ORDER Petitioner, a Private Limited Company, has filed this writ application for a mandamus directing the respondent State Bank of India and its authorities to accept its proposal for one time settlement of its term loan and cash credit accounts in terms of SBI OTS SME 2010 Scheme. Its further prayer is for a direction to the respondents to return all the securities against the said term loan and cash credit accounts, including title documents of immovable assets and other documents lying pledged, along with no dues certificate after receiving payment of the settlement amount under the Scheme. 2. Petitioner was registered as a Private Limited Company with the Registrar of the Companies in the year 1999-2000. The Company was intended to manufacture and produce Zinc Sulphate through its manufacturing unit. It had a Board of Directors consisting of three Directors. It had another sister concern in the name of M/s Ram Ganga Chemicals Private Limited which was run by the Directors from before and it had financial relation with the respondent-Bank. Hence, the petitioner-Company also approached the respondent-Bank for financial assistance. A detailed project report was prepared with an estimated requirement of term loan of a sum of Rs.47.23 lacs and working capital of a sum of Rs.33.04 lacs. The project report with the estimated requirement of financial assistance was submitted to the respondent-Bank. The respondent-Bank made enquiries and was satisfied with the project report of the petitioner-Company. But, it took two long years to the respondent-Bank to sanction an amount of Rs.15 lacs only towards term loan and cash credit facility of Rs.20 lacs only, vide its letter of sanction dated 31.05.2001. However, as required by the respondent-Bank, the petitioner-Company furnished margin money in the shape of 50% and 40% respectively for the two loan accounts, besides pledging fixed deposit of Rs.2.25 lacs. Unfortunately, the accounts of petitioner-Company could not function well due to some intervening practical difficulties coupled with the inadequacy of the amount of loan sanctioned by the respondent-Bank. Hence, vide letter dated 04.03.2002 and 19.09.2002, it requested the respondent-Bank for an additional limit of Rs.10,66,165/- for purchasing machineries and for other needs. The request of the petitioner-Company was not accepted and the Bank kept on sitting tight over the matter. As a result, the petitioner-Company attracted sickness and lost its production and got closed forever. Hence, vide letter dated 04.03.2002 and 19.09.2002, it requested the respondent-Bank for an additional limit of Rs.10,66,165/- for purchasing machineries and for other needs. The request of the petitioner-Company was not accepted and the Bank kept on sitting tight over the matter. As a result, the petitioner-Company attracted sickness and lost its production and got closed forever. In the circumstances, the respondent-Bank moved the Debt Recovery Tribunal, Patna under Section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 through O.A. No.39 of 2003 which was allowed ex parte and the Tribunal issued recovery certificate. However, a recall application was filed, vide M.A. No.31 of 2005, and the ex parte order was recalled, vide order dated 13.07.2009 (Annexure-1), and the O.A. was restored and the petitioner-Company was allowed to file written statement. It is stated that the said O.A. is still pending for disposal. Meanwhile, the respondent-Bank floated a one time settlement scheme in the year 2010 vide SBI OTS SME 2010 (for short ‘the said Scheme’), circulated through its letter dated 05.03.2010 (Annexure-2), wherein the existing non-performing assets, classified as doubtful or loss asset as on 31.03.2009, were called upon for settlement of the accounts in terms of the Scheme. Accounts of the petitioner had already been classified as non-performing assets prior to the cut-off date. Hence, as per its case, it was eligible for settlement of its accounts under the Scheme. Accordingly, vide its proposal dated 17.05.2010 (Annexure-3), it applied for settlement of its term loan and cash credit accounts with the respondent-Bank in terms of the said Scheme, along with the deposit of upfront money for the purpose, vide receipt dated 18.05.2010. The petitioner-Company also informed the Tribunal in the said O.A. No.39 of 2003 with regard to submission of its proposal for settlement of its accounts with the Bank in terms of the said Scheme. The matter remained pending with the Bank and the petitioner-Company moved the tribunal on many occasions for necessary direction to the respondent-Bank to appear in the O.A. and take a stand in respect of proposal submitted by it, which the Bank had failed to do. In the circumstances, petitioner-Company had to file this writ application with the aforesaid prayer. 3. The respondent-Bank has appeared in the case and has filed its counter affidavit. In the circumstances, petitioner-Company had to file this writ application with the aforesaid prayer. 3. The respondent-Bank has appeared in the case and has filed its counter affidavit. Shorn of other details mentioned in the counter affidavit in respect of the transactions with the petitioner-Company in course of sanction of the term loan and cash credit facility in view of its project report, the stand of the Bank in the case is that the petitioner-Company was not eligible for being allowed settlement under the said Scheme as the Company was found to be a ‘willful defaulter’. It is stated that in spite of assistance it did not install the machines and the stock of raw materials, purchased out of bank finance, was willfully diverted by the petitioner-Company to its sister concern namely, M/s Ram Ganga Chemicals Private Limited, which fact was admitted by the petitioner-Company itself in its letter dated 04.09.2002 (marked as Annexure-C). It is also stated that the proposal of the petitioner was rejected on 25.05.2010 itself and was communicated to the petitioner-Company. Still, it has taken two long years to come to this Court. It is also stated that the Bank has come with another scheme namely ‘SBI OTS MSME 2012’ and the petitioner-Company may submit its proposal in terms of the same. 4. Petitioner has filed a detailed rejoinder to the counter affidavit, the sum and substance of which is that it was on account of delay on the part of the respondent-Bank in sanctioning the loan amount and inadequacy of the same which had caused the unit to close down at its very inception and there was no willful default on its part. For this the petitioner has annexed many documents with its rejoinder. In the rejoinder the receipt of the said rejection letter dated 25.05.2010 has been denied and it has also been said that the same is a non-speaking letter. It is also said that the O.A. No.39 of 2003 is still pending before the Tribunal. 5. Rejection of the proposal of petitioner-Company for settlement of its accounts under the said Scheme is annexed as Annexure-B with the counter affidavit. This Court finds that the letter is apparently a non-speaking one. It is also said that the O.A. No.39 of 2003 is still pending before the Tribunal. 5. Rejection of the proposal of petitioner-Company for settlement of its accounts under the said Scheme is annexed as Annexure-B with the counter affidavit. This Court finds that the letter is apparently a non-speaking one. Referring to the application of one of the Directors dated 17.05.2010 for settlement of dues under the said Scheme it is only said that ‘a/c is not eligible under SBI SME OTS 2010.’ The letter does not disclose any reason, whatsoever, for holding the petitioner-Company as not eligible for settlement of its accounts under the said Scheme. However, in the counter affidavit a stand is taken that the petitioner was ‘willful defaulter’ as admittedly it had diverted the raw materials, purchased out of bank finance, to its associate M/s Ram Ganga Chemicals Private Limited. It is said that this fact has been admitted by the petitioner-Company in its said letter dated 04.09.2002. Hence, what is required to be examined is whether in the light of this admitted act of diversion of raw materials to its sister concern the petitioner-Company became ineligible for settlement of its accounts under the said Scheme, or not. It may be pointed out that the respondent-Bank has not alleged any other act and/or omission on the part of the petitioner-Company in connection with its transactions with the Bank which could come in the way of acceptance of its proposal for settlement of its accounts under the said Scheme. 6. The 2010 OTS Scheme has been placed on record by the petitioner as Annexure-2. In the Scheme the clause containing ‘Coverage’ defines ‘willful Default’ as follows :- “As practically all small NPAs get branded ‘willful’ default, all accounts with outstandings up to Rs.5 lacs as on the cut-off date and otherwise eligible under the scheme, may be considered as automatically eligible even if the reason of default has been recorded as ‘willful’. In other words, no review of the reason of default will be required for accounts with outstandings up to Rs.5 lacs. In other cases, a review may be undertaken by the authority having powers to sanction the compromise and if on review the default is not willful, the account may be considered under SBI OTS-SME, 2010. In other words, no review of the reason of default will be required for accounts with outstandings up to Rs.5 lacs. In other cases, a review may be undertaken by the authority having powers to sanction the compromise and if on review the default is not willful, the account may be considered under SBI OTS-SME, 2010. On receipt of the compromise amount in full the concerned sanctioning authority will arrange for removal of the name of the borrower from the list of willful defaulters/CIBIL.” 7. The above provisions shows that all accounts with outstanding up to Rs.5 lacs as on the cut-off date and otherwise eligible were to be treated as automatically eligible. In other cases a review was to be undertaken by the authority of the Bank having powers to sanction the compromise and, if on review the default was not found willful, the account could be considered under the said Scheme. The letter dated 25.05.2010, holding the petitioner-Company as ineligible, does not disclose that, even if the petitioner-Company was found defaulter, a review was undertaken to consider its case for bringing it under the scope of the said Scheme. In the counter affidavit, though it is stated that the petitioner-Company was ‘willful defaulter’, but nowhere it is stated that its case was taken up for review by the competent authority in terms of the Scheme at any point of time to hold it as such. From bare reading of the ‘Coverage’ clause of the said Scheme it is apparent that it did not disqualify an applicant from being considered under the Scheme only on account of being a defaulter. It is clear that even, even if the outstanding of the accounts of an applicant was more than 5 lacs as on the cut-off date, its case had to be taken up by the competent authority for review for the purposes for examining its case for brining it under the scope of the said Scheme. Thus, apparently, there was no proper consideration of the proposal of the petitioner-Company for settlement of its accounts under the said 2010 OTS Scheme. Thus, apparently, there was no proper consideration of the proposal of the petitioner-Company for settlement of its accounts under the said 2010 OTS Scheme. Although it has not been annexed with the counter affidavit, but learned counsel for the Bank has furnished a copy of master circular on willful defaulters issued by the Reserve Bank of India, which is dated July 1, 2010, issued to all the scheduled commercial banks, for perusal of this Court as well as a copy of the 2012 OTS Scheme. Apparently, the said master circular is not applicable in the case of the petitioner as the same was issued by the Reserve Bank of India on July 1, 2010 whereas the 2010 OTS Scheme was floated by the respondent-Bank through its circular dated 5th of March, 2010. Moreover, even if the case of the petitioner-Company was required to be reviewed in terms of 2010 OTS Scheme in the background of its conduct prior to the declaration of its accounts as NPA, the circulars of the Reserve Bank of India in respect of the same, as applicable at the relevant time of the alleged “willful default’ by the petitioner-Company had to be taken into account. So far as availing the opportunity of 2012 OTS Scheme is concerned, it was open to the petitioner-Company to do the same. But floating of 2012 Scheme could not be taken as justification for the action of the respondent-Bank in rejecting the proposal of the petitioner-Company for settlement of its accounts under 2010 OTS Scheme without reviewing it in terms of the above clause. Thus, it is apparent that, the proposal of the petitioner-Company for settlement of its accounts under the 2010 OTS Scheme was rejected by the respondent-Bank without application of mind and without reviewing its case in terms of the Scheme, in the light of the relevant circulars of Reserve Bank of India applicable at the relevant time of the alleged default. It may also be noticed that, as per the admitted case of the parties, the O.A. is still pending before the Tribunal and it is not denied that petitioner had moved the Tribunal a number of times for a direction to the respondent-Bank for consideration of its proposal and take a stand before the Tribunal, which it has failed to do till now. Hence, the delay of approximately two years in petitioner-Company moving this Court cannot be treated as prejudicial to the case of the petitioner. 8. As a result, this writ application is allowed. The one sentence letter of the Bank dated 25.05.2010 annexed as Annexure-B with the counter affidavit is held non est in the eye of law and the Bank is directed to consider the proposal of the petitioner-Company submitted through application dated 17.05.2010 under the 2010 OTS Scheme and take an appropriate decision in respect of settlement of accounts of the petitioner-Company in accordance with law as quickly as possible and preferably within three months from the date of receipt/production of a copy of this order.