Sri Sathish Hegde Vs the Authorized Officer and Manager Central Bank of India

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF MANDAMUS OR ANY OTHER WRIT AS APPLICABLE TO DIRECT THE RESPONDENT TO HONOR THE ONE TIME SETTLEMENT AS STATED IN THEIR INTIMATION LETTER DATED 25.02.2025 ANNEXURE-A, IN VIEW OF THE COMPLIANCE MADE BY THE PETITIONER AS PER THE TERMS AND REFERENCE TO THE SAID INTIMATION LETTER, THEREBY DIRECTING THE RESPONDENT BANK TO RELEASE ALL ORIGINAL TITLE DEEDS TO THE MORTGAGED SCHEDULE PROPERTY AFTER DISCHARGING IT

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FROM THE MORTGAGE UNDER A REGISTERED RELEASE DEED UNDER DUE BANKING PROCESS, AND ALSO FROM ALL FURTHER SARFAESI PROCEEDINGS AGAINST/PLACED AGAINST MORTGAGED PROPERTY, UNDER CONFIRMATION, WHICH THIS HONBLE HIGH COURT DEEMS IT FITDIRECT THE RESPONDENT TO ACCEPT ANY PAYMENTS BY THE PETITIONER, AS DIRECTED BY THIS HONBLE HIGH COURT.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN B GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE SMT. JUSTICE LALITHA KANNEGANTI

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ORAL ORDER

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The present writ petition is filed seeking the following

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prayers:

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“1. Issue a writ of mandamus or any other writ as applicable to direct the Respondent to honor the One Time Settlement as stated in their intimation letter dated 25.02.2025 - Annexure-A, in view of the compliance made by the Petitioner as per the terms and reference to the said Intimation letter, thereby directing the Respondent Bank to release all original title deeds to the mortgaged schedule property after discharging it from the mortgage under a registered release deed under due banking process, and also from all further SARFAESI proceedings against/placed against mortgaged property, under confirmation, which this Hon'ble High Court deems it fit,

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2. To pass the order by directing the Respondent to accept any payments by the Petitioner, as directed by this Hon'ble High Court,

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3. To Pass such other order or direction that this Hon'ble High court deems fit to suit the circumstances and/or as required in the case"

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It is the case of the petitioner that he had availed a loan facility of Rs.20,00,000/- from the respondent/Bank by mortgaging his residential property. Due to financial constraints, the petitioner could not pay the EMIs. It is stated that the respondent issued a One Time Settlement (for short ‘OTS’) by intimation letter dated 25.02.2025 under certain conditions, However, without placing any last date or due date for settlement, the respondents offer to settle the loan account at Rs.15,00,000/against the contractual demand of Rs.81,79,826/- as on 31.01.2025.

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It is stated that the petitioner had been directed to clear the amount within 31.03.2025, as per the telephonic conversation with the Branch Manager of the respondent/Bank, wherein the petitioner submits that he had approached the Branch of the Bank on 31.03.2025 along with cash for depositing the same. However, the Branch Manager of the respondent Bank refused to accept the same under the Banking Regulation Act applicable on the last financial day of the year

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and also due to income tax regulations. The petitioner submits that he could not deposit the amount into any other accounts of his friends or relatives for the purpose of transferring the amount to the respondent/Bank. The petitioner was in constant touch with the respondent Bank regarding the payment of the amount as demanded under the OTS intimation letter.

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Subsequently, the Branch Manager of the respondent/Bank called upon the petitioner to remit the amount in accordance with the directions of the Regional Office. The petitioner then requested the bank account number for remittance. The Branch Manager forwarded the account number by way a WhatsApp message from the official mobile number of the bank. Thereafter, the petitioner transferred a sum of Rs.15,00,000/- by way of RTGS, apprehending under an apprehension/fear of rejecting the money (in cash) as observed on 31.03.2025. The petitioner also shared the transaction details with the Branch Manager by way of WhatsApp message. Screenshots of the WhatsApp messages have been produced before this Court.

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The petitioner requested the respondent/Bank to execute a mortgage cancellation deed along with return of the original title deeds of the mortgaged schedule property. However, the Branch Manager refused to do so, stating that the OTS had been cancelled and that a fresh OTS proposal from the Regional Office was awaited. The Branch Manager further demanding that the petitioner surrender possession of the property as per the revised guidelines to approve a fresh OTS. Hence, the petitioner is constrained to come before this Court.

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Learned counsel appearing for the petitioner submits that the intimation letter that is sent by the Bank does not stipulate any timeline for payment. It is further submitted that when he approached the bank on 31.03.2025 along with the money, as the bank refused to accept the same in view of the banking regulations. Later, the petitioner has received the communication through WhatsApp from the Bank containing the account details, pursuant to which the petitioner remitted the amount. It is contended that after receiving the entire amount, the respondent/Bank cannot direct the petitioner to surrender possession of the property under the revised guidelines for approving a fresh OTS. It is submitted that there

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are no lapses on the part of the petitioner. Hence, the learned counsel prays that the writ petition be allowed.

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The learned counsel appearing for the

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respondent/Bank has filed objections. It is stated that the petitioner had approached the respondent/Bank seeking to settle the dues under OTS scheme. The respondent Bank accordingly informed the petitioner that the outstanding loan amount shall be repayable as whole in a sum of Rs.15,00,000/against the total outstanding of Rs.81,79,826/before 31.03.2025. It is further stated that the respondent issued an intimation letter dated 25.02.2025 granting 30 days’ time to the petitioner to repay the entire OTS amount of Rs.15,00,000/-. However, the petitioner, without adhering to the terms and conditions of the OTS, failed to make payment under OTS scheme.

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It is contended that, as admitted in the petition, the petitioner approached the respondent/Bank 9 days after the expiry of the deadline and sought the loan account number for remittance. Though the petitioner has subsequently paid Rs.15,00,000/- to the respondent Bank, the payment was

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made beyond the stipulated time. It is further submitted that, as per the terms and conditions contained in the OTS letter dated 25.02.2025, the settlement was time-bound and the amount ought to have been paid on or before 31.03.2025. Since the petitioner failed to make payment within the stipulated time, the question of regularising the OTS does not arise.

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In support of the said contention, reliance is placed on the judgment of the Hon’ble Apex Court in the case of State Bank of India vs. Arvindra Electronics Pvt. Ltd .,¹ reported in, mainly paragraphs 22, 23, and 24, which read as follows:

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"22. Even otherwise as rightly submitted on behalf of the Bank directing the Bank to reschedule the payment under OTS would tantamount to modification of the contract which can be done by mutual consent under Section 62 of the Contract Act. By the impugned judgment and order rescheduling the payment under the OTS Scheme and granting extension of time would tantamount to rewriting the contract which is not permissible while exercising the powers under Article 226 of the Constitution of India.

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23. It is required to be noted that under the OTS Scheme which was originally sanctioned in the year 2017 the borrower was required to pay Rs 10,53,75,069.74 against the outstanding of

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1 (2023) 1 SCC 540

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Rs 13,99,89,273.99. Therefore, under the original sanctioned OTS Scheme the borrower was getting the substantial relief of approximately Rs 3 crores. The Bank agreed and accepted the OTS offer on the terms and conditions mentioned in the letter dated 21-112017. In the sanctioned letter dated 21-112017 it was specifically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21-5-2018, otherwise OTS would be rendered infructuous. Therefore, the borrowers were bound to make the payment as per the sanctioned OTS Scheme. Therefore, the High Court ought not to have granted further extension dehors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India.

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24. The submissions on behalf of the borrower that in case of some other borrowers the time was extended is concerned, the same is neither here nor there. The Bank mutually can agree to extend the time which is permissible under Section 62 of the Contract Act. The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS Scheme still it be granted further extension as a matter of right. There cannot be any negative discrimination claimed. The borrower has to establish any right in their favour to claim the extension as a matter of right."

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Relying on the said judgment, it is submitted that

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there cannot be any direction to reschedule the loan account or to issue a writ of mandamus directing the respondent to grant OTS. It is further submitted that since the petitioner has failed

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to adhere to the terms and conditions of the scheme and the letter, the petitioner is not entitled to any relief.”

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Having heard the learned counsel on either side, perused the material on record.

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There is no dispute about the fact that the obligation between the petitioner and the respondent is contractual in nature and the parties are bound by the terms and conditions of the contract and also the guidelines that are issued by the Union of India from time to time. The judgment relied upon by the learned counsel for the respondent in the case of State Bank of India (supra ), there cannot be any dispute and the Courts are consistently followed the same, the Court cannot direct a Bank to issue OTS as a matter of prerogative if the petitioner fits into the OTS.

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However, coming to the facts of the present case, the letter was dated 25.02.2025. It is the submission of learned counsel for the respondent/Bank that the petitioner has to pay the amount by 31.03.2025. This Court has perused the letter dated 25.02.2025. The letter does not contain time line under which the petitioner has to pay the amount.

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In between the contractual parties, when intimation or an offer is given, it should contain the time. Now, by virtue of the submissions that are made by the respondent, this Court can understand that it has to be paid by 31.03.2025. Therefore, the same cannot be termed as a default on behalf of the petitioner.

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In this case, undisputedly, the petitioner has paid the entire amount. According to the respondent/Bank, remaining amount to be paid by 31.03.2025, whereas the petitioner has paid the same on 09.04.2025. In the normal course, when a party fails to pay and adhere to the terms and conditions of the OTS scheme, the Court while exercising jurisdiction under Article 226 of the Constitution of India, in the normal case would not interfere. However, in this case, there are clear lapses on the part of the respondent Bank in mentioning that they will not interfere.

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However, this is a case which there is a clear lapses on the part of the Bank which supposed to mention the same and without mentioning it cannot be presumed that it has to be by 31.03.2025 and that apart, the petitioner paid the entire

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amount by 09.04.2025. In the facts and circumstances of the case, and considering the lapses on the part of the respondent/Bank, the respondent ought to have taken further steps in accordance with the OTS. In that view of the matter this Court is passing the following:

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ORDER

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i. Accordingly, the writ petition is allowed .

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ii. In view of the fact that, the petitioner had paid the entire amount as per the letter dated 25.02.2025, the respondent Bank shall take further steps pursuant to the offer given in the said letter.

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Sd/(LALITHA KANNEGANTI) JUDGE

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SMC List No.: 1 Sl No.: 2

Sri Sathish Hegde v. the Authorized Officer and Manager Central Bank of India

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Sri Sathish Hegde v. the Authorized Officer and Manager Central Bank of India

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