The Jammu & Kashmir and Ladakh High Court held that merely because a banking company has formulated a scheme excluding the cases of borrowers where the chances of recovery are bright, it cannot be stated that such a scheme or such covenants of the scheme are discriminatory in nature against the excluded borrowers.

While stating that a banking company has the discretion to make policies and guidelines to differentiate the cases of those borrowers where the chances of recovery are bright from those where the chances of recovery are bleak, a Single Judge Bench of Justice Sanjay Dhar observed that “a bank would be justified in refusing to grant the benefit under the OTS Scheme to a particular class of borrowers where it is of the opinion that recovery of the dues can be effected by sale of mortgaged property or that there are higher chances of recovery keeping in view the financial health of the borrower”.

Senior Advocate Altaf Haqani appeared for the Petitioner, whereas, Senior Advocate Z.A. Shah appeared for the Respondents

It a nutshell, the Petitioner had obtained loan of approx. Rs.9.24 Crores from the Respondent Bank which later was classified as a non-performing asset (NPA), since amount of Rs.7.86 Crores was outstanding. In view of negotiation as per the scheme of the RBI, settlement amount of Rs. 6.80 crores were offered. However, the Respondent, instead of accepting the offer, launched proceedings under Section 14 of the SARFAESI Act. In the meantime, the bank launched a special (Onetime Settlement Scheme) OTS Policy for recovery of NPAs. Since cases like that of the Petitioner were not covered under the scheme, the Petitioner contended it to be discriminatory and arbitrary.

After perusing the facts of the case and analyzing the Special OTS scheme, the High Court observed that the scheme does not only include Petitioner but also other categories.

Placing reliance on the decision of the Apex Court in case of Bijnoor Urban Cooperative Bank Limited, Bijnor & others vs. Meenal Agarwal & others [(2023) 2 SCC 805] wherein it was held that the bank has power to exclude certain class of borrowers while also taking a conscious decision, the High Court elucidated that the bank is justified in refusing to grant the benefit under the OTS scheme to the borrowers from whom chances of recovering a higher amount is bright.

The Bench also observed that it cannot exercise its writ jurisdiction and interfere with the financial prudence of the Bank and direct it to follow the terms set by the Court.

In fiscal matters, the Courts do not ordinarily interfere in exercise of power of judicial review. The conclusion reached by the experts, particularly in the field of finance and banking cannot be substituted with the views of the Court. Interference in such matters in writ jurisdiction would be uncalled for unless it is shown that the decision of a banking company is illegal or perverse”, added the Bench.

Accordingly, the Bench dismissed the petition while noting that the argument raised by the Petitioner being discriminated is without any merit and sounds preposterous.

Cause Title: Ghulam Ahamad Mir v. J&K Bank Ltd. and Ors.

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