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2022 Supreme(Online)(KER) 33324
HIGH COURT OF KERALA
GOPINATH P, J
K.P.UMASANKAR – Appellant
Versus
THE PUNJAB NATIONAL BANK – Respondent
WP(C) NO. 4909 OF 2020
For the Appellants/Petitioners: S.M.PRASANTH, P.VISWANATHAN
For the Respondents: R.S.KALKURA, M.S.KALESH
Legal principles governing one-time settlements allow for exceptional extensions in repayment time under certain justified circumstances.
Headnote:(A) Constitution of India - Article 226 - One-time settlement offer - Extension of time for payment - The court held that exceptional circumstances might warrant extending the period for payment under a one-time settlement if requested timely and justified, particularly following the borrower's death - Relevant judgments cited include Bindu Vijayakumar v. Regional Manager, SBI and Vijayakumari v. Indian Bank. (Paras 8, 10, and 12)
(B) The acceptance of delay due to unfortunate circumstances can lead to enforcement of payment terms if substantial payment has already been made and the borrower acts in good faith. (Paras 3, 7, and 10)
Facts of the case:
The petitioner, as a guarantor, challenged the bank's refusal to extend the time for the payment after the borrower's death, following a one-time settlement offer.
Findings of Court:
The court found compelling circumstances to issue a direction for accepting payment along with interest, addressing the equity involved in the matter.
Issues: The key issues were about the refusal to extend the time for payment post the borrower's death and the applicability of equitable considerations.
Ratio Decidendi: The court ruled that extensions could be granted in exceptional cases, balancing the interests of both parties based on the particular circumstances.
Result: The writ petition is allowed, and the bank is directed to accept the outstanding amount with interest.
| Table of Content |
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| 1. petition relates to loan settlement and its complexities post-borrower's death. (Para 1 , 2 , 3) |
| 2. legal arguments regarding extension of one time settlement payments. (Para 4 , 5 , 6) |
| 3. court discusses the legal precedents affecting jurisdiction under article 226. (Para 7 , 8) |
JUDGMENT
The petitioner is a guarantor in respect of a loan availed by a proprietary concern named 'PBT Spices' of which one Thankappan was the proprietor. The aforesaid proprietary concern had availed a loan of Rs.11,70,000/- from the respondent bank in the year 2006. The said loan became a Non Performing Asset, leading to initiation of proceedings by the bank under the SARFAESI Act. Those proceedings were challenged by the petitioner before the Debts Recovery Tribunal through S.A. No.799/2010 which is still pending consideration of the Tribunal. The bank, thereafter, filed O.A. No.292/2012, for recovery of a sum of Rs.18,32,308/- along with future interest and costs from the aforesaid proprietary concern. The said O.A. is also pending consideration before the Tribunal.
2. While matters stood thus, at the instance of the petitioner, the respondent bank granted an offer for One Time Settlement, permitting closure of the loan account on payment of Rs.7,02,116/-. This was on 30.03.2019. It is not in dispute that a sum of Rs.4,50,000/- was paid on 30.03.2019 itself towards the One Time Settlement and the balance payable was Rs.2,52,116/-. This amount had to be paid within 45 days from 30.03.2019 as per the terms of the letter sanctioning One Time Settlement. The time for payment would therefore run till 15.05.2019. On 08.05.2019, the original borrower died. The petitioner, thereupon requested the bank to extend the time for payment of the balance amount under One Time Settlement, which came to be rejected through the document marked as Ext.R1(b) produced along with the counter affidavit filed by the respondent bank before this Court. The petitioner disputes the receipt of Ext.R1(b), though the said communication appears to have been sent by registered post; acknowledgment due. The petitioner submits that despite all efforts to make the bank accept the request for extending the time for balance payment, the bank refused to accede to the request and therefore the petitioner was forced to approach this Court through this writ petition filed under Article 226 of the Constitution of India.
3. Sri. P. Viswanathan, learned Senior counsel, instructed by Sri. S M. Prasanth, appearing for the petitioner, would point out the facts of the case and would submit that the action of the bank in refusing to extend the time limit for payment under One Time settlement offer is arbitrary and illegal. He refers to the judgment of a learned Single Judge of this Court inBindu Vijayakumar v. Regional Manager, SBI , Kollam and Others [ 2022(1) KHC 394 ], where this Court, on consideration of various judgments including the judgment of the Hon’ble Supreme Court inVijayakumari P. and Another V. Indian Bank represented by its Chief Manager [ AIR 2018 SC 759 ], held as follows:-
‘’8. Courts cannot vary the terms of an agreement especially in the exercise of jurisdiction under Article 226 of the Constitution of India. The terms of one-time settlement scheme cannot also be interfered with or varied to the advantage or disadvantage of any person by resorting to the powers under Article 226 of the Constitution of India. A Division Bench of this Court in Asokan Vasu v. State Bank of India (2020 SCC OnLine Ker. 4282) had observed that “A loan is granted in terms of the contract, and grant of one time settlement or re-scheduling of the loan amount is really a modification of the contract, which can only be done by mutual consent of the parties, vide Section 62 of the Contract Act, 1872.The court cannot alter the terms of the contract.”
9. In the aforestated decision, it was further observed that the Court has no power to extend the terms of a one-time settlement and that there
