THE BIJNOR URBAN COOPERATIVE BANK LIMITED, BIJNOR & OTHERS versus MEENAL AGARWAL & OTHERS

Citation: [2021] 9 S.C.R. 416 · Decided: 15-12-2021 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 9 S.C.R.
   [2021] 9 S.C.R. 416
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THE BIJNOR URBAN COOPERATIVE BANK LIMITED,
BIJNOR & OTHERS
v.
MEENAL AGARWAL & OTHERS
(Civil Appeal No. 7411 of 2021)
DECEMBER 15, 2021
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Constitution of India: Art. 226 – Power under – Exercise of –
Grant of benefit under the One Time Settlement (OTS) Scheme – On
facts, writ petitioner obtained credit facility from the financial
institution/Bank and the said loan amount was declared as Non-
Performing Asset (NPA) – Writ petition seeking issuance of writ of
mandamus directing the Bank to positively grant of benefit under
the OTS Scheme to the writ petitioner-borrower – Allowed by the
High Court – Sustainability of – Held: Not sustainable – 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 – Such a decision
should be left in the interest of the bank and in its commercial wisdom
– Thus, the High Court erred and exceeded in its jurisdiction in
issuing writ of mandamus directing the Bank to positively grant the
benefit of OTS to the petitioner – Order passed by the High Court is
quashed and set aside.
Allowing the appeal, the Court
HELD: 1.1 As per the guidelines issued, the grant of benefit
of OTS Scheme cannot be prayed as a matter of right and the
same is subject to fulfilling the eligibility criteria mentioned in
the scheme. The defaulters who are ineligible under the OTS
Scheme are mentioned in clause 2. A wilful defaulter in repayment
of loan and a person who has not paid even a single installment
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after taking the loan and will not be able to pay the loan will be
considered in the category of “defaulter” and shall not be eligible
for grant of benefit under the OTS Scheme. Similarly, a person
whose account is declared as “NPA” shall also not be eligible.
As per the guidelines, the Bank is required to constitute a
Settlement Advisory Committee for the purpose of examining
the applications received and thereafter the said Committee has
to take a decision after considering whether a defaulter is entitled
to the benefit of OTS or not after considering the eligibility as
per the OTS Scheme. While making recommendations, the
Settlement Advisory Committee has to consider whether efforts
have been made to recover the loan amount and the possibility
of recovery has been minimized, meaning thereby if there is
possibility of recovery of the amount, either by initiating
appropriate proceedings or by auctioning the property mortgaged
and/or the properties given as a security either by the borrower
and/or by guarantor, the application submitted by the borrower
for grant of benefit under the OTS Scheme can be rejected.
[Para 5.2][429-D-H; 430-A]
1.2 In the instant case, despite the fact that it was specifically
pointed out before the High Court by way of counter affidavit
that the recovery proceedings under SARFAESI Act are pending;
the borrower and her husband have availed two credit facilities
and both the loan accounts are maintained regularly and the money
is being deposited on regular basis; the Settlement Advisory
Committee concluded that the borrower is enjoying a good
financial status and the secured assets are sufficient in case if
any recovery is to be made and by auctioning the mortgaged
property the bank can recover the entire loan amount, the High
Court failed to consider the said aspects in their true perspective
and issued a writ of mandamus as if the grant of benefit under
the OTS Scheme can be claimed as a matter of right. [Para 6]
[430-A-C]
1.3 In the instant case, a conscious decision was taken by
the Bank as well as the Settlement Advisory Committee which is
reflected from the Board’s Resolution and the decision. Even
personal hearing was afforded to the original writ petitioner by
THE BIJNOR URBAN COOPERATIVE BANK LIMITED,
BIJNOR  v. MEENAL AGARWAL
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SUPREME COURT REPORTS
[2021] 9 S.C.R.
the Settlement Advisory Committee. The High Court observed
that no opportunity was given to the ori

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