TMI Blog2022 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... ime limit fixed in the OTS is final, and the same cannot be extended under any circumstances cannot be countenanced since having regard to the COVID-19 pandemic, it would have been virtually impossible for the petitioners to make the full payment by 26.09.2020 with the lockdowns in place, and the prohibition to the industrial activities being enforced by the State and Center Governments strictly in the Country - the reason for delay in the payment was on account of the circumstances beyond their control. Since the entire amount of OTS was paid, though with some delay, and the circumstances of the case justify the grant of extension of time by about six months; and for the said delay the respondent can be compensated by payment of interest; the said sale of machinery, even if true, has no bearing on this case. The time for payment of the OTS as per Annexure P-16 letter dt. 26.03.2020 shall stand extended upto 31.03.2021 subject to the petitioners paying interest @ 1 month MCLR on reducing balance w.e.f. 26.03.2020 till 31.03.2021 within four weeks from the date of receipt of certified copy of this order; on receipt of the same, the loan dues of the petitioners shall be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... member in the same. CWP No. 657 of 2019 7. The petitioners again approached this Court by way of filing CWP No. 657 of 2019, in which notice of motion was issued on 17.01.2019. The First OTS dt. 7.6.2019 sanctioned by Allahabad Bank 8. While the said Writ Petition was pending, vide Annexure P-3 dt. 7.6.2019, the Allahabad Bank offered an One Time Settlement (OTS) under which the petitioners had to pay Rs. 14.75 Crores. 9. The OTS letter stated that the application money of Rs. 75 Lakhs would be appropriated towards the OTS amount; 20% of the OTS amount should be deposited as upfront money within thirty days from 06.07.2019; and the balance should be paid within six months from the date of the said letter i.e. 07.12.2019. 10. It was further stated that no interest would be charged if the entire OTS amount is paid within three months from that date i.e. by 06.09.2019, and if not, interest @ One year MCLR which was then 8.65% was to be paid on reducing balance basis w.e.f. 07.06.2019. Certain other incentives were also provided. 11. It was also stated that in the event of failure to repay the entire amount within the stipulated period, the OTS would become in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equest letter dt. 15.11.2019 made by the petitioners for extension of time for complying with the OTS, stating that the OTS had failed since the petitioners did not adhere to the terms of the sanctioned OTS. CWP No. 2555 of 2020 23. The petitioners thereafter filed CWP No. 2555 of 2020 challenging the said rejection of letter dt. 15.11.2019. 24. On 05.02.2020, notice of motion was issued and status quo was directed to be maintained by this Court. Offer of Second OTS vide Annexure. P16 on 26.3.2020 by Allahabad Bank 25. While the said Writ Petition was pending, the Allahabad Bank came out with another OTS scheme and again settled with the petitioners for an OTS for Rs. 10,60,32,000/- vide Annexure P-16 letter dt. 26.03.2020. 26. Under the terms of the said letter, Rs. 4 Crores paid by the petitioners were stated to have been appropriated towards the OTS, and the petitioners were to pay 20-25% of the OTS within 30 days, and the balance amount of the OTS within six months from the date of sanction i.e. by 26.9.2020, failing which the OTS sanctioned would be rendered infructuous. 27. It was further stated that no interest would charged if the entire OTS amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore this Court, counsel for the petitioners stated that the petitioners would discharge all their liability on or before 31.12.2020, but this was opposed by the counsel for the respondent, and so counsel for the petitioner sought time to get instructions as to whether the balance amount could be paid within four weeks from that date. The matter was thus adjourned to 15.10.2020. 33. On 15.10.2020, counsel for the petitioners stated that the petitioners would pay Rs. 50 Lakhs by 16.10.2020, Rs. 50 Lakhs by 27.10.2020, Rs. 1.5 Crores by 31.12.2020, (%)1.5 Crores by 31.01.2021, Rs. 1.5 Crores by 28.02.2021, and the balance amount along with interest on delayed payment would be paid by 31.03.2021. 34. To test the bona fides of the petitioners, the hearing of this case was deferred to 28.10.2020, and on that date it was reported that there was a mistake in the earlier order (dt. 15.10.2020) in regard to the payment of Rs. 1.5 Crores by 31.12.2020 which should have read as Rs. 1 Crore by 31.12.2020. It was also recorded that Rs. 1 Crore was already deposited by then with the respondent-Bank which had been taken over the Allahabad Bank and the balance of Rs. 1 Crore would be deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory is being run by the petitioners or not. 44. In the detailed written statement filed by the respondent, similar stand is taken and certain decisions of the Supreme Court are relied upon to contend that the OTS having failed, the petitioners are still liable to pay Rs. 9,01,04,640/- more. 45. It is contended that the decision to grant benefit of the OTS and its extension ought to be left to the commercial wisdom of the respondent-Bank and it cannot be compelled to settle the account of the petitioners for a meager amount of Rs. 10,60,32,000/- when it has security worth more than Rs. 18.68 Crores. 46. Reliance is placed on the judgment of the Hon'ble Supreme Court in the case of Bijnor Urban Cooperative Bank Ltd. and Others Vs. Meenal Aggarwal and Others [Civil Appeal No.7411 of 2021 dt. 15.02.2021(SC)] and other decisions of the Gujarat High Court and the Delhi High Court. It is also asserted that the time is of utmost essence as per the OTS sanction letter dt. 26.03.2020. CM-2703-CWP-2022 and CM-2704-CWP-2022 47. Subsequently, CM-2703-CWP-2022 and CM-2704-CWP-2022 were filed by the respondent for placing on record Annexures A-3 to A-5 and the additional af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,32,000/- and upfront payment of Rs. 4 Crores was paid at that time. 55. The petitioners were able to do so by entering into agreements to sell dt. 30.04.2019 in respect of lands covered by sale deeds No. 18465 and 18479, dealing with 1210 sq. yards and 1570 sq. yards respectively, and also by agreeing to sell another property of 10 Marla at Village Bajra, and also another property of 10 Marla at Village Daad in the name of the petitioner No. 2 which was never mortgaged to the Allahabad Bank. The agreements to sell dt. 30.4.2019 in respect of lands covered by sale deeds No. 18465 and 18479 specifically inform the buyer of the mortgage created in favor of the Allahabad Bank and that the sale deeds will be executed after obtaining NOC from the said Bank. 56. Thereafter, after filing of this Writ Petition, the entire amount of Rs. 10,60,32,000/-, the amount sanctioned under the second OTS dt. 26.3.2020 was paid to the respondent Bank/Allahabad Bank except the interest component which is required to be paid. 57. The plea of the respondent that the petitioners could not have entered into agreement to sell when there was status quo order granted in CWP No. 2555 of 2020 on 05.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest for the period of delay, the Court can consider extending the period with some flexibility to achieve the ultimate aim of such settlement. 66. It laid down certain illustrative guidelines which are required to be considered cumulatively or individually on case to case basis to decide whether in a given case an applicant would be entitled for the extension of OTS. 67. They are as under:- A. The original time provided in the Settlement:- If the time period originally stipulated in the settlement letter to pay off the settlement amount is short or is not excessive, the case for extension could be considered, and reasonable time must be given to the borrower to arrange the funds to clear off the OTS. B. Extent of payments already deposited under the settlement or before filing of the petition:- If the borrower has already paid substantial amounts to the creditor under the OTS, and for some remaining amounts, is seeking a reasonable extension, such request can be considered favourably. C. Reasons which led to delay in payment- If the borrower was prevented by certain reasons or circumstances beyond his control, it could be a reason to consider an exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actors are not exhaustive but only illustrative for the guidance of the parties and the Courts, while considering the prayer by the borrower for extension of the time under OTS on case to case basis. It also held that the Courts would be free to consider the credentials of the borrower as well, being an equitable and discretionary relief. 68. Several decisions rendered by different High Courts and Supreme Court were considered by the said Division Bench while rendering the above judgment. 69. These principles have again been reiterated in Arvindra Electronics Pvt. Ltd.3 (Supra) and also in Amrik Singh v. DCB Bank Ltd.4 by this very Bench of this High Court. 70. Counsel for the respondent-Bank however sought to contend that the Supreme Court recently in the case of Bijnor Urban Cooperative Bank (1 Supra), had taken a view that the High Court under Article 226 of the Constitution of India cannot direct a Bank to positively consider or grant benefit of OTS to a borrower, and therefore, even extension of time to comply with the OTS, cannot be granted to a borrower by this Court. 71. We may point out that in the case of Bijnor Urban Cooperative Bank (1 Supra), the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the RBI guidelines, and it was certainly aware of the amount of securities lying with it. It declared that if in terms of the guidelines issued by the RBI, a right is created in a borrower, even a writ of Mandamus can be issued. 77. In the decision of the Full Bench of this Court in the case of M/s. Indo Swiss Time Ltd. Vs. Umarao and Others AIR 1981 Punjab 213, it was held that if there is direct conflict between the decisions of the Supreme Court rendered by two equal Benches, the High Court must follow the judgment which appears to lay down the law more elaborately and more accurately; and that mere incidence of time-whether judgment is earlier or later, could hardly be relevant. 78. We are of the view that in the case of Sardar Associates 2009 (8) SCC 257 (Supra) the Court had elaborately considered the issue of grant of OTS rather than in case of Bijnore Urban Cooperative Bank1 (Supra) and the decision in Sardar Associates 2009 (8) SCC 257 (Supra) was not noticed by the Supreme Court in the Bijnore Urban Cooperative Bank1 (Supra) case. So we prefer to follow the decision in Sardar Associates 2009 (8) SCC 257 (Supra) and hold that it would not be open to a Bank to dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually impossible for the petitioners to make the full payment by 26.09.2020 with the lockdowns in place, and the prohibition to the industrial activities being enforced by the State and Center Governments strictly in the Country. 87. So the reason for delay in the payment was on account of the circumstances beyond their control. 88. Moreover, the bona fide intent of the borrower to pay the remaining amount under the OTS was clear, not only from the fact that for the first OTS sanctioned on 07.06.2019, they had paid Rs. 5.25 Crores to the respondent and under the Second OTS for Rs. 10,60,32,000/-, the petitioners had paid the said amount by 31.03.2020 as per the time schedule fixed by this Court except the interest component. Therefore, in these facts and circumstances, request of the petitioners for extension of time for payment of OTS requires to be granted in terms of the decision in Anu Bhalla2 (Supra). 89. As regards that plea of the respondent that there was some sale of the machinery by the petitioners, the same has been vehemently denied by the petitioners and it is contended that the machinery was not in the properties mortgaged to the Bank. 90. Be that as it m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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