1. Challenge to recovery proceedings under Kerala Co-operative Societies Act — Property mortgaged and auctioned — Auction not confirmed. (Para 1 )
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2026 Supreme(Online)(Ker) 62056
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Gopinath P., J
Sunny – Appellant
Versus
State of Kerala – Respondent
WP(C) NO. 7278 OF 2024|WP(C) NO. 7299 OF 2024|WP(C) NO. 7322 OF 2024|WP(C) NO. 7917 OF 2024
Advocates:
For the Appellants/Petitioners: N.L. Bitto, Mithul T Anto
For the Respondents: K. Jagadeesh, V. Renju, M Praveenkumar
For the Appellants/Petitioners: N.L. Bitto, Mithul T Anto
For the Respondents: K. Jagadeesh, V. Renju, M Praveenkumar
The court may grant a final opportunity to debtors to apply for a One Time Settlement (OTS) scheme to settle liabilities, even after an auction sale, provided the sale has not yet been confirmed.
Headnote:(A) Recovery Proceedings - One Time Settlement (OTS) - Opportunity to avail OTS scheme - Where property has been auctioned but the sale has not yet been confirmed, the court may grant a final opportunity to the petitioners to apply for an existing OTS scheme to settle liabilities. (Para 4)
Issues: Whether the petitioners should be permitted to apply for the One Time Settlement (OTS) scheme despite the property already being sold in auction.
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Table of Contents
2. Petitioners seek to avail OTS scheme; bank opposes stating no application and auction already conducted. (Para 2 , 3 )
3. As property purchased by bank and auction unconfirmed, one opportunity to apply for OTS is warranted. (Para 4 )
4. A debtor may be permitted to apply for One Time Settlement even after auction if the auction purchaser is the creditor and confirmation is pending. (Para 4 )
5. Petitioners permitted to apply for OTS; sale not to be confirmed pending compliance with OTS terms. (Para 4 )
6. Can a debtor be allowed to apply for a One Time Settlement after an auction sale when the property was purchased by the creditor bank and confirmation is pending?
Yes. The court granted an opportunity to apply for the OTS scheme because the property was purchased by the bank itself and the auction had not yet been confirmed. (Para 4 )
JUDGMENT
[WP(C) Nos.7278, 7299, 7322, and 7917 of 2024]
These writ petitions are filed challenging the recovery proceedings initiated by the respondent bank for recovery of amounts due under credit facilities availed by the petitioners from the respondent bank. The property belonging to the 1st petitioner in W.P.(C) No. 7278 of 2024 had been mortgaged to secure the repayment of liabilities in respect of all the loans in question. The property of the 1st petitioner in W.P.(C) No. 7278 of 2024 was sold in an auction and purchased by the respondent bank. However, the auction has not been confirmed on account of an interim order of this Court. The challenge raised by the petitioners against the awards passed under Section 70 of the Kerala Co-operative Societies Act, 1969, has also been rejected by the Kerala Co-operative Tribunal.
2. When these matters are taken up for consideration today, it is the submission of the learned counsel appearing for the petitioners that the petitioners may be permitted to approach the bank for the One Time Settlement (OTS) scheme now in force (Ashwas-2026). It is submitted that the provisions of the said OTS scheme can be availed of until the end of this month.
3. The learned counsel appearing for the respondent bank submits that the petitioners have not even applied for the benefits of the Ashwas Scheme. It is further submitted that the property has already been sold in auction, and confirmation alone is pending.
4. Having heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondent bank, and in the facts and circumstances noticed above, I am of the opinion that since the property of the 1st petitioner in W.P.(C) No. 7278 of 2024, which was mortgaged to secure the repayment of liabilities of the loans in question, has been purchased by the bank itself in an auction, and since the auction has not yet been confirmed, one opportunity can be given to the petitioners to apply for and obtain the benefits of the OTS scheme now in force (Ashwas-2026). However, as the OTS scheme now in force is to expire by the end of this month, it is directed that the petitioners shall make a suitable application before the competent authority seeking the benefits of the OTS scheme now in force (Ashwas-2026) by 5:00 p.m. on 24.09.2026. If the petitioners make such an application for the OTS within the time specified, the sale of the property of the 1st petitioner in W.P.(C) No. 7278 of 2024 in favour of the bank shall not be confirmed unless the petitioners fail to comply with any of the terms of the OTS that may be offered to them. All contentions of both sides are left open.
These writ petitions are disposed of as above.
