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TMI Blog2021 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI Act'). That there were two other loan accounts also which were being regularly serviced by respondent no.1 - original writ petitioner, meaning thereby that the payment was regularised insofar as two other loan accounts are concerned. However, so far as the present loan account is concerned, which was declared as NPA, not a single amount was paid till an application for extending the benefit of OTS was submitted. 2.1 That One Time Settlement Scheme was issued by the Bank 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 reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of OTS issued vide Circular Nos. C-108 and C-121. 2.5 The aforesaid writ petition was vehemently opposed by the Bank by filing a detailed affidavit-in-reply. It was inter alia submitted that the writ petitioner was not entitled to get any relief under the OTS Scheme as the probabilities of recovery of loan amount does not diminish and still stands and sufficient amount of property is mortgaged with the Bank and therefore by auctioning the mortgaged property the Bank can recover the loan amount. It was also submitted that her case does not come under the eligible category for OTS. It was submitted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed cleverly by the original writ petitioner to come out of NPA. It is submitted only when, after her first application for grant of benefit under the OTS Scheme was rejected on 17.09.2019, the original writ petitioner thereafter deposited a sum of Rs. 60 lakhs to come out of NPA and to take the benefit under the OTS Scheme. It is submitted that under the OTS Scheme, once the account is declared as NPA and not a single amount has been deposited till the application for grant of benefit under the OTS is filed and there are chances of recovery of the entire loan amount by auctioning the mortgaged 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 Schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even the same was credited in the NPA account, thereby showing that her request for OTS has been accepted. It is submitted that thereafter to reject the application for grant of benefit under the OTS is malafide and arbitrary and therefore the High Court has rightly issued a writ of mandamus and has rightly directed the bank to positively consider her case for grant of benefit under the OTS Scheme. 4.2 It is further submitted that as such the original writ petitioner was being harassed by the Bank even when she was eligible to the benefit under the OTS Scheme. It is submitted 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 Constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money aggregating all types of loan accounts of an organization / individual member, for which a lump sum agreement can be made that the limit of debt will be extinguished. 8. Personal Borrowers Rs. 10.00 Lakhs 9. Institutional Borrowers Rs. 50.00 Lakhs In cases of more than the above limit, prior approval of the registrar co-operative societies will have to be obtained by making a separate plan by the board of directors of the concerned bank for onetime settlement. 4. Settlement Formula: a) Accounts 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e delivery of loan. 4. Efforts have been made to recover the loan and the possibility of recovery has been minimized. The board of directors after due consideration will approve the one-time payment. The decision of the committee (S.A.C) will be reviewed every month by the board of directors and the settlement proceedings will be completed within the prescribed time-limit." 5.2 Therefore, as per the guidelines issued, the grant of benefit of OTS Scheme 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the SARFAESI Act and that the properties mortgaged can be auctioned, has observed that the proceedings under the SARFAESI Act have remained pending for seven years and the Bank has been unable to recover its dues and therefore the hope of recovery is illusory. This conclusion is not supported by any material on record. Merely because the proceedings under the SARFAESI Act have remained pending for seven years, the Bank cannot be held responsible for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fact, not a single amount/installment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme. 11. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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