Summary
The Court set aside a mandamus directing a cooperative bank to positively consider or grant one-time settlement to a borrower. Settlement was not available as of right but depended on the scheme’s eligibility conditions and the bank’s informed commercial assessment of recovery prospects. The bank and its advisory committee had considered the borrower’s financial position and adequate security, and a personal hearing had been afforded. The High Court could not substitute its unsupported view that recovery was illusory merely because enforcement proceedings had remained pending for years.
Issues
- Whether a borrower could compel grant of one-time settlement notwithstanding scheme conditions and prospects of recovering the full debt.
- Whether the bank’s rejection lacked a hearing or an informed assessment of recovery.
Provisions considered
- Article 226, Constitution of IndiaMandamus could not compel a positive settlement decision contrary to scheme eligibility and the bank’s considered commercial assessment. (¶¶ 5, 6-12)
Held
- One-time settlement could not be claimed as an automatic right. Eligibility depended on the applicable scheme and guidelines, including consideration of recovery efforts and remaining prospects. The advisory committee was required to examine the application under those conditions. (¶¶ 5.1-5.2, 11)
- The bank could refuse to accept a reduced sum where it reasonably concluded that the borrower could pay or that sufficient secured property permitted recovery of the full loan. The decision called for conscious application of mind and commercial judgment in the bank’s and public interest. (¶¶ 6, 8-11)
- The record showed consideration by the bank and advisory committee and a personal hearing. The High Court’s finding that no opportunity had been provided was factually incorrect. (¶ 7)
- Long pendency of security-enforcement proceedings, without supporting material or fault attributable to the bank, did not establish that full recovery was illusory. The positive settlement direction exceeded the permissible exercise of writ jurisdiction in this case. (¶¶ 8, 12-13)
Result
Bank’s appeal allowed without costs; High Court mandamus directing positive consideration or grant of one-time settlement quashed.