Borrowers cannot claim one-time settlement as a matter of right; financial institutions retain discretion to grant or deny OTS based on public interest and eligibility criteria.

JUDGMENT :

V. Narasingh, J.

1. The petitioner has filed this writ petition questioning the decision/order dated 23.02.2013 issued by the Opposite party no.1- IPICOL rejecting the One Time settlement proposal of the petitioner. Writ petition has been filed with a prayer to issue a direction to the opposite parties 1 and 2 to implement the scheme published under Annexure-4 (OTS-2011) qua the petitioner company and to issue direction to the said opposite parties to accept the proposal for OTS given by the petitioner company. For convenience of reference the prayer of the writ petition is extracted hereunder:

“It is, therefore, humbly prayed that your Lordship be pleased to admit the writ application, issue RULE NISI calling upon the opposite parties to show cause and if they fail to show cause or show insufficient cause, issue appropriate writ, direction and order commanding the opposite parties 1 and 2 to implement the scheme published under Annexure-4 in case of the petitioner company and direct them to accept the proposal for OTS given by the petitioner company”

2. The facts leading to filing of the present writ application in a nutshell are as under:

2-A. The petitioner company incorporated under the provisions of the Companies Act, 1956 in the name and style of M/s Suburban Industries Pvt. Ltd, has set up plant to manufacture L.P.G. Cylinder and had obtained a term loan from the opposite parties in the year 1999 of about Rs.2,64,50,000/-. The said loan account of the petitioner was categorized as „Non Performing Asset‟ since the petitioner defaulted in repayment of the loan as per schedule.

On account of the aforesaid financial crisis in the petitioner company, in April, 2008, the petitioner company submitted an application for one time settlement of the dues by making an initial deposit of Rs. 19.50 lakhs with the opposite parties 1 and 2.On 16.10.2008(Annexure-1) the opposite parties 1 and 2 approved the one time settlement proposal of the Petitioner Company and issued letter to that effect. The opposite parties 1 and 2 determined the OTS amount at Rs.376.02lakhs and fixed up the terms of further payments to be made on installments.

2-B. In terms of the aforesaid letter dated 16.10.2008 at Annexure-1 the opposite parties 1 and 2 determined the OTS amount at Rs.376.02 lakhs and fixed up the terms of further payments to be made in installment. The petitioner deposited a further sum of Rs.50.00 lakhs on 22.05.2009.

2-C. In the meanwhile a modified OTS scheme issued by the opposite parties 1 and 2 in July, 2009 under Annexure-2 which was widely published. As per clause of the OTS, 2009 switch over option was available to the defaulters who were under consideration for OTS under old scheme. Under the switch over scheme, the opposite parties made clear that the settlement order issued earlier under any previous OTS scheme would stand cancelled. Payments made under the previous OTS scheme would be treated as payment towards the settlement under the current scheme i.e.2009.

The petitioner company in terms of the aforesaid Annexure-2 submitted necessary application on 17^th July, 2009 at Annexure-3. The scheme under Annexure-2 was referred to the Government for its approval and on 26.05.2011 by a gazette notification of the Industries Department of the State of Odisha, the Government of Odisha gave approval to the same and incorporated certain conditions therein which are also acceptable to the petitioner comp