Summary
The Supreme Court set aside High Court orders directing SBI to reconsider a defaulting borrower's application under its OTS 2020 Scheme. The application was not accompanied by the mandatory up-front deposit under clause 4(i), so it was not even liable to be processed. The Court held that, in appropriate cases and after notice to the affected party, a court may uphold an administrative rejection on an alternative ground that appears from the order's own narrative or the records, even if the ground stated is untenable.
Issues
- Whether the High Court was justified in interfering with SBI's rejection of the borrower's application under the OTS 2020 Scheme and directing its reconsideration.
- Whether a borrower who is not excluded by the 'not eligible' clause of an OTS scheme is automatically entitled to have its application considered.
- Whether a court reviewing an administrative order may sustain it on a ground not stated in the order but appearing from the record, consistently with Mohinder Singh Gill and related decisions.
- Whether the Supreme Court could go beyond the limited question noted while issuing notice on the special leave petition.
Provisions considered
- Article 226, Constitution of IndiaThe Court held the writ court's interference with the bank's rejection of the OTS application unjustified, since the application did not comply with the scheme and no mandamus to process it could issue; the Court noted that no court can by mandamus direct a secured creditor to grant OTS benefit except where eligibility criteria are satisfied. (¶¶ 20, 21, 23, 24, 44)
- Clause 4(i), SBI One Time Settlement Scheme, 2020Requires a borrower to deposit 5% of the OTS amount (15% for wilful defaulters) with the application, failing which the application will not be processed. The respondent paid nothing up front, so its application was incomplete and it had no right to have it processed. (¶¶ 25, 26, 27, 39, 40)
- Clause 2.1, SBI One Time Settlement Scheme, 2020The 'cases not eligible' clause did not apply to the respondent, but the Court held that escaping it did not satisfy the scheme's other conditions or entitle the borrower to consideration. (¶¶ 41, 42)
Held
- Even where limited notice has been issued on a special leave petition, the Supreme Court may expand the scope of the lis. (¶ 22)
- Under clause 4(i) of the OTS 2020 Scheme, an application unaccompanied by the up-front deposit of 5% of the OTS amount is not required to be processed; the respondent, which deposited nothing up front, had no legal right to have its application considered, still less granted. (¶¶ 26, 27, 39)
- Not falling within the scheme's list of ineligible cases does not make a defaulting borrower entitled to consideration; the application must also satisfy the scheme's other stipulated conditions. (¶ 41)
- Reconciling Commissioner of Police v. Gordhandas Bhanji, Mohinder Singh Gill, Opto Circuits and 63 Moons with later decisions, the Court held that while additional grounds outside an administrative order cannot be raised by affidavit or argument, in appropriate cases the court may consider the factual narrative in the order and the documents it refers to; where the stated grounds are untenable but an alternative ground traceable from the order or relevant records could validly have supported it, the court may uphold the order on that ground after giving the affected party notice and an opportunity to respond. (¶¶ 34, 35, 36, 37, 38)
- The respondent's failure to make the up-front payment was fundamental and justified the conclusion that it did not deserve the benefit of the OTS 2020 Scheme, although that ground was not stated in the rejection letter; since the respondent had been put on notice and heard on it, and the bank could in any event rely on it on reconsideration, upholding the High Court's direction would not advance justice. (¶¶ 31, 32, 40, 42, 43)
Result
Appeal allowed; the Division Bench and Single Judge orders set aside. SBI is free to proceed in accordance with law to enforce the security interest; the respondent may submit a fresh OTS proposal outside the OTS 2020 Scheme, which SBI may decide as it deems fit. The judgment does not otherwise affect proceedings pending before the DRT.