sacrificing interest through OTS to borrowers who by their way of actions are a willful defaulter. The said amount in the name of the down payment being 5% of the offer amount deposited by borrower vide letter dated 18.4.2011 (Annexure 10 to the writ petition) is his own decision. There is no communication from any of the offices of bank for so, including letter vide Annexure-10 whose language itself proves that it is at his own giving reference of his own letter dt. 30.3.2011. 24. That the contents of paragraph 21 of the writ petition are matter of record. That Annexure-11 is the own creation of the petitioners whereas the letter of bank dt 14.3.2011 (Annexure-9) which he refers, does not have any such mention and it is also clear that asking for specific offer of Rs. 112.00 lacs is without any commitment on the part of Branch until the OTS is sanctioned by the Competent Authority. 25. That the contents of paragraph 22 of the writ petition are wrong and are denied. The petitioner was continuously pursuing the OTS via-a-vis the bank has been advising the petitioner to improve the offer which the petitioner did not do. 26. That the contents of paragraph 23 of the writ petition are wrong and are denied. There was no settlement with regard to the OTS between the parties. When the petitioner did not improve the offer amount, the bank sent the letter dated 3.1.2012 (Annexure-12). 27. That the contents of paragraph 24 of the writ petition are wrong and are denied. There was no specific offer of the petitioner for OTS except that of dated 30.3.2011 and when observed by the bank that the negotiations for OTS from the side of the petitioner don’t move improving the offer amount from Rs. 106.00 lacs, the matter was treated as closed and the petitioner was informed vide Annexure-12 that the further course of recovery action pursuant to notice Under Section 13.2 would continue vis-a-vis reply to his objections vide his letter dated 3.3.2011 (Annexure-8). 28. That the contents of paragraph 25 of the writ petition are wrong and are denied. 106.00 lacs, the matter was treated as closed and the petitioner was informed vide Annexure-12 that the further course of recovery action pursuant to notice Under Section 13.2 would continue vis-a-vis reply to his objections vide his letter dated 3.3.2011 (Annexure-8). 28. That the contents of paragraph 25 of the writ petition are wrong and are denied. The petitioners in the name of OTS delayed the repayment of loan as long as they can and when bank rejected the OTS proposal they have filed the present writ petition to avoid the repayment of loan advanced to them.” 10. A close examination of the dates and events, which led to rejection of the OTS proposal by the bank, would show that the petitioner was not willing to increase the amount calculated by it at Rs. 106 lacs as the OTS amount in February, 2011. In the last letter of the Bank sent with regard to the OTS proposal dated 11.12.2010, the bank expressed its willingness to consider the offer of Rs. 114 lacs, so that an appropriate decision be taken and advised him to deposit 25% of OTS proposal, as down payment in no lien account, which is required for considering OTS proposal as per bank guidelines. The petitioner did not comply with this letter dated 11.12.2010. The petitioner’s conduct clearly shows that it was not interested in making any payment and only wanted to drag the proceedings. 11. We do not find that the bank had not complied with the directions of the Reserve Bank of India, in framing a reasonable non-discriminatory policy for OTS for non-performing accounts under the Micro and Small Enterprises Sector. The bank worked out a policy on 24.9.2009 vide Circular No. 213-2009-BC-REC-09 for working out detailed procedure for coverage of accounts; asset classifications; method of payment; future interest, and sanctioning authority for advances upto Rs. 50 lacs. For the advances of more than Rs. 50 lacs, the bank decided to continue with the existing policy, which was in vogue at that time following the matrix chart. 12. We do not find any substance in the argument of learned counsel appearing for the petitioner, that the bank was unreasonable, arbitrary and unwilling to settle the OTS proposal. The admitted facts culled out from the pleadings would show that the bank was more than willing and had actually entered into long and active negotiations with the petitioner. 12. We do not find any substance in the argument of learned counsel appearing for the petitioner, that the bank was unreasonable, arbitrary and unwilling to settle the OTS proposal. The admitted facts culled out from the pleadings would show that the bank was more than willing and had actually entered into long and active negotiations with the petitioner. The bank insisted upon OTS amount of Rs. 114 lacs on 11.12.2010 and requested the petitioner to deposit 25% in no lien account. The bank made an invitation to offer within its policy considering various aspects, including the asset classification and recoverability of the loan. The difference of six lacs taking into account the liability was not such, which can be said so arbitrary, unreasonable and discriminatory, that the Court may record a finding against the bank, to quash the notice under Section 13 (2) of the SARFAESI Act, 2002. 13. In Sardar Associates (supra), the Punjab & Sind Bank had turned down the OTS proposal of the borrower. It was held by the Supreme Court, that the Board of Directors of the bank could not have deviated from the guidelines on a minor matter, which did not accept the broad aspects of policy decision and had adopted a discriminatory approach. The Supreme Court held in para-42 of the judgment that if in terms of the guidelines issued by the Reserve Bank of India, a right is created in a borrower, there is no reason as to why a writ of mandamus could not be issued. 14. In the present case, we do not find that guidelines issued by the Syndicate Bank on 24.9.2009, for the borrowers, where the original advance limit is more than Rs. 50 lacs, created any right in favour of the petitioner for any amount for one time settlement, nor the petitioner has demonstrated any discrimination exercised by the bank with any other borrowers. 15. The petitioner has made an application under the Right to Information Act, 2005 and has travelled upto Central Information Commissioner to be given the note sheet of the negotiation. 15. The petitioner has made an application under the Right to Information Act, 2005 and has travelled upto Central Information Commissioner to be given the note sheet of the negotiation. We are of the view, that the note sheet of the negotiation in a process to arrive at a decision, to enter into a contract for OTS, will not have any evidentiary value to record any findings for or against any party, unless there is any such pleading or claim of any promise, or of any mala fide intentions. The petitioner has not placed on record any such material, which may satisfy us that the bank had agreed to Rs. 106 lacs as the OTS proposal and had gone back on its promise, in asking for payment of Rs. 114 lacs. As observed above, taking into account the total liability, the difference in the OTS amount proposed by the bank and offered by the petitioner was not such, which can be said to be arbitrary or may have discriminated the petitioner to interfere in the matter. 16. The writ petition is dismissed. ——————