Any One Time Settlement Scheme Is Time Bound; Cannot Argue Absence Of Time Frame In Scheme: Allahabad High Court
A writ petition was filed being aggrieved by the cancellation of the One Time Settlement that was offered by the Bank.
Justice Shekhar B. Saraf and Justice Praveen Kumar Giri, Allahabad High Court
The Allahabad High Court observed that any One Time Settlement (OTS) Scheme is time bound and one cannot raise the argument that no time frame was fixed for making the repayment of the same just because time frame has not been provided in the OTS.
The Bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri observed, “The petitioners have raised grounds stating that the OTS Scheme is still alive as the SOTS Scheme was not known to them. This argument cannot be countenanced by us and is outrightly rejected for the simple reason that the letter granting OTS to the petitioners specifically refers to the SOTS Scheme. Secondly, any OTS is time bound and the petitioners cannot raise the argument that no time frame was fixed for making the repayment of the same just because time frame has not been provided in the letter granting OTS.”
Advocate Vijay Kumar Sharma represented the Petitioners, while Advocate Sanjai Singh represented the Respondents.
Case Brief
A writ petition under Article 226 of the Constitution of India wherein the Petitioners were aggrieved by the cancellation of the One Time Settlement that was offered by the Bank.
The Petitioners took certain loan amounts from the Bank, but due to financial constraint could not maintain the loan accounts, thus, the loan accounts were declared as non performing assets. Later, in 2023, the Bank and the Petitioners entered into an agreement for One Time Settlement.
However, in 2024, the Petitioners failed to comply with the OTS Scheme, therefore, the Bank rejected the OTS and further declared the account of the Petitioners as a non performing asset. The Bank issued an auction notice and also sold one mortgage property in January, 2025.
Court’s Observation
At the outset, the High Court noted that the Petitioners agreed on a One Time Settlement with the Bank and the Bank issued a letter to the Petitioners wherein the terms and conditions were laid down. “The letter specifically refers to the SOTS Scheme 2022-23. Upon perusal of the SOTS Scheme, it is clear from Clause 7.3 to 7.5 that OTS Scheme would be applicable for a maximum repayment period of 180 days”, the Court said.
The High Court also took into account the fact that the Bank wrote to the Petitioners on several occasions to complete payment of OTS amount but on one pretext or the other, the payment was not made by the Petitioners.
Resultantly, the Court held that the Petitioners failed to comply with the OTS Scheme. The High Court observed, “The petitioners have raised grounds stating that the OTS Scheme is still alive as the SOTS Scheme was not known to them. This argument cannot be countenanced by us and is outrightly rejected for the simple reason that the letter granting OTS to the petitioners specifically refers to the SOTS Scheme. Secondly, any OTS is time bound and the petitioners cannot raise the argument that no time frame was fixed for making the repayment of the same just because time frame has not been provided in the letter granting OTS.”
The High Court opined that the Bank was not at fault for proceeding to cancel the OTS provided to the petitioners and selling the securities in accordance with law to third parties.
Accordingly, the Writ Petition was dismissed.
Cause Title: M/S Jaharveer Maharaj Agro Pvt. Ltd. And Another V. Union Of India And Ors (Neutral Citation No. - 2025:AHC:143513-DB)
