Borrowers have no inherent legal right to compel a financial institution to accept a One Time Settlement (OTS) proposal, as it remains a matter of discretion entirely for the creditor.

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT OR ORDER IN THE NATURE OF MANDAMUS DIRECTING THE RESPONDENTS TO CONSIDER THE REPRESENTATIONS DATED 17.2.2025 AND 16.7.2025 VIDE ANNEXURES-M1 AND N1 AND PROVIDE AN OPPORTUNITY TO CLEAR THE OUTSTANDING LOAN IN ONETIME SETTLEMENT SCHEME AND ETC.,

THIS PETITION, COMING ON FOR PRELIMINARY HEARING THROUGH VIDEO CONFERENCING / PHYSICAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE M.I.ARUN

ORAL ORDER

The petitioners are said to have obtained a loan from respondent No.2 - Bank. It is submitted that they have committed default in repayment of the said loan and respondent No.2 - Bank has initiated recovery proceedings against them. Further, the petitioners have submitted a One Time Settlement (OTS) proposal to respondent No.2 - Bank to clear the loan. As the same has not been accepted, the present writ petition is filed with the following prayers:

"(i) Issue writ or order in the nature of Mandamus directing the respondents to consider the representations dt.17.2.2025 and 16.7.2025 vide Annexures M1 and N1 and provide an opportunity to clear the outstanding loan in onetime settlement scheme; and

(ii) to declare that the second respondent society is not entitled to collect interest from the petitioners in their loan accounts from 6.6.2003; and

(iii) to grant such other reliefs as deem fit under the circumstances of the case, in the interest of justice and equity."

The petitioners do not have a right to claim One Time Settlement. As and when the bank offers it, they are always at liberty to claim the same. If the petitioners are aggrieved by the interest charged by the bank, then in that event, the petitioners are having an alternative and efficacious remedy to approach the appropriate authority in the manner known to law.

For the aforementioned reasons, the Writ Petition is hereby dismissed.