2022 (11) TMI 1398 - SC - Indian Laws

Extension of period to make the payment of balance amount under sanctioned OTS Scheme beyond the time granted under the sanctioned OTS Scheme - exercise of powers under Article 226 of the Constitution of India? - HELD THAT - In the present case in the sanctioned letter dated 21.11.2017 it was specifically provided that the entire payment to be made by 21.05.2018. The schedule to make the payment under the instalments was also mentioned. It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS Scheme on or before the date mentioned in the sanctioned letter. The prayer of the borrower for extension of nine months came to be rejected as far as back on 16.05.2018 and the borrower was directed to make the payment of Rs.2.52 crores by 21.05.2018 the borrower failed to make the payment. At this stage it is required to be noted that during the pendency of the writ petition there were as many as three different OTS floated by the Bank and the Bank offered the respondent borrower to settle the outstanding payment under the OTS Scheme. However the borrower did not opt for any of the scheme. 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 Rs.13, 99, 89, 273.99. Therefore under the original sanctioned OTS Scheme the borrower was getting the substantial relief of approximately 3 crores. The Bank agreed and accepted the OTS offer on the terms and conditions mentioned in the letter dated 21.11.2017. In the sanctioned letter dated 21.11.2017 it was specifically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21.05.2018 otherwise OTS would be rendered infructuous. Therefore borrowers were bound to make the payment as per the sanctioned OTS Scheme. Therefore the High Court ought not to have granted further extension de hors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India. 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 Indian 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. The impugned judgment and order passed by the High Court granting further time to the respondent borrower to make the balance payment under the OTS Scheme in exercise of powers under Article 226 of the Constitution of India is unsustainable and the same deserves to be quashed and set aside and is accordingly quashed. Appeal allowed.

Summary

Issues Involved:
1. Extension of time for payment under the One Time Settlement (OTS) Scheme.
2. High Court's powers under Article 226 of the Constitution of India.
3. Applicability of precedents and binding decisions.

Issue-wise Detailed Analysis:

1. Extension of time for payment under the One Time Settlement (OTS) Scheme:
The State Bank of India (the Bank) had sanctioned a cash credit to the borrower, whose account was classified as NPA in 2015. The Bank offered an OTS Scheme on 01.09.2017, requiring the borrower to make payments within six months. The borrower accepted the OTS and made partial payments but failed to pay the balance by the stipulated deadline. The borrower sought an extension, which the Bank denied, leading to the borrower filing a writ petition. The High Court granted an additional six weeks for payment, which the Bank contested, arguing that the OTS terms were clear and binding, and any deviation would render the OTS infructuous. The Supreme Court noted that the borrower did not adhere to the payment schedule, and despite multiple OTS offers from the Bank, the borrower failed to settle the dues.

2. High Court's powers under Article 226 of the Constitution of India:
The Supreme Court examined whether the High Court was justified in extending the payment period under the OTS Scheme while exercising powers under Article 226. The Court referred to its decision in Bijnor Urban Cooperative Bank Limited vs. Meenal Agarwal, which held that:
- No borrower can claim the benefit of an OTS Scheme as a matter of right.
- The High Court cannot issue a writ of mandamus directing a bank to grant OTS benefits beyond the eligibility criteria.
The Supreme Court emphasized that the High Court's extension of time effectively modified the contract terms, which is not permissible under Article 226. The Court highlighted that the High Court should have followed the binding precedent set in Bijnor Urban Cooperative Bank Limited, which was directly applicable to the issue at hand.

3. Applicability of precedents and binding decisions:
The Supreme Court criticized the High Court for not adhering to the binding decision in Bijnor Urban Cooperative Bank Limited and instead relying on an earlier decision in Sardar Associates vs. Punjab & Sind Bank. The Court clarified that the Sardar Associates case was factually distinguishable as it dealt with RBI guidelines, whereas the present case involved adherence to the OTS terms. The Supreme Court reiterated that subsequent decisions on the point should be followed, and the High Court's deviation was unwarranted.

Conclusion:
The Supreme Court quashed the High Court's judgment granting further time for payment under the OTS Scheme, stating that it was unsustainable. The Court upheld the Bank's position that the borrower was bound by the original OTS terms and could not claim extensions as a matter of right. The appeal was allowed, and the original writ petition filed by the borrower was dismissed. The Court emphasized the importance of adhering to binding precedents and the limitations of judicial intervention in contractual matters under Article 226.