Summary
A borrower whose account had become an NPA accepted a one-time settlement from State Bank of India. The sanction required full payment by 21.05.2018, failing which the settlement would lapse. The borrower paid most of the amount but missed the deadline, and the Bank refused an extension. The borrower also declined three later OTS offers. Years later the Punjab and Haryana High Court, under Article 226, gave it six more weeks to pay the balance. The Supreme Court set that aside. Bijnor Urban Cooperative Bank holds that OTS benefits cannot be claimed as of right, and the High Court was bound to follow it. Rescheduling payment rewrites the contract, which only the parties can modify under Section 62 of the Contract Act. Extensions given to other borrowers create no right.
Issues
- Whether the High Court under Article 226 could extend the time for paying the balance under a sanctioned one-time settlement beyond the period fixed in the sanction letter.
Provisions considered
- Article 226, Constitution of IndiaThe writ jurisdiction cannot be used to grant extension of time under a sanctioned OTS de hors its terms, as that rewrites the contract. (¶¶ 6.1, 6.5, 6.6, 8)
- Section 62, Indian Contract Act, 1872Rescheduling payment under the OTS is a modification of the contract that can be made only by mutual consent; a bank may agree to extend time with some borrowers, but none can demand it. (¶¶ 6.5, 7)
Held
- A borrower cannot claim the benefit of an OTS as of right, no mandamus can direct a bank to grant it, and it remains subject to the scheme's eligibility criteria; the High Court was bound to follow this later decision and erred in preferring Sardar Associates, which turned on a bank's deviation from RBI guidelines. (¶¶ 6.3, 6.4)
- The sanction letter required full payment by the fixed date on pain of the OTS becoming infructuous; the borrower defaulted, its extension request was refused, and it did not opt for three later OTS offers, so the High Court's extension, beyond even the period originally sought, was impermissible. (¶¶ 6.5, 6.6)
- That the bank extended time for other borrowers gives no right to extension, as there can be no negative discrimination and the borrower must establish a right of its own. (¶¶ 7, 7.1)
Result
Appeal allowed; the Punjab and Haryana High Court's judgment granting further time to pay the OTS balance set aside and the borrower's writ petition dismissed; no order as to costs.