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2015 Supreme(Cal) 678
IN THE HIGH COURT OF CALCUTTA
HARISH TANDON, J.
Arya Bhandar Pvt. Ltd. - Petitioner
Versus
Kotak Mahindra Bank Ltd. - Opposite Party
C.O. No. 1064 of 2015
Decided on : 19-11-2015.
For the Petitioner:Mr. Amit Gupta and Mr. Subrata Goswami, Advocates.
For the Opposite Party :Mr. Joy Saha, Mr. Anirudha Roy, Mr. Sarathi Dasgupta and Mrs. Sreetama Manna, Advocates.
The conduct of the parties in prevaricating the stands in course of the proceeding may be the relevant factor to deny the relief under OTS.
Headnote:
OTS - RBI GUIDELINES - DRT ACT - The Debt Recovery Tribunal (DRT) erred in directing the banks to accept the One Time Settlement (OTS) scheme proposed by the Reserve Bank of India (RBI) after a delay of 7 years, as the petitioner's conduct and subsequent actions indicated a waiver of their rights under the OTS.
Fact of the Case:
The petitioner applied for OTS under RBI guidelines in 2006 but did not respond to the bank's offer. The bank assigned the loan account to Kotak Mahindra Bank, which filed an application to be added as a co-applicant. The petitioner opposed the application based on the OTS, but the DRT allowed the application without considering the OTS.
Finding of the Court:
The Appellate Tribunal set aside the DRT's order, holding that the petitioner's delay in pursuing the OTS and subsequent offer of a different settlement amounted to a waiver of their rights under the OTS.
Issues: Whether the DRT erred in directing the banks to accept the OTS after a delay of 7 years.
Ratio Decidendi: The RBI guidelines on OTS are binding on Scheduled Banks, and borrowers have a right to seek a mandatory direction from the competent forum upon the Scheduled Bank to act strictly in terms of the said policies/guidelines. However, the conduct of the parties in prevaricating the stands in course of the proceeding may be the relevant factor to deny the relief.
Final Decision: The revisional application is dismissed with no order as to costs.
Harish Tandon, J.
The Debt Recovery Appellate Tribunal has remanded the original application to be considered afresh after setting aside the order passed by the Debt Recovery Tribunal allowing an application filed by the petitioner herein for direction upon the HDFC Bank to accept the payments in terms of One Time Settlement (OTS) issued by the Reserve Bank of India.
2. Bereft of unnecessary details, it would suffice the purpose of determining the points involved in this revisional application from the following facts.
3. A proceeding was initiated before the Debt Recovery Tribunal under Section 19 of the DRT Act by the State Bank of India, the opposite party no. 2 herein, for recovery of a sum of Rs. 1,38,67,768/- against the petitioners before the Debt Recovery Tribunal-I, Kolkata which was registered as OA No. 254 of 1999. In course of the said proceeding, a letter dated 27.01.2006 was issued by the Assistant General Manager of the SBI forwarding the proposal for One Time Settlement in terms of the guidelines issued by the Reserve Bank of India on non-performing assets account for Small and Medium Enterprises sector. The said letter reveals the minimum amount payable by the petitioner at Rs. 99,52,453.07/- out of which 25% of the said amount shall be payable upfront within a month from the settlement and the remaining balance of 75,000/- to be paid within an year in instalment. The petitioner responded the said letter and agreed to pay the minimum amount as indicated and asked for the confirmation of the settlement so that, 25% of the said amount can be paid upfront and the balance 75 % shall be paid in three instalments within a year. The petitioner, thereafter, did not respond to the said letter and neither of the parties could pursue the same further. It is a matter of record that the SBI assigned the loan account to Kotak Mahindra Bank, the opposite party no.1 herein, on 29.03.2006. The Kotak Mahindra Bank filed an application on 05.09.2006 for addition as a co-applicant with the State Bank of India. The factum of One Time Settlement was brought on record by the petitioner while opposing the said application filed by the Kotak Mahindra Bank but subsequently the said application was allowed without considering the plea of OTS.
4. Subsequently a further application was taken out on 14.03.2013 by the petitioner for an order directing the opposite parties to accept the settlement in terms of the mandate of the Reserve Bank of India. A further application was taken out on 17.02.2014 for similar direction but the same does not appear to have been taken on record as the requisite Stamp Duty was not paid on the said application. The Debt Recovery Tribunal took up the interlocutory application as well as the main application and dispose of the same holding that the SBI was bound to accept the OTS in terms of the RBI guidelines and the Kotak Mahindra Bank being the assignee of the said debt is equally bound. The proceeding was disposed of directing the petitioner to pay 25% of the OTS amount within three weeks from the date and the balance within one year from the date of the order along with interest prevailing with a State Bank of India to the Kotak Mahindra Bank. The Debt Recovery Tribunal further incorporated the default clause that in case of failure to pay the aforesaid amount, Kotak Mahindra Bank would be entitled to recover the entire amount claimed in the original application. The Kotak Mahindra Bank carried the said order to the Debt Recovery Appellate Tribunal. The Appellate Tribunal as indicated above set aside the said order by which the Debt Recovery tribunal directed the Banks to accept the OTS and received the amount in terms thereof and remanded the original application to be heard afresh on merit.
5. The learned Advocate for the petitioner assailed the order of remand passed by the Appellate Tribunal on the ground that if the application in terms of the OTS is taken out within the last date fixed for the sa
