No Mandamus can be issued for granting one time settlement.

Markandey Katju, CJ.

This writ appeal is filed against the impugned order of the learned single Judge dated 19.05.2004 passed in W.P.No.14013 of 2004. We have perused the impugned order and the other papers available on record, and also heard the learned counsel for the parties. We are of the opinion that the impugned order cannot be sustained.

2. The prayer in the writ petition was for the issuance of a writ of mandamus directing the 2nd respondent in the writ petition (the present appellant), which is the Tamil Nadu Industrial Investment Corporation Limited (hereinafter referred to as TIIC) to accept the one time settlement offer made by the petitioner and to release the properties and fixed assets offered as collateral securities.

3. The writ petitioner is a private limited company registered under the Indian Companies Act and is engaged in the business of Software Development Projects. A term loan of Rs.2.60 crores was sanctioned to the writ petitioner-company by the TIIC vide sanction letter dated 30.04.2001for a Software Development Project.

4. It was alleged in paragraph-11 of the affidavit filed in support of the writ petition that petitioner could not pay the dues to the TIIC as per the time schedule because of the unforeseen constraints in the market, as witnessed everywhere due to the global recession, and because of that the writ petitioner could not earn adequate revenues to repay the loan, since it was in its early phase of consolidation. TIIC issued a foreclosure notice on 16.07.2003 demanding the petitioner to settle the entire amount of principal and interest, failing which it will proceed with the auctioning of the collateral properties.

5. It is alleged that the petitioner came forward to raise funds by disposing of the properties offered as collateral securities, and its Managing Director presented a proposal to TIIC for one time settlement. The petitioner further alleged that it offered a proposal to pay Rs.2 crores against the release of all the collateral securities, and was awaiting for the approval and confirmation from TIIC. The petitioner also alleged that this proposal of one time settlement of Rs.2 crores against the release of collateral properties has not been considered by the TIIC till date. The petitioner prayed for re-scheduling of the repayment of the loan and interest.

6. Before the learned single Judge, the learned counsel for the writ petitioner, Mrs.Nalini Chidamabaram contended that a third party is willing to purchase one item of the property, which is offered as collateral security situate at Ponneri Taluk for a sum of Rs.2 crores. She also pointed out that apart from the above item of the property, a residential house situated at Royapettah, Chennai-14 is also offered as security to TIIC. The learned single Judge in his impugned order in paragraph –6 observed :

“If that is so, if the petitioner brings any third party to purchase one item of the property, either for Rs.2 crores or any amount higher than that, as and when the sum of Rs.2 crores is deposited either directly by the petitioner or by the proposed purchaser, the 2nd respondent shall release the said property situates at Ponnery Taluk from the guarantee offered by the petitioner. As regards the further grievance of the petitioner is concerned with regard to one time settlement, the 2nd respondent is directed to consider the request of the petitioner favourably, if the above said amount of Rs.2 crores is paid.”

7. In our considered opinion it is not proper for the Court to interfere in such matters relating to recovery of loans. Such matters are contractual in nature and writ jurisdiction is not the proper remedy for this. A writ lies when there is an error of law apparent on the face of the record, or there is violation of law. No writ lies merely for directing one time settlement or for directing re-scheduling of the loan or for fixing instalments in connection with the loan. It is only the bank or the financial ins