Courts cannot compel banks to provide benefits of One Time Settlement Schemes if borrowers fail to meet payment obligations under the scheme, preserving the contractual sanctity and banks' discretion in such matters.

JUDGMENT :

S. MANU, J.

1. The question arising in these appeals concerns scope of interference in writ petitions pleading for grant of the benefits of One Time Settlement Schemes (hereinafter referred to as 'OTS Schemes'). Appellant in all these appeals is the State Bank of India. The Bank is deeply aggrieved by the directions issued by the learned Single Judge extending the benefits of OTS Schemes to the party Respondents in spite of the lapses in discharging their obligations under the Scheme. The Appellant Bank contends that the directions issued by the learned Single Judge are inconsistent with the law laid down by the Hon'ble Supreme Court. We proceed to dispose all appeals by this common judgment as the basic issue to be decided is common.

2. We will refer to the facts of the cases at first.

W.A.No.1275/2024

3. Respondent in W.A.No.1275/2024 had availed two loan facilities of ₹25,00,000/- and ₹10,00,000/- for the purpose of running business. He had offered the residential property in his name as security for availing the aforementioned two loan facilities from the Bank. When the Respondent committed default, the Bank initiated measures under the SARFAESI Act and also filed Original Application before the DRT. While so, the Bank announced “RINN SAMADHAN 2021-22 SCHEME” for settlement of accounts and the benefit of the Scheme was offered to the Respondent also. Pursuant to the same, the Respondent remitted first installment of ₹2,75,000/- for one account as per the Scheme on 21 February 2022 and ₹75,000/- for another account on 22 February 2022. The second installment was not paid on time. It was due in April 2022. Though the amount was paid after April, same was received by the Bank. Case of the Respondent is that the entire amount as per the special scheme was remitted and was accepted by the Bank without any murmur. However, the Bank later took the stand that on account of delay in paying the second installment benefit of the scheme would not be available to the Respondent. The Bank demanded entire amount from the Respondent with respect to both loan accounts. By Annexure-A1 letter dated 19 August 2022 Bank informed the Respondent that payment of the amount calculated on the basis of the special scheme, after the failure to remit the second installment on time, was without concurrence of the Bank. The Bank clarified that the remittance cannot be accounted under the special OTS scheme and the Respondent can seek refund of the amount or enter into fresh terms for a compromise settlement. Another communication dated 29 September 2022 produced as Annexure-A2 was also issued to the Respondent. The learned Single Judge by the impugned judgment allowed the writ petition and directed the Bank to release the title documents of the mortgaged properties. The Respondent was directed to pay interest for the delayed payment of the second installment to the Bank.

W.A.No.1348/2024

4. The Respondent in W.A.No.1348/2024 had availed various credit facilities from the Appellant Bank. The account of the Respondent was classified as NPA on account of default in repayment and proceedings under the SARFAESI Act followed. The Respondent approached the DRT and filed writ petitions 27100/2019, 34373/2019 and 30107/2022. A compromise settlement was arrived at on 01 December 2022 on the basis of which the Respondent was liable to remit the amounts within 31 March 2023 extendable upto 19 June 2023. The Respondent failed to discharge the said obligation and approached this Court in W.P.(C)No.28353/2024. Earlier litigations were not revealed in the writ petition. Though the Bank challenged the maintainability of the writ petition, the learned Single Judge by order dated 8 August 202