Writ Court Can Extend Timeline of 'One Time Settlement' Scheme If Satisfied With Reasons Mentioned By Defaulter: Telangana HC

The Telangana High Court has made it clear that in exercise of its powers under Article 226 of the Constitution, a writ court can extend the period mentioned for payment under 'One Time Settlement' scheme arranged by the Bank, if satisfied with the circumstances mentioned by the defaulter."In the present case, it is specifically contended by the petitioner that he is doing real estate business, due to the present COVID-19 pandemic situation, he sustained loss. However, to clear the loan, he sold the property and received money from the purchaser and deposited the same in the account and paid the entire loan amount including the interest vide his letter dated 28.07.2021. There is only one day delay. Therefore, according to this Court, it is a fit case to extend the time to the petitioner to repay the loan amount," Justice K Lakshman observed in the facts of the case.The petitioner had availed loan facility of Rs.1.55 crores from the State Bank of India. Following default in repayment, the Petitioner company was declared a NPA. In October 2020, the Bank announced SBI OTS 2020 scheme for which the Petitioner herein was eligible.The Bank accepted the Petitioner's proposal under the said scheme and it was agreed that the Petitioner would pay OTS amount of Rs.76,14,995. The final payment was to be made on or before July 27, 2021, failing which the OTS Sanction was to be rendered infructuous.As the Petitioner could not pay the balance installments as on said date, the Bank cancelled the OTS Scheme and requested the petitioner to repay the entire outstanding amount together with interest. Aggrieved by the same the petitioner company moved the High Court. Counsel for petitioner argued that there was a delay of only one day in making the payment. A cheque to clear the dues was furnished to the on July 28, 2021. The Court perused a series of precedents which unanimously held that High Court in exercise of its jurisdiction under Article 226 of the Constitution of India is having power to extend the period of settlement as of originally provided for in the OTS Letter.It referred to Anu Bhalla Vs. District Magistrate, Pathankot, wherein a Division Bench of Punjab and Haryana High Court laid down certain illustrative guidelines to be considered on case to case basis to determine whether an applicant would be entitled for extension of OTS or not and the same are mentioned below:(i) Original Time provided in the Settlement; (ii) Extent of payments already deposited under the settlement or before filing the petition; (iii) Reasons which led to delay in the payment; (iv) Payments having been accepted by the bank/Financial institutions, after the stipulated date; (v) Bona fide Intent of the borrower to pay the remaining amounts under the settlement; (vi) Time period being demanded by the applicant to clear the remaining/balance settlement amount; (vii) Attending factors and circumstances; (viii) Irreparable loss and injury to the applicant. In view of the above, the petition was allowed and the High Court concluded "this court by invoking its inherent powers under Article 226 of the Constitution of India can extend the time to the loanee to pay the amount agreed under OTS on satisfying the reasons mentioned therein on examination of the facts." Case Title: Md. Afroz Baig Vs. State Bank of India, Mumbai, and anotherCitation: 2022 LiveLaw (Tel) 89 Click Here To Read/Download Order

Writ Court Can Extend Timeline of 'One Time Settlement' Scheme If Satisfied With Reasons Mentioned By Defaulter: Telangana HC

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