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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Ramachandra Rao, E Jasjit Singh Bedi, JJ.
M/s. Jindev Shuttering & Anr. – Appellants
Versus
Bank Of Baroda & Anr. – Respondents
CWP No. 26858 of 2018
Decided On : 19-04-2022
OTS Extension - Loan Settlement - SARFAESI Act, 2002 - [Section 13 (2) of the SARFAESI Act, 2002, OTS scheme 'SWABHIMAAN' and 'SWABHIMAN-II'] - The court considered the petitioners' request for extension of time for payment of the One Time Settlement (OTS) amount under the SARFAESI Act, 2002. It relied on the case of Anu Bhalla and Another Vs. District Magistrate, Pathankot and Another and outlined illustrative guidelines for granting OTS extension, emphasizing the borrower's bona fide intent and reasons for delay in payment. The court held that the delay in legal proceedings should not prejudice the parties and granted the petitioners an extension of time for OTS payment.
Fact of the Case:
The petitioners sought a Writ in the nature of Mandamus to direct the respondent-Bank to accept the Demand Drafts for payment of the balance OTS amount and extend the time for payment of the balance OTS amount along with interest. The respondent-Bank contended that the OTS stood withdrawn as the petitioners failed to make the full payment by the stipulated date.
Finding of the Court:
The court found that the petitioners had made substantial payments and sought an extension of time due to financial constraints. It held that the delay in legal proceedings should not prejudice the parties and granted the petitioners an extension of time for OTS payment.
Issues: The main issue was whether the court could grant an extension of time for the payment of the balance amount under the OTS.
Ratio Decidendi: The court relied on the case of Anu Bhalla and Another Vs. District Magistrate, Pathankot and Another and outlined illustrative guidelines for granting OTS extension, emphasizing the borrower's bona fide intent and reasons for delay in payment. It held that the delay in legal proceedings should not prejudice the parties and granted the petitioners an extension of time for OTS payment.
Final Decision: The Writ Petition was allowed, and the petitioners were granted an extension of time for payment of the amount due under the OTS. The respondent Bank was directed to treat the petitioners as having complied with the OTS within the extended time, close the loan account, and return the security documents to the petitioners.
JUDGMENT
M.S. Ramachandra Rao, J. - In this Writ Petition, the petitioners have prayed for the issuance of a Writ in the nature of Mandamus, directing the respondents-Bank to accept the Demand Draft of Rs. 3.80 Lakhs for payment of the balance OTS amount and allow application dt. 21.07.2018 (Annexure P-7) for extension of time upto 31.10.2018 for payment of balance amount of OTS along with interest for the delayed period.
2. The petitioner No.1 is a proprietary concern of which the petitioner No.2 is the proprietor.
3. The petitioner No.1 and was sanctioned a term loan of Rs. 98 Lakhs on 28.02.2011 by the respondent Bank for establishment of a shuttering material store.
4. The loan facility was secured by hypothecation of fixed asset, and the loan was repayable in 57 monthly installments of Rs. 1,71,930/- plus interest w.e.f. 01.07.2011. According to the petitioners, the said loan was sanctioned as per the Self Employment Scheme of Government of India.
5. Initially, according to the petitioners, the business ran well and certain installments were paid by the petitioners towards the loan, but builders to whom the petitioners supplied the shuttering material did not pay the rentals, and did not also return the shuttering material.
6. Consequently, the petitioners suffered huge losses in business, and could not repay the loan of the respondents-Bank.
7. The loan account of the petitioners was declared as Non Performing Asset (NPA) on 30.09.2013, and notice dt. 21.10.2013 was issued under Section 13 (2) of the SARFAESI Act, 2002 (hereinafter referred to as "the Act").
8. The respondent-Bank also filed OA No.1039 of 2013 before the DRT-II, Chandigarh.
9. On 04.09.2017, the respondents-Bank floated an OTS scheme called "SWABHIMAAN" and on 1.2.2018, another OTS called "SWABHIMAN-II". The latter scheme was launched on 01.02.2018, and was valid upto 31.03.2018.
10. Petitioners were approached by the respondents-Bank to settle the loan and an OTS dt. 15.03.2018 was sanctioned for a sum of Rs. 13.10 Lakhs.
11. As per the terms of the said OTS, Rs. 2 Lakhs was to be paid as an upfront fee on acceptance of OTS, Rs. 4.55 Lakhs was to be paid by 31.03.2018, Rs. 2.20 Lakhs was to be paid on 15.04.2018, Rs. 2.20 Lakhs was to be paid before 15.05.2018 and Rs. 2.15 Lakhs was to be paid before 15.06.2018.
12. It was mentioned in the sanction letter dt. 15.03.2018 that all the relief/concessions given under the OTS would be withdrawn if the borrower fails to honor any of the terms and conditions of the settlement whether fully or partially, and the entire contractual dues then became payable by the borrower. Petitioners paid the upfront amount of Rs. 2 Lakhs on 15.03.2018.
13. They thereafter made payment totaling Rs. 8.30 Lakhs including the payment of the upfront amount by 14.06.2018, but were unable to pay the balance amount towards the OTS of Rs. 13.10 Lakhs before 15.06.2018 i.e. the last date for payment under OTS.
14. They in fact deposited Rs. 50,000/- on 14.06.2018, and requested the Branch Manager of the respondents-Bank to extend time for payment of the balance amount upto 31.10.2018.
15. Petitioners contend that the Branch Manager had advised them to apply in writing and deposit Rs. 1 Lakh more so that their application could be forwarded to the higher authorities for approval, and so the petitioners made an application on 21.07.2018, seeking time till 31.10.2018 for payment of the balance OTS amount of Rs. 4.80 Lakh. They also deposited Rs. 1 Lakh more on 23.07.2018.
16. Petitioners then approached this Court by filing the instant Writ Petition on 11.10.2018 contending that their application dt. 21.07.2018 for extension of time for paying the amount under the OTS is pending with the competent authority of the respondents-Bank, that the OTS has not been cancelled or revoked by the respondents-Bank, and they are ready with the Demand Drafts amounting to Rs. 3.8 Lakhs, and also ready to pay interest for the delayed period.
17. They prayed that the respo
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