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TMI Blog2005 (11) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... t the borrower/petitioner No. 1 and the guarantors/petitioner Nos. 2 to 4 by filing O.A. No. 587/1977 in Debt Recovery Tribunal-I, Delhi (for short 'DRT'). 5. An ex-parte final order was passed against the petitioners by the DRT. By that order the judgment debtors were held to be liable to pay to the Bank ₹ 18,78,240/- along with interest. A true copy of the final order is Annexure-B to the writ petition. In pursuance of that order a Recovery Certificate was issued on 20.12.2001 under Section 19(22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the DRT Act). A true copy of the recovery certificate is Annexure-C to the writ petition. 6. Subsequently a settlement was arrived at between the respondent bank and the petitioners on 12.6.2003 under the then prevailing One Time Settlement Scheme (OTS) of the Reserve Bank of India. Pursuant to the above OTS, Sheesh Pal Nehra, Director of Petitioner No. 1, paid a sum of ₹ 10.86 lakhs to the bank, although the amount which had to be paid was ₹ 20 Lakhs. Admittedly, the petitioners did not pay the balance amount of ₹ 9.14 Lakhs under the OTS Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a suit/O.A in December,1997 against the petitioners for the recovery of ₹ 18,78,240/- with interest before the DRT, Delhi. While the said suit/O.A was pending before the DRT the respondent bank came out with a one-time settlement scheme for defaulting borrowers. The respondent bank sent intimation of the said scheme to the petitioners on 29.8.2000 and 25.11.2000, but the petitioners did not respond to the same. It is stated that in the year 2003 revised guidelines of the one-time settlement scheme were issued by the Reserve Bank of India and accordingly the respondent bank came out with another one-time settlement scheme (popularly called as RBIOTS-2003 Scheme). As per the said scheme, the eligible borrowers had to approach the bank with an application on or before 30.4.2003. As per the said scheme, the entire OTS amount was payable in lumpsum. However, the bank was also entitled to consider payment of the OTS amount in Installments and in case of payment in Installments, the borrower had to pay 25% of the OTS amount as upfront money and the balance 75% in Installments within a period of one year together with the interest at the rate at par with Bank's PLR from the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this petition. The matter is entirely contractual and no writ can be issued in this connection. A writ lies if there is violation of law or error of law apparent on the face of the record. No error of law on the face of the record or violation of law has been pointed out in this case. A writ cannot be issued merely on sympathetic considerations. There are well settled principles of exercise of writ jurisdiction. 17. Moreover, the one-time settlement offered by the bank under which an opportunity to settle the liability at a concessional rate of interest was given to the petitioners expired because the said OTS scheme was only a time bound measure and the same cannot be revived at a belated stage. The Bank cannot be compelled to accept an amount which is less than the contractual amount, which in our opinion, is the sole commercial decision of the bank. The petitioners failed to adhere to the financial discipline of the bank and committed various defaults. The account of the petitioner company had become irregular in a very short time. We agree with the stand of the respondent bank that irregularity in the accounts cannot be allowed by the respondent bank. 18. As is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the repayments are not received as per the scheduled time frame, it will disturb the equilibrium of the financial arrangements of the Corporations. They do not have at their disposal unlimited funds. They have to cater to the needs of the intended borrowers with the available finance. Non-payment of the Installment by a defaulter may stand on the way of a deserving borrower getting financial assistance. As was observed by this Court in Gem Cap's case (supra), the legislative intent in enacting the statute in question was to promote industrialization of the states by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a stipulated period. Though the corporation is not like an ordinary moneylender or a bank which lends money, there is purpose in its lending i.e. to promote small and medium industries. The relationship between the corporation and the borrower is that of creditor and debtor. That basic feature cannot be lost sight of. A corporation is not supposed to give loan and then to write it off as a bad debt and ultimately to get out of business. As noted above, it has to recover the amounts due so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision applies to this case. 26. In Mardia Chemicals Ltd v. Union of India AIR2004SC2371 , the Supreme Court quoted from the Narasimham Committee reported which stated:- Banks and financial institutions at present face considerable difficulties in recovery of dues from the clients and enforcement of security charged to them due to delay in the legal processes. A significant portion of the funds of banks and financial institutions is thus blocked in unproductive assets, the values of which keep deteriorating with the passage of time. Banks also incur substantial amounts of expenditure by way of legal charges which add to their overheads. 27. In paragraph 34 of the same judgment the Supreme Court observed: It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time consuming and is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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