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2005 Supreme(Del) 1044
High Court Of Delhi
D.K.GUPTA - Appellant
Versus
ORIENTAL BANK OF COMMERCE - Respondent
Decided On : 11/29/2005
Once a party enters into a settlement, it is not entitled to further concessions under a subsequent scheme. The court should observe judicial restraint in matters relating to loan recoveries.
Headnote:
Mandamus - Loan Settlement - RBI Scheme 2003 - [PARTNERSHIP FIRM] - [RBI Scheme 2003, Section 2(1)(o)] - The court discussed the petitioner's request for a mandamus to settle the account under the RBI Scheme 2003. The court highlighted the settlement agreement dated 25.05.2000 and the petitioner's repeated defaults in payment, concluding that the petitioner, having once entered into a settlement, was not entitled to further concessions under the RBI Scheme 2003.
Fact of the Case:
The petitioner, a partner in a partnership firm, sought a mandamus to settle the account under the RBI Scheme 2003, claiming financial crisis due to the respondent bank's refusal to permit the settlement.
Finding of the Court:
The court found that the petitioner, having defaulted on the settlement agreement dated 25.05.2000, was not entitled to further concessions under the RBI Scheme 2003. The court also noted the petitioner's malafide intentions and unwillingness to pay its dues.
Issues: The issues involved the petitioner's eligibility for the RBI Scheme 2003, the respondent bank's refusal to permit the settlement, and the petitioner's repeated defaults in payment.
Ratio Decidendi: The court held that the petitioner, having once entered into a settlement, was not entitled to further concessions under the RBI Scheme 2003. The court emphasized the petitioner's malafide intentions and unwillingness to pay its dues.
Final Decision: The petition was dismissed, and the court highlighted the adverse effect of interfering with loan recoveries on the economy.
( 1 ). THIS writ petition has been filed with a prayer for a mandamus directing the respondent, Oriental Bank of commerce, to permit the petitioner to avail and settle the account Indo Pacific Trade Corporation under the one time settlement scheme for public sector banks issued by the Reserve Bank of India on 21. 09. 2003. The petitioner also prayed for a direction that the respondent bank be directed not to initiate legal proceedings against it before the Debt Recovery Tribunal.
( 2 ). THE petitioner no. 1 is a partner of petitioner no. 2, which is a registered partnership firm consisting of petitioner no. 1 and one Lovleen Singhal.
( 3 ). IT appears that the petitioner no. 2 had taken a loan from the respondent bank, but had not repaid the same. Petitioner no. 2 had availed loan facility in two branches of the respondent bank, i. e. , at Panchkuiya Raod and daryaganj, New Delhi. A Settlement was arrived at between the respondent bank and the petitioners in respect of both the branches on 25. 05. 2000 vide Annexure P-3 of the writ Petition. Under this settlement, the bank agreed to accept a sum of Rs. 143. 21 lacs instead of Rs. 161. 61 lacs due and payable by the petitioners on 01. 12. 1999. Thereafter further extension was granted by the respondent bank for payment vide bank letters which are at pages 30-45-B of the Writ Petition. Despite these letters, the petitioners did not deposit the amounts as agreed to be paid under the settlement dated 25. 05. 2000.
( 4 ) THE agreement between petitioners and the respondent bank dated 25. 05. 2000 stated that the petitioners had to pay Rs. 143. 21 lacs to the respondent bank in the following manner:- (1)Rs. 10 lacs in lump sum within 3-4 days. (2)Balance Rs. 133. 21 lacs plus interest at PLR plus interest tax on settlement amount as above in monthly installment without committing more than 2 defaults in the entire repayment period as under:-
A)RS. 30 lacs in 6 installments of Rs. 5 lacs each commencing from May 2000.
B)RS. 45 lacs in 6 installments of Rs. 7. 5 lacs each commencing from November 2000. Balance Rs. 58. 21 lacs plus interest tax PLR in 12 equal monthly installments commencing from May 2001.
( 5 ) UNDER the settlement dated 25. 5. 2000 it was agreed that if there was any failure to pay the settlement amount with interest, the respondent bank was at liberty to withdraw all concessions and proceed to recover the entire bank dues which at the time when settlement arrived at on 25. 5. 2000 amounted to Rs. 161. 61 lacs.
( 6 ). BY means of this petition, the petitioner stated that he should be allowed another one time settlement (OTS) under the scheme of the Reserve Bank of India (known as the Revised guidelines for compromise settlement of chronic non-performing assets of public sector banks) issued on 29. 01. 2003 which has been extended from 05. 02. 2004 to 27. 07. 2004. A true copy of the RBI Scheme dated 29-01-2003 as Annexure P-1.
( 7 ). THE petitioner stated that its business is closed and it is facing financial crises as the respondent bank is not permitting it to avail the opportunity given to it by the RBI. It is alleged that the banks have to follow all the RBI guidelines without discrimination.
( 8 ). THERE was some correspondence between the parties as is evident from paragraph 12-A to paragraph 32 of the Writ petition. The petitioner alleged that it was having financial constraints and claimed benefit of the RBI scheme of 2003. However, the respondent bank vide letter dated 21. 03. 2001 wrote to the petitioner that under the rbi guidelines only those accounts which were doubtful as on 21. 03. 1997 were eligible under the scheme. Hence the account of the petitioner is not covered, as it does not fall within the ambit of the RBI policy 2003 vide annexure P-8. The bank vide letter dated 18. 03. 2002 stated that as per the settlement proposal approved by the bank in 2000 the petitioner was to deposit Rs. 5 lacs per month. It was observed that f
