2020 (6) TMI 759 - HC - Indian Laws

Repayment of loan by way of cash credit and term loan from the respondent-Bank - certain default in repayment - non-payment of second instalment of OTS - lockdown due to Covid-19 - HELD THAT - Since the petitioner is willing to pay the second installment of ₹ 50,88,751/- by 25th June, 2020 as already committed in his e-mail dated 08.05.2020, the Bank may consider allowing the petitioner to deposit the second installment and the third installment as well. Even though none is present on behalf of the respondent-Bank, in the interim, this Court deems it fit that in the light of the Covid-19 pandemic, if the petitioner makes the second installment of ₹ 50,88,751/- by 25th June, 2020 as proposed in his e-mail dated 08.05.2020, the respondent-Bank will not resort to any coercive action against the petitioner. List accordingly on 28.07.2020 on which date the petitioner will submit the necessary documents as proof of payment of the second installment.

Summary

Issues:
1. One Time Settlement (OTS) agreement terms and default in repayment.
2. Impact of Covid-19 lockdown on repayment schedule.
3. Request for rescheduling repayment based on RBI Circulars.
4. Court intervention due to pandemic situation.

Analysis:
1. The petitioner had entered into a One Time Settlement (OTS) agreement with the respondent-Bank due to defaults in repayment. The terms of the OTS included a total payable amount, appropriation of the application money, and installment payment deadlines. The petitioner paid the first installment but faced challenges in paying the second installment of a significant amount due to the Covid-19 lockdown.

2. The Bank directed the petitioner to deposit the second installment by a specific date to keep the OTS valid. However, due to the lockdown and restrictions, the petitioner requested an extension to make the payment, citing the impact of the pandemic on his ability to meet the deadline. The petitioner referred to RBI Circulars allowing repayment rescheduling and moratorium due to Covid-19.

3. Despite the petitioner's commitment to pay the pending installments by specific dates, the Bank rejected the request for an extension. In light of the Covid-19 situation and RBI Circulars, the petitioner sought the Court's intervention to allow him to make the payments at a later date without facing coercive actions from the Bank. The Court considered the exceptional circumstances and agreed that coercive actions should be avoided during the pandemic.

4. The Court, acknowledging the unprecedented situation created by the pandemic, decided that if the petitioner makes the second installment payment by the revised date as proposed in his email, the Bank should not take any coercive actions against him. The Court scheduled a follow-up date for the petitioner to provide proof of payment, ensuring compliance with the revised repayment schedule. This intervention aimed to balance the interests of both parties in light of the extraordinary circumstances caused by the Covid-19 pandemic.