STATE BANK OF INDIA versus ARVINDRA ELECTRONICS PVT. LTD.

Citation: [2022] 13 S.C.R. 1073 · Decided: 04-11-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
1073
[2022] 13 S.C.R. 1073
1073
STATE BANK OF INDIA
v.
ARVINDRA ELECTRONICS PVT. LTD.
(Civil Appeal No. 6954 of 2022)
NOVEMBER 04, 2022
[M. R SHAH AND KRISHNA MURARI, JJ.]
Bank/Banking: One Time Settlement Scheme (OTS) – No
borrower can, as a matter of right pray for a grant for the benefit
of one time settlement scheme – No writ of mandamus can be issued
by the High Court in exercise of Art.226 of the Constitution of India,
directing the financial institution/bank to positively grant a benefit
of OTS to a borrower – The grant of benefit of OTS Scheme is
subject to the eligibility criteria and the guidelines issued from time
to time – In the instant case, State Bank of India sanctioned a cash
credit in favour of the borrower which was classified as NPA in
2015 – Bank came out with OTS scheme which provided for making
payment as settled, within 6 months – Bank sent OTS offer to the
borrower which was accepted by him and certain amount was paid
from time to time – However, when borrower asked for extension of
time for the remaining amount, the bank refused – Borrower filed
writ petition u/Art.226 of Constitution of India before High Court
seeking extension of time for outstanding amount, which was
granted by High Court – On appeal, held: 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 – Even during the pendency of writ petition, three
different OTS schemes were floated by bank and offered to borrower
which were refused by him – Rescheduling the payment under OTS
scheme can be done only by mutual consent of borrower and bank
u/s.62 of Contract Act – Order of High Court is unsustainable.
Allowing the appeal, the Court
HELD: 1. In the case of Bijnor Urban Cooperative Bank
Limited, Bijnor and Others vs. Meenal Agarwal, it was observed
and held by this Court that, (i) no borrower can, as a matter of
right pray for a grant for the benefit of one-time settlement scheme;
(ii) No writ of mandamus can be issued by the High Court in
A
B
C
D
E
F
G
H
1074
SUPREME COURT REPORTS
[2022] 13 S.C.R.
exercise of Article 226 of the Constitution of India, directing the
financial institution/bank to positively grant a benefit of OTS to a
borrower; (iii) The grant of benefit of OTS Scheme is subject to
the eligibility criteria and the guidelines issued from time to time.
[Paras 6.1 and 6.4][1081-B-C]
Bijnor Urban Cooperative Bank Limited, Bijnor and
Others vs. Meenal Agarwal and Others, (2021) SCC
Online SC 1255 – relied on.
2. 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.
By the impugned Judgment and Order the High Court has granted
further six weeks’ time from 10.03.2022 which would be beyond
even the time prayed by the borrower in the year 2018. 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 Indian 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. [Para
6.5][1081-G-H; 1082-A-D]
A
B
C
D
E
F
G
H
1075
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6954
of 2022.
From the Judgment and Order dated 10.03.2022 of the High Court
of Punjab and Haryana at Chandigarh in CWP No.12953 of 2018.
Sanjay Kapur, Ms. Megha Karnwal, Arjun Bhatia, Ms. Akshata
Joshi, A

Excerpt shown. Read the full judgment & AI analysis in Lexace.