Borrowers cannot demand specific benefits under One Time Settlement schemes if they fail to properly engage in the process; such benefits are discretionary and not a right.

JUDGMENT

Muralee Krishna S., J.

The petitioners in W.P.(C)No.11083 of 2025 filed this Writ Appeal under Section 5(i) of the Kerala High Court Act, 1958, challenging the judgment dated 27.11.2025 passed by the learned Single Judge in that writ petition.

2. Going by the averments in the writ petition, the appellants have availed three loans from the 3^rd respondent Vazhoor Farmers Service Co-operative Bank Ltd.(‘the Bank’ for short) and executed a mortgage deed in favour of the bank, creating an equitable mortgage over their property. Due to default in repayment, arbitration proceedings were initiated under Section 69 of the Kerala Co-operative Societies Act , 1969 (‘the Act’ for short), in respect of the loans and ex parte awards were passed against the appellants. In the revision petitions filed by the appellants, the Co-operative Tribunal issued a direction to the bank to regularise the accounts, so as to continue the repayment. There was no intimation from the bank about the payment to be effected as on 30.10.2018, and the respondent had not initiated any recovery proceedings. In the case of co-operative banks, the direction issued by the Government was to be followed by the bank, and it was accordingly, there were no recovery proceedings initiated, and non-payment of any amount by the appellants was not due to any fault on their part. However when the respondents were proceeding with recovery proceedings without regularizing the loan liability and has declared that in front of the appellants’ residential house they will raise board stating that the property of the appellants is under sale proceedings and that appellants are defaulters, the appellants have filed representation before the 2^nd respondent Assistant Registrar stating that their loans are to be regularized and waiver of interest may be given and further the penal interest and other charges to be excluded and the loan liability as on the date of regularization may be permitted to be remitted in 40 instalments. The appellants have stated that their only income is about Rs.20,000/-, which they are getting by way of rent from their saw mill, and the 1^st appellant is suffering from a serious liver problem and is undergoing treatment for which they are not able to take proper consultation and medication, etc. The appellants have submitted a representation after receiving notice to clear the liability under Navakerala Kudishika Nivaranam 2018. When recovery proceedings were initiated, the appellants approached this Court and obtained Ext.P1 and Ext.P2 judgments dated 10.08.2023 in W.P(C) No.9468 of 2021 and 17.11.2023 in W.A.No.1631 of 2023, respectively. Thereafter, the Bank issued Ext.P6 letter dated 11.07.2024 calculating the total liability of the appellants at Rs.57,10,982/- and the appellants have approached this Court by filing W.P.(C) No.25939 of 2024. As per Ext.P8 judgment dated 06.08.2024 in W.P.(C) No.25939 of 2024, this Court directed the District Level Committee formed for assessing the benefit to be given under the One Time Settlement Scheme, to take a decision, after considering the objection of the appellants also in the matter of One Time Settlement. Now the Bank issued Ext.P9 letter dated 14.02.2025 along with Ext.P10 order issued by the 4^th respondent District Level committee and Ext.P11 calculation statement. The total amount directed to be paid was Rs.53,13,802/-. But the details were made in the said calculation statement, without hearing the appellants or even going through the circular conditions and benefits that were to be granted. The appellants have