A borrower cannot claim a One Time Settlement (OTS) as a matter of right, and a High Court cannot issue a writ of mandamus compelling a financial institution to grant such a settlement against its commercial judgment.

(Order of the Court was made by N.SATHISH KUMAR, J.)

The petitioner has filed the present Writ Petition seeking a direction to the respondents to declare the action of the respondent Bank in rejecting the petitioner’s request for One Time Settlement (OTS), as notified on 04.09.2025, without assigning any valid reasons, as arbitrary and unsustainable, to set aside the same, and consequently direct the respondent Bank to sanction the OTS benefits in accordance with the guidelines issued by the RBI.

2.When the matter was taken up for hearing today, the learned Standing Counsel appearing for the respondent Bank submitted that the borrower is liable to pay more than a sum of Rs.62 crores towards the loans availed by them. On the other hand, the learned counsel appearing for the petitioner submitted that, insofar as the term loan is concerned, the outstanding amount as on 21.10.2024 was only Rs.20,54,35,670/-. Hence, the learned counsel submitted that, if the Bank furnishes the exact outstanding figure, the petitioner Trust is ready and willing to pay the entire amount due under the term loan account.

3.Considering the facts and circumstances of the case, we are not inclined to entertain the Writ Petition for the simple reason that the law on the issue is well settled. As a matter of right, a borrower cannot seek a direction for grant of One Time Settlement. The Hon’ble Supreme Court of India, in Bijnor Urban Co-operative Bank Limited, Bijnor and others Vs.

Meenal Agarwal and others [(2023) 2 SCC 805], has held as follows:

“14. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved, and it is always to be presumed that the financial institution/bank shall take a prudent decision as to whether to grant the benefit under the OTS Scheme, having regard to the public interest involved and the factors narrated hereinabove.”

4.In view of the above, it is for the writ petitioner to approach the respondent Bank for settlement and put forth his proposal for payment. Therefore, no positive direction can be issued by this Court in exercise of its writ jurisdiction.

5.With the above observations, this Writ Petition is disposed of.

No costs. Consequently, connected Miscellaneous Petition is closed.