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2022 DIGILAW 228 (CAL)

Nilesh Agarwal v. State Bank Of India

2022-02-14

RAJASEKHAR MANTHA

body2022
JUDGMENT 1. The writ petitioner seeks intervention of this Court under Article 226 of the Constitution of India, to compel the State Bank of India to allow him to participate in an OTS Scheme of 2021 dated January 13, 2022. 2. The facts relevant for the instant petition are that the petitioner has outstanding dues to the extent of Rs. 7 crores to the State Bank of India. 3. Two earlier OTS Schemes/settlements, compromises have failed. The petitioner, under the first settlement dated October 15, 2018, did not make any payment. The second settlement, recorded in an order of the Debt Recovery Tribunal at Siliguri on June 12, 2019 entitled 'consent decree' was also not honoured. 4. The bank invoked the terms of the 'consent decree' and applied for the original application being revived. On the bank's application, the Debt Recovery Tribunal recording that a 'consent decree' was passed on 12.06.2021, directed issuance of recovery certificate. The said order is pending challenge before the DRT itself. 5. Mr. Joy Saha, learned Senior Counsel appearing for the petitioner, by reference to the said OTS Scheme, particularly, Clauses 1(ii) to iv and v and 2.1 (a.ii) would argue before this Court that the petitioner was indeed eligible under the said Scheme and the bank at least ought to have invited him to participate thereunder. 6. The bank has discriminated in refusing the petitioner's request. Urgency is pleaded in that time frame under Clause 1 (ii), is fast approaching. 7. Mr. Saha relies upon a decision of the Hon'ble Supreme Court in the case of Sardar Associates and others vs. Punjab & Sind Bank and others reported in (2009) 8 SCC 257 , particularly, paragraphs 19, 33 and 36 thereof. 8. Mr. Om Narayan Rai, learned counsel for the State Bank of India relies upon Clause 2.1(a.v) to indicate that the petitioner is not eligible under the Scheme since a decree of consent has already been passed by the DRT. 9. Mr. Rai relies upon a decision of the Hon'ble Supreme Court in the case of Bijnor Urban Cooperative Bank Limited, Bijnor and others vs. Meenal Agarwal and others reported in 2021 SCC Online SC 1255. This Court has carefully considered the rival contentions advanced by the parties. 10. The question is whether a OTS Scheme offered by a bank nationalized or otherwise to its borrower, can be enforced against the bank. 11. This Court has carefully considered the rival contentions advanced by the parties. 10. The question is whether a OTS Scheme offered by a bank nationalized or otherwise to its borrower, can be enforced against the bank. 11. The observations of the Hon'ble Supreme Court in the Sardar Associates case (supra), were in the context of a Scheme of the Reserve Bank of India. The constituent of the bank was allowed to participate in the Scheme and was thereafter refused benefit thereunder. At no place in the said judgment has the Supreme Court laid down that every constituent of a bank is entitled, as a matter of right, to enforce any Scheme floated by the bank against it. General eligibility under a Scheme, can normally be ascertained from the text of the Scheme itself. The actual entitlement thereof would depend on the facts and circumstances of each case. The conduct of a borrower, the reliability and viability of the offer made and the commercial aspects thereof are in the exclusive domain of the lender bank. 12. Unlike a service benefit or any other like benefit against the State or its instrumentality where a person is eligible at least to compete and participate in the same, in an OTS Scheme of a banker for its customer, a right to participate cannot be claimed as a matter of right. An OTS Scheme is an invitation to offer albeit strictly on its terms. It is for the bank to decide as to whether a customer/defaulter is eligible or not. After all a loan agreement is a private contract between a bank and its constituent. 13. The observations made in the Sardar Associates case (supra) must be deemed as those in the context and special facts and circumstances of the said case. They do not lay down any universal law that rights accrue to a borrower defaulting or otherwise, under every OTS Scheme against the bank. The case is otherwise distinguishable on facts. The case was one where the bank in question had deviated from the guidelines of the RBI. It is now well-settled that judgment of Court should not be read its statute. 14. The case is otherwise distinguishable on facts. The case was one where the bank in question had deviated from the guidelines of the RBI. It is now well-settled that judgment of Court should not be read its statute. 14. From the observations of the Supreme Court in Bijnor Urban Cooperative Bank Limited case (supra), it clearly transpires in an OTS Scheme of the bank, whether a constituent is eligible or not, would be a matter within the discretion and exclusive domain of the bank in question. Reference in this regard is made to Paragraphs 28 and 30 of the said decision, which are set out hereinbelow. 28. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty. 30. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty. 30. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove. 15. In the facts of the instant case, this Court finds that the petitioner has already defaulted in honouring two earlier settlements, OTS Schemes and/or compromises. This Court is not inclined to invoke the discretionary jurisdiction under Article 226 of the Constitution of India to allow any benefit to the petitioner. 16. This Court has also noted the submissions of Mr. Rai, that there is decree passed by the Tribunal, which is pending challenge. This Court is not desirous of making any observations that would affect any proceeding. For the reasons stated hereinabove, the writ petition fails and shall stand dismissed. 17. It is made clear that this Court has not entered into the merits of any of the claims of the petitioner and the bank against one another in any pending proceeding. 18. This Court is not desirous of making any observations that would affect any proceeding. For the reasons stated hereinabove, the writ petition fails and shall stand dismissed. 17. It is made clear that this Court has not entered into the merits of any of the claims of the petitioner and the bank against one another in any pending proceeding. 18. The aforesaid order shall not also prejudice the bank's decision or discretion, if any, in future in considering any offer of the petitioner. There shall be no order as to costs. 19. All parties shall act on the server copy of this order duly downloaded from the official website of this Court.