The decision reaffirms that the grant of benefit under the OTS is subject to the eligibility criteria and the commercial wisdom of the bank, and highlights the availability of alternative remedies under the SARFAESI Act.

ORDER :

1. This order will dispose of Writ Petition Nos. 843 of 2021 and 2737 of 2021.

2. Heard Mr. Sujith Jaiswal, learned counsel for the petitioners and M. Narender Reddy, learned Senior Counsel appearing on behalf of Mr. V.V.S.N. Raju, learned Standing Counsel for the respondent-State Bank of India (Bank).

3. In Writ Petition No. 843 of 2021, petitioner has prayed for the following relief:

“...........to issue order or direction more particularly a Writ of Mandamus declaring the impugned possession notice dated 08.01.2021, issued by Respondent as illegal, arbitrary without following any procedure laid down in the Act, contrary to the rules and against the procedure laid down and principles of natural justice and consequently to set aside the impugned possession notice dated 08.01.2021 issued by respondent-Bank...........”

4. It is stated that petitioner had availed initially financial assistance from the respondent-Bank to the tune of Rs. 10.00 crores in the year 2009 which was subsequently enhanced to Rs. 27.00 Crores.

5. For various reasons, there was default on the part of the petitioner in repaying the above loan amount. Consequently, loan account of the petitioner was classified by the respondent as Non-Performing Asset (NPA).

6. Thereafter, respondent initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act’).

7. On 06.01.2020 petitioner made an offer to the respondent for settlement of outstanding dues. After negotiations, respondent informed the petitioner vide letter dated 06.02.2020 that its offer to pay of Rs. 7.10 crores towards the outstanding dues was accepted by the appropriate authority of the respondent. However, the acceptance was subject to the terms and conditions mentioned in the letter dated 06.02.2020, which is extracted hereunder:

“(i) Total amount payable under the compromise settlement will be Rs. 7.10 crores (Rupees Seven crore Ten lakhs only).

(ii) Initial deposit amount of Rs. 0.36 crores paid by you in ‘No-Lien’ account will be appropriated towards your compromise settlement amount.

(iii) Upfront amount of Rs. 0.71 crores to be paid within 15 days from the date of this letter.

(iv) The balance compromise settlement amount of Rs. 6.03 crores (Rupees Six Crore Three Lakhs only) has to be paid within 3 months from the date of this letter, i.e. Rs. 2.00 crores on or before 04.03.2020, Rs. 2.00 crores on or before 31.03.2020 and Rs. 2.03 crores on or before 04.05.2020. In case of non-payment before 04.05.2020 interest @ prevailing MCLR, i.e. 7.85% (for 6 months period) on the balance amount paid after four months shall be charged from 30th day from the date of letter conveying sanction up to the date of final payment on or before 04.08.2020. Any extension beyond this will be subject to approval of competent authority.

(v) The Bank will release its charge on the properties and other securities on payment of full compromise settlement amount along with delayed period interest, if any.

(vi) Consent terms with default clause will be filed before Presiding Officer or Recovery Officer of DRT/Court for obtaining consent decree.

(vii) Cases, if any, filed by the Company/Directors/Guarantors against the Bank are to be withdrawn immediately.

(viii) On payment of full compromise amount, a Full Satisfaction memo will be filed before Recovery Officer/Presiding Officer of Hon’ble DRT, Hyderabad to withdraw the suit/recovery proceedings filed by the bank.

(ix) If, for any reason, the compromise amount or any installment, as agreed, is not paid within scheduled period, the Bank reserves the right to cancel the compromise settlement and entire dues of the Bank as claimed in DRT in the original application/Recovery Certificate with interest and costs will become due for payment.”

8. Petitioner did not adhere to the time-frame for payment in terms of the compromise arrived at, as extracted above.

9. By letter dated 10.08.2020, respo