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Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
In the complex world of banking disputes and debt settlements, debtors often face tight deadlines for paying settlement amounts under One Time Settlement (OTS) schemes. But what happens when part of the settlement amount has been paid to the bank, yet unforeseen circumstances—like legal impediments or moratoriums—prevent timely payment of the balance? A common question arises: Can the time for payment of the rest amount of the settlement be extended by the Hon'ble Court under Article 226 of the Constitution of India?
This blog post delves into this issue, drawing from judicial precedents and equitable principles. While courts have shown flexibility in exceptional cases, such relief is not automatic. Note: This article provides general information based on case law and is not legal advice. Consult a qualified lawyer for your specific situation.
Article 226 empowers High Courts to issue writs for enforcing fundamental rights and for any other purpose, granting broad discretionary powers. This includes equitable remedies beyond strict contract enforcement, particularly in banking and debt recovery matters.
Courts have affirmed that this jurisdiction allows extensions for settlement payments when justice demands it, especially post partial payment. As noted in key rulings, the Court’s jurisdiction under Article 226 is broad enough to permit such extensions as part of its equitable powers, but it is not a routine matter and should be based on the facts and reasons presented Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65.
The Hon'ble Courts under Article 226 may extend time for the remaining settlement amount after partial payment to the bank, particularly where debtors demonstrate genuine inability due to legal impediments or extraordinary events. This stems from the Court's equitable jurisdiction to prevent injustice Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65.
In one case, the Court observed: the appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65. This underscores the judiciary's role in balancing equity.
The wide scope of Article 226 allows remedial measures for payment extensions when debtors prove inability due to legal restrictions, not negligence Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65. Courts prevent injustice by not strictly enforcing timelines in such scenarios.
In Bijnor Urban Cooperative Bank Limited, the High Court set aside a rejection of a settlement offer and granted further time, exemplifying modification of timelines on equitable grounds State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487.
Extensions are discretionary, hinging on:- Valid reasons like legal impediments (e.g., IBC moratoriums).- Proof of non-negligence.- Avoidance of undue prejudice to the bank.
They aim at justice rather than rewriting contracts Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65.
Several judgments reinforce this approach while highlighting caveats. For instance, in a financial dispute under OTS schemes, courts emphasize compliance with prior orders and bona fide actions for equitable relief under Article 226 Krishna Kumar Gupta VS Bihar State Financial Corporation - 2018 Supreme(Jhk) 2218. Non-compliance can lead to dismissal, as seen where a petitioner failed to pay as directed, rendering actions non-bona fide Krishna Kumar Gupta VS Bihar State Financial Corporation - 2018 Supreme(Jhk) 2218.
Another ruling notes: Compliance with court orders is crucial, and actions must be bona fide to seek equitable relief under Article 226 of the Constitution of India Krishna Kumar Gupta VS Bihar State Financial Corporation - 2018 Supreme(Jhk) 2218.
In cases involving extensions for balance OTS payments, courts have granted relief where substantial payments were made and delays stemmed from uncontrollable factors like COVID-19. One decision held: Extension of One Time Settlement (OTS) is permissible in law. Courts have the jurisdiction to extend the period of settlement as originally provided for, in the OTS letter Anu Bhalla VS District Magistrate, Pathankot - 2020 Supreme(P&H) 1734. Here, petitioners received a 6-month extension, payable in installments with interest, after proving credentials and reasons beyond control Anu Bhalla VS District Magistrate, Pathankot - 2020 Supreme(P&H) 1734.
Conversely, petitions fail without bona fides. In a SARFAESI Act matter, the court dismissed a writ for extension due to disputed facts and lack of genuine intent: The petitioner failed to establish his bonafide intent to pay the balance amount under the OTS (from OTS loan repayment case summary). Courts distinguish cases based on evidence of hurdles like cheque theft but require substantiation.
In IBC contexts, repeated recovery attempts are discouraged, but settlements post-moratorium may qualify for extensions if equitable Godrej & Boyce Mfg. Co. Ltd. VS Nayati Healthcare & Research NCR Pvt. Ltd. - 2019 Supreme(Online)(NCLT) 4362Godrej & Boyce Mfg. Co. Ltd. VS Nayati Healthcare & Research NCR Pvt. Ltd. - 2019 Supreme(Online)(NCLT) 4056.
While possible, extensions are exercised judiciously:- Not on mere sympathy; substantial reasons required (e.g., legal impediments, health) State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487.- Should not modify contracts unless exceptional State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487.- Balances bank and debtor interests; undue prejudice to banks avoided Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65.- Disputed facts unfit for writ jurisdiction; alternative remedies preferred.
Courts caution: The extension should not amount to a modification of the original contract or scheme unless justified by exceptional circumstances State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487. Non-bona fide delays, like in Bihar State Financial Corporation OTS rejection, lead to dismissal Krishna Kumar Gupta VS Bihar State Financial Corporation - 2018 Supreme(Jhk) 2218.
For debtors seeking extensions:- File under Article 226 with strong evidence of impediments (e.g., moratorium orders, affidavits).- Highlight partial payments and compliance history.- Demonstrate no prejudice to the bank.
Banks should consider policy provisions allowing extensions, as some (e.g., SBI, PNB) permit them Anu Bhalla VS District Magistrate, Pathankot - 2020 Supreme(P&H) 1734. Courts evaluate borrower credentials for discretionary relief.
Under Article 226, Indian High Courts may extend time for remaining OTS payments after partial bank receipt, rooted in equitable jurisdiction for genuine cases Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487. However, success depends on proving exceptional circumstances without negligence.
Key Takeaways:- Possible but Discretionary: Ideal for legal hurdles like IBC moratoriums.- Bona Fides Essential: Substantial payments and valid reasons boost chances.- Not Routine: Avoids contract rewriting; balances parties' interests.- Seek Expert Advice: Writs involve fact scrutiny; professional guidance crucial.
Stay informed on evolving jurisprudence. For tailored strategies in bank settlements, reach out to legal experts.
References:- State Bank of India VS Arvindra Electronics Pvt. Ltd. - 2022 8 Supreme 487: Bijnor Urban Cooperative Bank case on remedial measures.- Shekhar Resorts Limited (Unit Hotel Orient Taj) VS Union of India - 2023 1 Supreme 65: Equitable extensions amid impediments.- Krishna Kumar Gupta VS Bihar State Financial Corporation - 2018 Supreme(Jhk) 2218, Anu Bhalla VS District Magistrate, Pathankot - 2020 Supreme(P&H) 1734, others as noted.
#Article226 #OTSExtension #BankSettlement
She raised a query whether it was available to this Court to bifurcate the lumpsum amount ordered in favour of the respondent no.1 by the Hon''ble Apex Court under the head salary and other heads. ... In this backdrop, a further order was made that in case the Bank had made any deposit in the High Court, it will be open the bank to withdraw the amount in view of the payment of the lumpsum #HL_STAR....
by not making payment of the balance amount as directed by this Hon''ble Court, the impugned order has been passed. ... The impugned order rejecting the application of the original writ petitioner under one time settlement scheme could not have been passed on the ground that the order passed by the Hon''ble High Court has not been complied. ... Thereafter the petitioners filed another representation, but did not pa....
very High Court, which is binding on this Bench, we reject the contentions of the respondent-Bank that this Court under Article 226 of the Constitution 20 AIR 1981 Punjab 213 Time Settlement amount of `10.54 Crores, has been declined. ... of the OTS amount or part thereof is extended, as sought by the petitioner, the objective sought to be achieved by way of the OTS, would be defeat....
Hon‟ble Supreme Court in case of B.K. Educational Services Vs. ... ‟ble High Court, which was disposed of with the direction to the Corporate Debtor to deposit the balance amount on or before 30 Hon‟ble Supreme Court in case of J.C. Budhraja v. ... Asset Reconstruction Company, wherein the Hon‟ble Supreme Court has held that the limitation period shall start running from t....
The loan amount was extended/increased until the year 2010. ... Notice is received by Corporate Debtor. ... Thus in the case mentioned above, the Hon‟ble Supreme Court has In this case, Hon‟ble Supreme Court has held that: Hon‟ble Supreme Court held that:span style="font-family:Bookman Old Style
It has been laid down by the Hon‟ble Supreme Court in Swiss Ribbon Pvt. Ltd. Vs. ... It is no more res-integra that IBC is not a recovery proceeding where because the money or part of it has not come, the party may repeatedly come to the Adjudicating Authority for the recovery of the amount. The Hon‟ble Supreme Court in citation M/s. ... No.3394/ND/2021) for withdrawal of IB-226/ND/2019 which was allowed and vide order dated 05.08.2....
It has been laid down by the Hon‟ble Supreme Court in Swiss Ribbon Pvt. Ltd. Vs. ... It is no more res-integra that IBC is not a recovery proceeding where because the money or part of it has not come, the party may repeatedly come to the Adjudicating Authority for the recovery of the amount. The Hon‟ble Supreme Court in citation M/s. ... No.3394/ND/2021) for withdrawal of IB-226/ND/2019 which was allowed and vide order dated 05.08.2....
The order passed by the Settlement Commission can no doubt be challenged before this Court or before Hon#25;ble the Supreme Court under Article 32 of the Constitution yet the enquiry envisaged is limited as to whether the order is contrary to any provisions of the Act or suffers from bias, fraud or malice ... Interest - The applicants are granted immunity from payment of any interest in consideration of merit of the case as well as in view of the dec....
It has been laid down by the Hon‟ble Supreme Court in Swiss Ribbon Pvt. Ltd. Vs. ... The Hon‟ble Supreme Court in citation M/s. Invent Asset Rs.4.11 Crores at a settlement amount of Rs.3.35 Crores only. ... No.3394/ND/2021) for withdrawal of IB-226/ND/2019 which was allowed and vide order dated 05.08.2021, this Hon‟ble Adjudicating Authority had disposed of the application in terms of ....
Wadhwa also relied upon the judgment of the Hon‟ble Supreme Court in the case of Master Construction Company (Supra) wherein the Hon‟ble Supreme Court observed as follows:- 2012 ... Distinguishing the judgment of the Hon‟ble Supreme Court in Boghara Polyfab Pvt. Ltd. ... The aforesaid discharge voucher was accepted by the petitioner unconditionally in full and final settlement of all i....
District Magistrate and another', decided on 22.09.2020, submitted that claim for extension of time for payment of balance settlement amount, pursuant to mutually agreed OTS by the borrowers should be considered by the Court, liberally. Learned counsel for the petitioner further argued that in Anu Bhalla's case (supra), the parties effected one time settlement for an amount of Rs.1.60 crores and the borrowers deposited sum of Rs.83.80 lakhs till 29.01.2020, but could not make the payment of balance amount towards the final conclusion of the OTS, due to some unavoidable circ....
He then argues that extension in repayment of the balance OTS amount is permissible and that various banks, like for example, State Bank of India, Punjab National Bank and Punjab and Sind Bank have settlement policies which itself permit extension of time in making balance payment of the settlement amount. Fourthly, he emphasised that, where the inability to clear the remaining amount of settlement, is on account of circumstances which were completely beyond their control of the petitioners, delay in making payment of the balance amount can be condoned keeping in view the b....
It is submitted that part payment of the settlement amount is already received by the respondent No. The balance amount of Rs.50,000/- in cash is handed over to the respondent No. 2 today in Court.
(iv) The amount already paid by the petitioner-Management to the concerned workmen at the time of alleged settlement shall be deducted while making rest payment; and The cost of litigation @ Rs.2,000/- per workman as awarded by the learned Labour Court, Dhanbad is also directed to be paid to the respondents-workmen under the head- Miscellaneous Amount; (v) The Executing Court, which is in seisin of Execution Case No.97 of 2016, is directed to execute the order of the learned Labour Court, Dhanbad subject to the aforesaid modification.
Although, we are aware that the Debt Recovery Tribunal proceedings are not terminated formally by withdrawal of the petition or recording full satisfaction before the Tribunal, for all practical purposes, the banks remedy before the Debt Recovery Tribunal has come to an end. It could be only a matter of time to formalize full satisfaction by the bank. As a matter of fact, after the payment of amount of Rs. 13.5 crores to the bank, which it has received as one time settlement, no further remains to be done by the bank.
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