Borrower Cannot Claim Extension Of Time Under OTS Scheme As A Matter Of Right: SC
The Supreme Court has held that a borrower cannot claim a further extension of time as a matter of right to make balance payment under the One Time Settlement Scheme.
The bench of Justice MR Shah and Justice Krishna Murari observed that "The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS Scheme still it be granted further extension as a matter of right."
The Court was dealing with an appeal challenging the Order passed by the Punjab and Haryana High Court by which the Court granted further six weeks' time to the original writ petitioner-borrower to make the payment of balance amount (Rs.2.02 crores with interest) which was due and payable under the sanctioned OTS Scheme.
Advocate Sanjay Kapur appeared on behalf of the Appellant-Bank whereas Advocate D.P. Singh appeared on behalf of the Respondent.
In the present case in the sanctioned letter it was specifically provided that the entire payment had to be made by May 21, 2018. The schedule to make the payment under the instalments was also mentioned.
It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS Scheme on or before the date mentioned in the sanctioned letter.
The prayer of the borrower for extension of nine months came to be rejected and the borrower was directed to make the payment of Rs.2.52 crores by May 21, 2018, the borrower failed to make the payment.
During the pendency of the writ petition, there were as many as three different OTS floated by the Bank and the Bank offered the respondent borrower to settle the outstanding payment under the OTS Scheme. However, the borrower did not opt for any of the scheme.
By the impugned Order the High Court granted further six weeks' time.
The Court observed that "By the impugned judgment and order rescheduling the payment under the OTS Scheme and granting extension of time would tantamount to rewriting the contract which is not permissible while exercising the powers under Article 226 of the Constitution of India."
The Court held that the High Court ought not to have granted further extension de hors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India.
The Court further held that the Bank mutually can agree to extend the time which is permissible under Section 62 of the Indian Contract Act.
In view of this, the Court set aside the impugned Order of the High Court and the appeal was accordingly allowed.
Cause Title- State Bank of India v. Arvindra Electronics Pvt. Ltd.