Namita Satpathy Vs Odisha State Cooperative Bank Ltd, Bhubaneswar

3. The Petitioner availed a loan of Rs.2,00,000/- from Opposite Party No.2, i.e. Odisha State Cooperative Bank Limited, Paradeep Branch on 9^th December 1997. It was a cash credit loan and

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the same was sanctioned by Opposite Party No.2-Bank. The Petitioner defaulted to repay the loan dues and as on 30^th June 2001 the total outstanding became Rs.3,77,626.81/-.

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4. The Petitioner continued to be on default and Opposite Party No.1- Bank raised Dispute Case No.100 of 2001 before the Court of Assistant Registrar, Cooperative Societies (T.R.), Bhubaneswar and the Court vide order dated 7^th November 2015 passed the order directing the Petitioner for payment of the outstanding loan amount along with pendent lite and future interest and penalty. The ordering portion of said order dated 7^th November 2015 is reproduced below:-

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On perusal of the plaint, Affidavit and documents filed by Learned Advocate for the Plaintiff and hearing his arguments, I find that the Defendant No.1 had availed a Cash Credit Loan of Rs.22,000/- from the Plaintiff Bank in 1997. Defendant No.2 and the Defendant No.3 signed the loan documents as Guarantors and therefore they are jointly and severally held liable for the outstanding loan dues along with Defendant No.1. Defendant No.1 had grossly failed to operate loan account

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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which resulted in non-payment of instalment dues in the above said loan account. The outstanding loan dues was Rs.3,77,626.81 as on 30.06.2001 along with future interest, penalty and pendilities. On account of persistent default, Defendant No.1 had incurred the liability of the entire outstanding loan amounting to Rs.3,77,626.81 as on 30.06.2001 along with future interest and penalty. Decree is awarded in favour of the Plaintiff Bank for realization of the outstanding dues amounting to Rs.3,77,626.81 as on 30.06.2001 along with future interest and penalty from Defendant No.1. If the Plaintiff Bank fails to recover the decretal amount from the Defendant No.1 despite sincere and legal endeavour within reasonable period of time it is open to the Plaintiff Bank to take recourse to legal and coercive measures against Defendant No.2 and Defendant No.3 for realization of the balance outstanding dues.

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5. Despite the order was issued by the Court of Assistant Registrar of Cooperative Societies under Annexure-9, Opposite Party No.2- Bank did not take any step for realization of the outstanding amount against the Petitioner. In the meantime, the Petitioner filed W.P.(C) No.22142 of 2019 for consideration of his representation regarding settlement of the loan account and this Court vide order dated 18^th December 2019 permitted the Petitioner to file a fresh representation and consideration thereof by the Bank by affording reasonable opportunity of hearing and to pass a reasoned order. The Opposite Party- Bank vide order dated 9^th June 2020 rejected the

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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prayer of the Petitioner holding that OTS is not permissible in respect of the Petitioner’s loan account and observed that the amount has now increased to Rs.6,07,525/- as on 29^th February 2020 plus interest and penalty. The loan amount was still neither realized nor settled and on 23^rd May 2025 the Petitioner made another request to the bank for settlement of the account. The Bank on 21^st June 2025 intimated the Petitioner that a principal of Rs.6,07,525/- plus interest of Rs.72,94,970/- is outstanding against the Petitioner as on 31^st May 2025. As such the Petitioner approached this Court in present writ petition praying for consideration of settlement of the loan account as per the OTS scheme under Annexure-10.

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6. Opposite Parties- Bank have filed their counter affidavit denying the claim of the Petitioner for settlement through OTS scheme. It is contended by the Opposite Parties in their counter affidavit that presently no OTS scheme is in operation or adopted by the Bank. It is further stated that the outstanding loan amount of the Petitioner has been categorized as NPA since long having marketable security and therefore, it is not an eligible case to be considered under the OTS scheme.

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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7. The OTS scheme as issued by Government of Odisha in Co-operation Department with guidelines for Cooperative Banks has been produced at Annnexure-10. These OTS guidelines contain the eligibility and ineligibility criterions for application of the OTS scheme. The relevant Clauses are reproduced below:-

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1. Eligible loans to be covered under OTS

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1.1 OSCB, DCCBs and UCBs

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In order to be eligible for OTS, a loan account should fulfil the following eligibility criteria.

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a. The loan should have been classified as NPA in the category of doubtful or loss assets as on the date 31.03.2023. This Cut-off date is applicable for the Financial Year 2025-26, and for subsequent years, the cut-off date be changed accordingly.

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b. The scheme should cover all the NPA/doubtful and loss assets of a borrower having book liability(BL) up to Rs.50 lakhs. For PACS/LAMPCS this limit shall be Rs.5.00 lakhs. However for DCCBs and UCBs, in case the Bank wants to cover any account beyond this limit, these cases shall be referred to RCS individually, with a justification and the Banks should act as per the decision of the RCS.

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c. AII loans and advances of the OSCB, DCCBs. UCBs, except for refinances and advances made to PACS for ST finance, shall be covered under the compromise settlement i.e. individual and institutional loans other than the loans advanced to PACS for on-lending purpose will be covered under the scheme.

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1.2 PACS (SOS, UMVIRCS & FSCS):

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a. All loan accounts other than crop loans, which are overdue for three years or more as on 31.03.2023, which has become doubtful for recovery as on the said date.

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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b. In case of liquidated PACS, the same procedure may be followed.

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2. lneligible loan accounts for OTS:

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The compromise settlement (OTS) shall not be applicable to the following category of borrowers:

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a. Where there is evidence of fraud and malfeasance.

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b. Wilful defaulter i.e. the borrower has the capacity to repay out of the income generated from the activity or otherwise but fails to do so wilfully.

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c. Where the loan was granted with tie-up arrangement for recovery (e.g. Salary Earners' Societies in case of OSCB and DCCBs).

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d. Fully secured loans, i.e. loans against which properties (movable or immovable) have been mortgaged and Gold loans, shall not be eligible for OTS Scheme. However, in case of NPA accounts, where the loanee has been deceased or the account has been lying NPA for 20 years or more, these accounts/loans can be considered for OTS.

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8. As seen from aforesaid clause at Clause-2.d, fully secured

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loans may be eligible for OTS scheme, where the loanee has been deceased or the account has been lying NPA for 20 years or more.

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Thus, it is submitted on behalf of the Petitioner that the loan account having been declared NPA since 1998 has acquired the eligibility for consideration under the OTS scheme for settlement of the account.

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9. It is a settled principles that a financial institution or bank

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cannot be directed to grant the benefits of OTS scheme to a borrower

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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without consideration of eligibility criteria mentioned thereof. In

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Bijnor Urban Cooperative Bank Limited vs. Meenal Agarwal &

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Ors., (2023) 2 SCC 805, it has been observed as follows:-

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12. 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 instalments, 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 the purpose of the scheme which may encourage such a dishonesty.

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13. If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of paying its/his dues as per the terms of the agreement entered into by it/him would like to get one-time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/instalment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme.

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14. 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.

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10. As seen from the aforesaid facts of present case, despite the approach of the Bank raising the dispute before the Competent Court

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for realization of the outstanding dues and despite the fact that the order has been passed by Competent Court directing for realization of

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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the amount, the Bank did not take any step for realization of the loan amount from the Petitioner for more than last ten years. At the same time, it is also true that the Petitioner continues to be a defaulter in

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repayment of the loan amount till date. In such situation, the Bank without taking any step for realization of the amount from the Petitioner has indirectly permitted the Petitioner to approach different forums for settlement of his loan account in terms of One Time Settlement Scheme. It is relevant here to look into Clause-2 of the OTS scheme dated 17^th September 2025 issued by the Government of Odisha at Annexure-10, as reproduced above. Now the loan account of the Petitioner has been lying NPA for more than 20 years, i.e. since 1998. Thus by virtue of such position, the non-performing loan account of the Petitioner has acquired the eligibility to be considered under the OTS scheme in terms of Clause 2.d of the scheme under Annexure-10. At the same time, it is seen, as already observed above, that the Competent Court of Assistant Registrar, Cooperative Societies vide its order dated 7^th November 2015 has counted the defaulted amount in respect of Petitioner’s loan account and thus it would be worth considering that the Bank should consider the prayer of the Petitioner for settlement of loan account in the light of the order

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Digitally Signed Signed by: SANGRAM DAS Reason: Authentication Location: High Court of Orissa, C utta ck Date: 03-Jul-2026 13:41:53

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passed by the Assistant Registrar of Cooperative Societies under Annexure-9. At the same time, it is also observed that the Bank should not take benefit of the situation to impose such high and unusual rate of interest considering the status and age of the Petitioner, for settlement of the loan account. Accordingly, the writ petition is disposed of with a direction to the Opposite Parties- Bank to consider the prayer of the Petitioner to settle her loan account in view of the scheme under Annexure-10, within a period of two months from the date of receipt of certified copy of this order, without applying any unusual rate of interest.

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(B.P. Routray) Judge

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S.Das,Sr.Steno

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W.P.(C) No. 2528 of 2026 Page 10 of 10

Namita Satpathy v. Odisha State Cooperative Bank Ltd, Bhubaneswar

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Namita Satpathy v. Odisha State Cooperative Bank Ltd, Bhubaneswar

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