TMI Blog2021 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee for the purpose of examining the applications received and thereafter the said Committee has to take a decision after considering whether a defaulter is entitled to the benefit of OTS or not after considering the eligibility as per the OTS Scheme. Even otherwise, 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 ₹ 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. The sum and substance of the 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 guidelin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide OTS Circular dated 01.08.2013 which provided that on the conditions contained in the said circular being complied with, the benefit of OTS can be taken by the debtor. The benefit of OTS Scheme came to be extended till 30.11.2019. The original writ petitioner submitted an application for consideration of her case under OTS vide application dated 22.07.2019. Vide communication dated 17.09.2019, her application for grant of benefit under the OTS came to be rejected on the ground that she is not eligible for OTS under the OTS Scheme and that the loan can be recovered by auction of the mortgaged property and that there are chances of recovering the loan amount and that her loan account has been declared as NPA . It appears that to come out of NPA eligibility, the original writ petitioner deposited a sum of ₹ 60 lakhs on 02.03.2020, i.e., after rejection of her earlier application on the ground that as her loan account is NPA , she is not eligible for OTS Scheme. 2.2 The Board of the Bank also passed a resolution dated 28.12.2020 to the effect that original writ petitioner is not eligible for the benefit under the OTS Scheme for the reason that the loan account is fully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even the case of the original writ petitioner was referred to the Settlement Advisory Committee for consideration which after hearing the writ petitioner also rejected her application for grant of benefit under the OTS Scheme. By the impugned judgment and order and in exercise of powers under Article 226 of the Constitution of India, the High Court has issued a writ of mandamus and has directed the Bank to positively consider her application for grant of benefit under the OTS Scheme. 2.6 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the High court, by which the High Court in exercise of powers under Article 226 of the Constitution of India has issued a writ of mandamus directing the Bank to positively consider her application for OTS, the Bank has preferred the present appeal. 3. Ms. Meenakshi Arora, learned Senior Advocate has appeared on behalf of the appellant herein Bank and Shri V.K. Shukla, learned Senior Advocate has appeared on behalf of respondent no.1 herein. 3.1 Ms. Meenakshi Arora, learned Senior Advocate appearing on behalf of the appellant herein has vehemently submitted that the High Court has materially erred in issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged property or other properties put as a security, the application for grant of benefit under the OTS scheme can be rejected. 3.6 It is therefore submitted that in the present case, as it was found that the original writ petitioner is not eligible for grant of benefit under the OTS Scheme, her application was rightly rejected, both, by the Bank as well as the Settlement Advisory Committee. 3.7 It is further submitted that the decision/s to reject her application for grant of benefit under the OTS Scheme was absolutely in consonance with the guidelines issued by the RBI as well as the OTS Scheme itself. It is submitted that the High Court ought not to have issued a writ of mandamus directing the Bank to positively consider her case for grant of benefit under the OTS Scheme, in absence of any absolute/vested right in her favour. 3.8 Ms. Meenakshi Arora, learned counsel appearing on behalf of the appellant Bank has heavily relied upon the decisions of the Allahabad High Court in the case of M.M. Accessories v. U.P. Financial Corporation, Kanpur, reported in AIR 2002 All 96 as well as another decision in the case of Vipin Kumar Gupta v. Branch Manager, Union Bank of India, G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the Bank with an ill/ulterior motive deliberately refused to grant the benefit under the OTS Scheme just to grab her property. It is therefore prayed not to interfere with the impugned judgment and order passed by the High Court, in exercise of powers under Article 136 of the Constitution of India. 5. Having heard learned counsel for the respective parties at length, the following issues/questions are posed for consideration of this Court: 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? 5.1 While considering the aforesaid issues/questions, the relevant clauses of the OTS Scheme are required to be referred to which are as under: 1. Introduction:- A large part of various types of loans dispersed from time to time by the urban co-operative banks of the state to the institutions/ members are currently in the form of time-less loans has been b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of non-performing assets which were or should have been classified as doubtful/loss as on 31st March 2013, the recovery of the amount will be equal to the total balance (principal and interest) in that account on the date the account is classified as doubtful and loss. If the interest has been charged in such accounts after the date of classification of doubtful/loss category, then the same can be waived, this policy will be applicable to all the borrowers and defaulters alike. b) Under this scheme, with the consent of the defaulter, the total amount of the settlement will have to be deposited in one lump sum, but if the defaulter is unable to deposit all the amount in one lump sum, then 25 percent of such amount till the date of the consent letter and for the recovery of remaining 75 percent, amount will have to be deposited in three equal installments over a period of one year on which interest will be payable at the rate of minimum loan interest from the date of settlement till the date of final repayment. Penal interest, legal expenses and other expenses will be waived. 5. Authority to sanction relief: - The Scheme will be first approved by the concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be prayed as a matter of right and the same is subject to fulfilling the eligibility criteria mentioned in the scheme. The defaulters who are ineligible under the OTS Scheme are mentioned in clause 2, reproduced hereinabove. A wilful defaulter in repayment of loan and a person who has not paid even a single installment after taking the loan and will not be able to pay the loan will be considered in the category of defaulter and shall not be eligible for grant of benefit under the OTS Scheme. Similarly, a person whose account is declared as NPA shall also not be eligible. As per the guidelines, the Bank is required to constitute a Settlement Advisory Committee for the purpose of examining the applications received and thereafter the said Committee has to take a decision after considering whether a defaulter is entitled to the benefit of OTS or not after considering the eligibility as per the OTS Scheme. While making recommendations, the Settlement Advisory Committee has to consider whether efforts have been made to recover the loan amount and the possibility of recovery has been minimized, meaning thereby if there is possibility of recovery of the amount, either by initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same. No fault of the bank can be found. What is required to be considered is a conscious decision by the Bank that the Bank will be able to recover the entire loan amount by auctioning the mortgaged property and a due application of mind by the Bank that there are all possibilities to recover the entire loan amount, instead of granting the benefit under the OTS Scheme and to recover a lesser amount. It is ultimately for the Bank to take a conscious decision in its own interest and to secure/recover the outstanding debt. No bank can be compelled to accept a lesser amount under the OTS Scheme despite the fact that the Bank is able to recover the entire loan amount by auctioning the secured property/mortgaged property. When the loan is disbursed by the bank and the outstanding amount is due and payable to the bank, it will always take a conscious decision in the interest of the bank and in its commercial wisdom. 9. 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 ₹ 100 crores. After availing the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 12. In view of the aforesaid discussion and for the reasons stated above, we are of the firm opinion that the High Court, in the present case, has materially erred and has exceeded in its jurisdiction in issuing a writ of mandamus in exercise of its powers under Article 226 of the Constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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