A One Time Settlement (OTS) is a contractual arrangement requiring strict adherence to its terms; failure to comply within the stipulated timeframe leads to the automatic lapse of the settlement, leaving the borrower with no vested right to its enforcement.

Order On Board

1. By way of this petition, the petitioner has called in question the legality and validity of the order dated 30.05.2025 (Annexure P/1) passed by Respondent No. 3, whereby the request of the petitioner for settlement of loan under the earlier approved One Time Settlement (OTS) scheme has not been accepted and a fresh proposal of higher amount has been insisted upon.

2. The facts, in brief, are that the petitioner had availed a loan of Rs. 25,00,000/- from the respondent Bank, which was subsequently classified as Non-Performing Asset (NPA). Recovery proceedings were initiated and a recovery certificate was issued by the Debts Recovery Tribunal, Jabalpur. It is the case of the petitioner that the respondent Bank had earlier approved a One Time Settlement (OTS) on 20.01.2025 for a sum of Rs. 9,00,000/-, out of which Rs. 1,00,000/- was deposited as upfront amount and the remaining Rs. 8,00,000/- was to be deposited within the stipulated time. The petitioner submits that due to freezing of his bank account and delay in release of the order passed by the Debts Recovery Tribunal dated 28.01.2025 (uploaded on 07.02.2025), he could not ensure timely transfer of the remaining amount, despite having taken steps including issuance of cheque. It is further the case of the petitioner that despite directions issued by this Court in earlier proceedings to consider his representation sympathetically, the respondent Bank arbitrarily declined the earlier OTS and insisted upon a higher settlement amount of Rs. 20,00,000/-.

3. Following reliefs have been prayed by way of this petition:-

“10.1 The Hon'ble Court may kindly be pleased to call for the entire records pertaining to the case of petitioner for its kind perusal.

10.2 The Hon'ble Court may kindly be pleased to quash/set-aside the impugned order dated 30.05.2025 (ΑΝΝEXURE P/1) and direct the respondent Bank to settle the loan as per earlier compromise approval dated 20.01.2025 of Rs, 9,00,000/-.

10.3 That, the respondents may be directed to de-freeze the PNB account of the petitioner and to recover the remaining amount of Rs. 8,00,000/- from the petitioner so that the aforesaid dispute could be settled in accordance with the compromise approval dated 20.01.2025.

10.4 That, the Hon'ble Court may kindly be pleased to grant any other relief, as if may deem fit and appropriate.”

4. Learned counsel for the petitioner submits that there was no deliberate default on the part of the petitioner in complying with the terms of the OTS, and the delay occurred due to circumstances beyond his control, including freezing of accounts and delayed release of the Tribunal’s order. It is contended that the respondent Bank has acted arbitrarily and contrary to the directions issued by this Court by refusing to honour the earlier approved settlement and by insisting upon an enhanced amount.

5. Learned counsel for Respondents No. 1 & 3 (UCO Bank) submits that the petitioner failed to comply with the terms of the One Time Settlement (OTS) within the stipulated period and, therefore, the settlement stood lapsed automatically. It is contended that once the OTS has failed, no right survives in favour of the petitioner to seek its enforcement as a matter of course. It is further submitted that the Bank is well within its jurisdiction