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IN THE HIGH COURT OF PUNJAB AND HARYANA
Jaswant Singh, Sant Parkash, JJ.
Anu Bhalla And Another - Appellant
Versus
District Magistrate, Pathankot And Another - Respondent
Civil Writ Petition No. 5518 of 2020 (O&M)
Decided On : 22-09-2020
Extension of One Time Settlement (OTS) is permissible in law. Courts have the jurisdiction to extend the period of settlement as originally provided for, in the OTS letter. Extension of time in making balance payment of OTS is permissible in law. The Courts would be free to consider the credentials of the borrower as well, being an equitable and discretionary relief.
Fact of the Case:
The petitioners had availed two term loans from Respondent No. 2 - a Non Banking Financial Company and are aggrieved of the inaction of the respondent No. 2 in considering their application for grant of extension in time, for making the repayment of the balance settlement amount in terms of One Time Settlement (OTS) dated 02.01.2019 (AnnexureP-11) entered between the petitioners and respondent No. 2.
Finding of the Court:
The Court held that the petitioners are entitled to extension of time to repay the remaining settlement amount, as they meet most of the factors deliberated upon in para No. 27.1 hereinabove (not repeated for the sake of brevity), they are entitled for extension of time. Though the petitioners, have pleaded that keeping in view the current situation where COVID-19 has adversely the capabilities of the petitioners, they may be permitted to repay the amount in 4 quarterly instalments (one year), but we feel that an extension of 6 months would be reasonable keeping in view the current situation.
Issues: 1. Whether this Court in exercise of its jurisdiction under Article 226 of the Constitution of India, has the jurisdiction to extend the period of One Time Settlement. 2. Whether in the facts of the present case, the petitioners would be entitled for an extension in making payment of the balance settlement amount pursuant to One Time Settlement dated 29.01.2019 (P-II). 3. Whether the present petition is maintainable in view of the proceedings pending before National Company Law Tribunal, Mumbai.
Ratio Decidendi: 1. The Court held that in deserving cases a borrower is entitled to extension in time for payment of the balance settlement amount, if he has already made substantial payments and for reasons beyond his control, could not make the remaining payment within the prescribed schedule under One Time Settlement. 2. The Court held that the petitioners are entitled to extension of time to repay the remaining settlement amount, as they meet most of the factors deliberated upon in para No. 27.1 hereinabove (not repeated for the sake of brevity), they are entitled for extension of time. 3. The Court held that in the peculiar facts and circumstances of the present petition, the petition would be maintainable.
Final Decision: The Court allowed the petition and held that the petitioners would have to pay the remaining amount due pursuant to OTS dated 02.01.2019 (P-II) in two quarterly instalments, of which a sum of Rs. 25 lacs shall be payable on or before 31.12.2020 and the remaining amount by 31.03.2021. The petitioners shall also pay interest @ 9% p.a. simple on the delayed payments on reducing balance payable w.e.f. 01.06.2019 i.e. the closing date of the settlement/OTS.
JUDGMENT
Jaswant Singh, J. - The present petition has been filed by the petitioners/principal borrowers who had availed two credit facilities from Respondent No. 2 - a Non Banking Financial Company and are aggrieved of the inaction of the respondent No. 2 in considering their application for grant of extension in time, for making the repayment of the balance settlement amount in terms of One Time Settlement (OTS) dated 02.01.2019 (AnnexureP-11) entered between the petitioners and respondent No. 2.
2. In brief, the pleaded case of petitioners, who are husband and wife, is that they had availed two Term Loans (Loan Against Property) from Respondent No. 2 on 12.08.2015. The first Term Loan was sanctioned for Rs.1.45 Crore (Annexure P-1) in the shape of Loan Against Property (LAP) against the security of a residential house and was repayable in a tenure of15 years with Equated Monthly Instalment (EMI) of Rs.2,07,036/-. The second Term Loan was availed for Rs. 58' Lakhs, against the same security of the said residential house, (mortgaged in both the accounts) which was to be repaid in a tenure of 30 years with Equated Monthly Instalment of Rs.75,284/-.
3. The petitioners are stated to be the founder members of AmanBhalla Foundation, which has set up educational institutions, imparting education in the field of Polytechnic, Engineering, Nursing, Teachers training, Hotel Management etc. at Pathankot (Punjab). Government of India, had introduced Post Matric Scholarship Scheme, pursuant to which educational institutions, would not charge tuition fee from the students of SC/ST/OBC/BC category, which was to be then reimbursed by the State Government, after having received the same from the Centre Government. The petitioners contend that pursuant to the said scheme, various students belonging to SC/ST/OBC/BC category take admission for which their Institutes do not charge tuition fee, and for such reimbursement the Institute is dependant upon the State Government. The petitioners submit that being a part of management of the Institute, the income of the petitioners was directly dependant upon the satisfactory running of the Institutes. Difficulty arose, when on account of the delay in receiving the reimbursement under the aforesaid scheme from the State Government, it faced financial constraints, due to which they could not repay the instalments of the aforesaid loans on time, which led Respondent No. 2 to declaring both the loan accounts as Non Performing Asset (NPA) by 01.01.2018.
4. Consequently, on 14.03.2018, Respondent No. 2 issued notice U/s 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as "Securitisation Act, 2002") claiming an amount of Rs. 1,38,02,347/- in the first loan account (Principal Sanctioned amount of Rs.1.45 Crore) and Rs.54,26,617/- (Principal Sanctioned of Rs. 58 lakhs) in the second loan account. Thereafter, on 28.07.2018, Respondent No. 2 issued possession notice U/s 13 (4) of the Securitisation Act, 2002 read with Rule 8(1) of Security Interest (Enforcement) Rules, 2002.
5. Initially, vide settlement letter dated 28.03.2018 (Annexure P-10), both the aforesaid accounts were settled for Rs.1.60 Crores and a repayment schedule was stipulated therein, as per which the settlement amount was to be paid in six instalments, so as to conclude the accounts by 30.08.2018. It seems that the said settlement did not work out, as payments could not be deposited by the petitioner. Thereafter, on 02.01.2019 (P-ll), the petitioners and respondent No. 2 entered into a fresh One Time Settlement (OTS) of both the loan accounts again for the same amount i.e. for Rs.1.60 Crores (Rs.1.15 crore and Rs. 45 lakhs being the settlement of both the accounts respectively). The repayment of the settlement amount was to be made in six instalments which were to conclude till 30.05.2019. The petitioners contend that in compliance of second OTS dated 02.01.
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