Bijnor Urban Co-operative Bank Limited, Bijnor vs Meenal Agarwal

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(SC) 820

M. R. SHAH, B. V. NAGARATHNA
Bijnor Urban Co-operative Bank Limited, Bijnor – Appellant
Versus
Meenal Agarwal – Respondent

Advocates appeared:
For the Appellant(s) :Meenakshi Arora, Jasbir Singh Malik, Varun Punia, Advocates
For the Respondent(s):V.K. Shukla, Parul Shukla , Kirti Aggarwal, Advocates

Judgement Key Points

What is the scope of a borrower’s right to seek One Time Settlement (OTS) under the OTS Scheme? What is the authority of a High Court under Article 226 to issue a mandamus directing a bank to grant OTS notwithstanding eligibility criteria? What factors define the bank’s eligibility and the Settlement Advisory Committee’s role in deciding OTS applications?

Key Points: - The OTS benefit cannot be demanded as a matter of right and is subject to eligibility criteria (!) (!) - A writ of mandamus directing a bank to grant OTS under Article 226, bypassing eligibility criteria, is not sustainable; banking decisions on OTS are within the bank’s commercial wisdom (!) (!) - The Settlement Advisory Committee must examine applications and consider factors like recoverability and likelihood of recovery before recommending decisions to the Registrar/board (!) (!)

What is the scope of a borrower’s right to seek One Time Settlement (OTS) under the OTS Scheme?

What is the authority of a High Court under Article 226 to issue a mandamus directing a bank to grant OTS notwithstanding eligibility criteria?

What factors define the bank’s eligibility and the Settlement Advisory Committee’s role in deciding OTS applications?

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 16.08.2021passed by the High Court of Judicature at Allahabad in Writ Petition No. 15194 of 2021, by which the High Court has allowed the said writ petition preferred by respondent No.1 herein (original writ petitioner) and has, in exercise of powers under Article 226 of the Constitution of India, issued a writ of mandamus directing the appellant – Bank to positively consider the original writ petitioner’s application for One Time Settlement (OTS), the Bank has preferred the present appeal.

2. The facts leading to the present appeal in a nutshell are as under:

That the original writ petitioner had obtained credit facility from the bank of about Rs. 1 crore. The said loan account with the Bank was categorised as “Non-Performing Asset, (NPA)”. The Bank also initiated proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act’). That there were two other loan accounts also which were being regularly serviced by respondent no.1 – original writ petitioner, mean

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2021 Supreme(SC) 820

M. R. SHAH, B. V. NAGARATHNABijnor Urban Co-operative Bank Limited, Bijnor – AppellantVersusMeenal Agarwal – Respondent

What is the scope of a borrower’s right to seek One Time Settlement (OTS) under the OTS Scheme?

What is the authority of a High Court under Article 226 to issue a mandamus directing a bank to grant OTS notwithstanding eligibility criteria?

What factors define the bank’s eligibility and the Settlement Advisory Committee’s role in deciding OTS applications?

Cases Referred (2)

M. R. SHAH, B. V. NAGARATHNA
Bijnor Urban Co-operative Bank Limited, Bijnor – Appellant
Versus
Meenal Agarwal – Respondent