Calcutta High Court Rejects Borrower's Suit Seeking Enforcement Of One-Time Settlement With Bank of Maharashtra

The Calcutta High Court has rejected a suit filed by Senbo Engineering Limited seeking enforcement of an alleged “concluded” One-Time Settlement (OTS) with the Bank of Maharashtra, holding that a borrower cannot compel a bank to accept an OTS or seek specific performance of such a proposal.

Justice Aniruddha Roy held that OTS proposals have no statutory force, and a borrower cannot seek specific performance against the bank's commercial decision.

Thus, the court allowed the bank's application (IA GA-COM/2/2025) for rejection of the plaint under Order VII Rule 11 CPC, concluding that the suit was barred in law and disclosed no enforceable right.

Background

Senbo Engineering had availed multiple credit facilities from the Bank of Maharashtra but defaulted, leading to the account being classified as a Non-Performing Asset. The bank issued notices under Sections 13(2) and 13(4) of the SARFAESI Act and initiated recovery proceedings before the Debt Recovery Tribunal in 2019 (OA 183/2019). Two separate insolvency petitions under Section 7 of the Insolvency and Bankruptcy Code (IBC) were also filed, the second of which remains pending before the NCLT.

The borrower submitted two OTS proposals—one in 2020 and another in December 2024—both of which the bank eventually rejected, despite engaging in negotiations and accepting certain part-payments.

Claiming that mutual discussions and acceptance of payments led to a “concluded contract”, Senbo filed a civil suit seeking a declaration of a binding OTS, specific performance allowing it to discharge all liabilities upon payment of ₹54 crore, and injunctions restraining the bank from taking coercive steps.

Appearing for the bank, counsel argued that borrowers have no right to enforce OTS schemes, and that acceptance of part payments does not constitute a binding settlement.

It was stated that the suit sought reliefs that would indirectly interfere with proceedings under SARFAESI, IBC, and the DRT Act and pursuant to Supreme Court rulings, courts cannot compel banks to accept OTS proposals.

Senior Advocate Dhruba Ghosh, for Senbo Engineering, relied on Bank of Rajasthan v. VCK Shares and Stock Broking to argue that an independent civil suit is maintainable for contractual disputes even where DRT proceedings are pending. He contended that the bank's conduct—accepting enhanced payments and engaging in negotiations—created a binding agreement enforceable through specific performance.

Court's findings

The Court held that an OTS not founded on any RBI or statutory scheme is purely a matter of the bank's commercial discretion. It was stated that a defaulted borrower cannot claim OTS as a matter of right.

Court held that mere negotiations or acceptance of part payments do not create a legally enforceable “concluded contract” and that reliefs seeking specific performance of an OTS are not maintainable as no such right exists in law.

Justice Roy emphasised that no bank can be compelled to accept a lesser amount under any settlement proposal, and borrowers cannot use civil suits to enforce reduced liabilities.

Finding the suit barred by law and devoid of a triable issue, the Court rejected the plaint in its entirety, holding that the borrower's attempt to enforce an OTS was legally untenable.

Case: SENBO ENGINEERING LIMITED VS BANK OF MAHARASHTRA

Case No: CS-COM/63/2025

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