A borrower cannot claim the benefit of a One-Time Settlement (OTS) scheme as a matter of right, and the High Court cannot issue a writ of mandamus to compel a financial institution to grant or extend such benefits, as it is a matter of the institution's commercial wisdom.

Digitally signed by MOHANKUMAR B SHELAR Location: HIGH COURT OF KARNATAKA

THIS WRIT PETITION IS FILED UNDER ARTCLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO, ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENTS TO CONSIDER THE REPRESENTATION OF THE PETITIONER AT ANNEXURE-F DATED 22.04.2026 AND EXTEND THE TIME OF 90 DAYS TO SETTLE OTS SCHEME LOAN AMOUNT IN THE INTEREST OF JUSTICE AND EQUITY.

THIS PETITION, COMING ON FOR PRILIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

ORAL ORDER

(PER: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI)

The petitioner filed this writ petition seeking a mandamus directing the respondent-Corporation to consider the representation of the petitioner vide Annexure-F dated 22.04.2026 and extend the time by 90 days to settle one-time settlement (OTS) scheme loan amount.

Brief facts leading rise to the filing of this writ petition are as follows:

2.1. The petitioner obtained a loan from the respondent-Corporation. The petitioner did not repay the loan amount. Meanwhile, the respondent-Corporation seized the petitioner-Industry due to non-payment of loan amount and tried to sell the Industry in public auction. Unfortunately, the respondent was unsuccessful in alienating the property in public auction. Meanwhile, on 08.01.2026, the respondent settled the recovery dispute in OTS scheme. After receiving the letter from the respondent, the petitioner tried to pay the loan amount by raising loan from his friends and relatives, but, the petitioner was not able to pay the advance cheque amount which is issued in view of the conditions of OTS scheme. The petitioner has submitted representation for extension of 90 days’ time for settlement of OTS scheme dated 22.04.2026. The petitioner, aggrieved by the action of the respondent in not extending the time, filed this writ petition.

Heard the arguments of learned counsel for the petitioner and learned counsel for the respondent.

Learned counsel for the petitioner submits that, the respondent has settled the recovery dispute in OTS scheme, but, the petitioner could not pay the amount as settled under OTS scheme. He further submits that, he petitioner made an attempt to raise loan from his friends and relatives, but, the petitioner was unsuccessful in raising the loan. He submits that, the petitioner requested the respondent to extend the time by 90 days to settle the loan, the respondent has not given any heed to the request made by the petitioner. Hence, on these grounds, he prays to allow the present writ petition.

Per contra, learned counsel for the respondent submits that, the petitioner had obtained a loan and has not repaid the same within time, and committed default. He submits that, the respondent has accepted the OTS scheme and permitted the petitioner to repay the loan amount. Despite granting time, the petitioner did not comply with the terms and conditions of the OTS. He further submits that, the petitioner has no right to seek for extension of time. However, the respondent had accepted the OTS request made by the petitioner. Further, the petitioner was required to pay the loan amount. The petitioner did not perform his part of conditions by repaying the amount within stipulated period under the OTS scheme. Hence, on these grounds, he prays to dismiss the present writ petition.

Perused the records and considered the submissions of the learned counsel for the parties.

It is undisputed fact that, the petitioner committed default in repayment of loan amount; the respondent, accepted the request of the petitioner for settlement of loan amount under OTS scheme, however, the petitioner did not repay the loan amount within stipulated time and sought for extension of time to repay the same.

This Court, in the case of M/s Chamundeshwarishrri (M/S S R Industries) and Another Vs. Canara Bank and Another, WP No.39471/2025, disposed of on 04.02.2026 has, in paragraph Nos.12 to 15 as follows:

“12. At the outset, it has to be stated here that th