THE HON'BLE JUSTICE A.RAJASHEKER REDDY
AND
THE HON'BLE DR. JUSTICE SHAMEEM AKTHER
W.P.NO.21893 OF 2020
O R D E R (Per the Hon'ble Sri Justice A.Rajasheker Reddy)
The writ petitioner - Company is the borrower. 2nd respondent - Bank vide letter in SAMB-II/HYD/ESN/815-B dated 19.10.2020 extended the One Time Settlement scheme to the account No./CIF No.72185231022 of the petitioner. As per the case of the 2nd respondent - Bank, as the petitioner failed to pay the upfront amount within time, the OTS scheme stood closed, and the benefit under the scheme, cannot be extended to the petitioner. The petitioner disputes the same, and seeks for a direction in this writ petition to implement the OTS scheme.
2. The material on record would disclose that the petitioner/borrower, which is a company, represented by its Managing Director, availed credit facility from the 2nd respondent - Bank, after executing necessary security documents, and the guarantors secured the loan by creating equitable mortgage of their properties. As the petitioner failed in making repayment of the loan amount, its account was declared as NPA on 27.02.2017, and the Bank initiated proceedings under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act') for recovery of the loan amount, and eventually the property was auctioned on 23.12.2019, and the 3rd respondent herein was the highest bidder. The 2 said auction purchaser paid 25% of the sale consideration, and in respect of balance amount of 75%, he filed W.P.No.6400/2020, and this court vide order dated 8.10.2020 disposed of the said writ petition granting eight weeks time for payment of the balance amount, but however, the 3rd respondent/auction purchaser, failed to pay the amount within the time allowed by this court.
3. Though the petitioner in this writ petition is aggrieved by the action of the 2nd respondent - Bank in not implementing OTS scheme, inter alia, sought to dispute the procedure adopted by the Bank in auctioning the properties. It is also sought to be contended that in W.P.No.6400/2020, it was not made a party, and by playing fraud, and contrary to Rule 9 (4) and (5) of Security Interest (Enforcement) Rules, 2002, the auction purchaser could gain time for payment of the balance amount, and the same is not sustainable.
4. It is to be seen that as per the averments made in the counter affidavit, which are not denied by the petitioner by filing any reply, the subject properties involved in W.P.No.6400/2020 are in the name of the guarantors and not that of the petitioner - Company. Therefore, the petitioner has no locus standi to question the said proceedings. A Division Bench of this court in the decision reported in M/S PRINCE CORRUGATED PACKING vs. ANDHRA BANK1, held that "When the actual owner of the property brought to sale is not aggrieved and does not come forward, it is 1 2019 SCC Online TS 1657 3 not open to a third party, even if he be the principal borrower at whose behest the owner of such property offered a guarantee, to maintain a challenge under Section 17 of the SARFAESI Act." Therefore, the petitioner is not justified in making any references of the said writ petition, and the averments made in this regard with much verbosity, requires no reference at all, and moreover, the learned Standing Counsel for the 2nd respondent submitted that though the 3rd respondent has filed W.P.No.6400 of 2020, and time was granted for payment, as payment was not made within the stipulated time, the amount deposited by the 3rd respondent was forfeited, and that the present writ petition has been filed to extend the OTS for depositing the amount, as such, the 3rd respondent has no say in the matter.
5. As noted above, the grievance of the petitioner in this writ petition ultimately boils down to implementation of OTS scheme.
6. The 2nd respondent - Bank vide letter in SAMB-II/HYD/ESN/815-B dated 19.10.2020 extended the One Time Settlement scheme to the account No./CIF No.72185231022 to the petitioner. As per the said communication, for processing the application for OTS, the wilful defaulter is required to pay 5% of upfront amount by 23.11.2020.
7. In the affidavit filed in support of the writ petition it is stated that though the OTS letter is dated 19.10.2020, it was despatched on 06.11.2020 and that after receipt of the said letter, petitioner addressed letters both 4 through email and by post on 21.11.2020 to the 2nd respondent - Bank conveying its willingness to settle the dues and seeking for extension of time for payment of the upfront amount till 15.12.2020, and balance by 15.01.2021, i.e., within one month from the date of approval of OTS, citing Covid-19 pandemic, slump in business activity and ailments of the director of the company and its promoters. Its further case is that on 23.11.2020, the Director of the company visited the 2nd respondent, and the 2nd respondent - Bank handed over letter vide ref No.SAMB/HYD/ESN/1050 dated 23.11.2020, indicating that OTS scheme itself is non-discretionary and non-discriminatory, and hence it is not possible to extend the time for payment of upfront amount beyond 23.11.2020.
8. That on the very same day, the petitioner could mobilize the cash to a tune of Rs.46,40,000/- and requested the officials to accept the cash, but the officials of the 2nd respondent - Bank rejected to accept on the ground that cash hours were closed, then the petitioner, requested to accept the cheques of Bank of Baroda and HDFC Bank for Rs.23,20,000/- each, but the request was also rejected citing that only cheques of SBI would be accepted, and that based on the telecommunication, the Managing Director of the company again visited on 24.11.2020 with the above stated two cheques, but the same were not accepted. In those circumstances, petitioner sent a letter dated 26.11.2020 enclosing two original cheques bearing No.000052 dated 23.11.2020, drawn on Bank of 5 Baroda, Punjagutta Hyderabad for Rs.23,20,000/- dated 23.11.2020, and another cheque bearing No.000206 dated 23.11.2020, drawn on HDFC Bank Limited, Hyderabad for Rs.23,20,000/-, totalling to Rs.46,40,000/-, to the 2nd respondent - Bank, by way of speed post, and that the said letter was received by the Bank.
9. The case of the petitioner is that with the letter dated 26.11.2020, it sent two cheques dated 23.11.2020, it has to be taken that it paid the upfront amount within time i.e., 23.11.2020, which is the last date for payment of upfront amount under the OTS scheme. In support of this version, petitioner, in the writ affidavit, sought to rely on the judgment of the Supreme Court reported in K.SARASWATHY v. SOMASUNDARAM CHETTIAR2, wherein it was held that payment by cheque realised subsequently on the cheque being honoured and enchased relates back to the date of the receipt of the cheque, and in law the date of payment is the date of delivery of the cheques.
10. In the writ affidavit, petitioner also contended that the 2nd respondent - Bank contravened the guidelines of the Reserve Bank of India, and relying on the decision of the Apex Court in SARDAR ASSOCIATES v. PUNJAB & SIND BANK3 it sought to contend that if as per the guidelines issued by the Reserve Bank of India, a right is created in a borrower, writ of mandamus can be issued for its enforcement. 2 (1989) 4 SCC 527 3 (2009) 8 SCC 257 6
11. With these averments, the petitioners seeks for a direction to the 2nd respondent - Bank to receive the upfront amount and to implement the OTS scheme extended to it vide letter of the Bank dated 19.10.2020. Petitioner also filed an affidavit stating that it is ready and willing to settle the dues under the OTS scheme.
12. Assistant General Manager/Authorised Officer, State Bank of India, Stressed Assets Management Branch, Kachiguda, Hyerabad, filed counter affidavit on behalf of the 2nd respondent.
13. In the counter affidavit, while stating facts relating to availing of loan by the petitioner, committing default, declaration of its loan account as NPA and initiation of proceedings under the SRFAESI Act, and bringing the properties standing in the name of the guarantor for sale, the 3rd respondent emerging as highest bidder, and filing of W.P.No.9408 of 2020 by him, order passed by this court dated 08.10.2020; it is further stated inter alia that one time settlement offer dated 19.10.2020 was intimated to the petitioner and it was delivered to the petitioner on 07.11.2020, wherein it was clearly mentioned that offer letter of OTS will be processed only on deposit of 5% of the OTS amount i.e., Rs.9,27,97,005.60/- by 23.11.2020, but the petitioner failed to pay the amount on before the stipulated date.
14. The allegations of the petitioner that on 23.11.2020 the petitioner was willing to deposit/deliver the cash/cheque with the 7 2nd respondent- Bank, but the officials of the Bank refused to accept 5% upfront amount relating to OTS on 23.11.2020, and that, though the petitioner was willing to deliver the cheques to the Bank on 24.11.2020, the same were not received by the Bank, are denied.
15. It is stated that the petitioner sent the cheques dated 23.11.2020 along with the letter dated 26.11.2020 to the 2nd respondent - Bank, and the same was received on 02.12.2020 i.e., beyond the stipulated time, and hence the said cheques were returned to the petitioner vide letter dated 02.12.2020, as the OTS scheme is non- discretionary and non-discriminatory.
16. That the petitioner earlier addressed letter dated 21.11.2020 to the 2nd respondent - Bank requesting to extend the time for payment of 5% upfront amount till 15.12.2020, and the balance till 31.01.2020, and in response to the said letter, 2nd respondent vide letter dated 23.11.2020 denied the said request, informing the petitioner that the OTS scheme itself is non-discretionary and non-discriminatory. That no cheques/cash were made available to the 2nd respondent - Bank, either on 21.11.2020, 23.11.2020 and 24.11.2020 by the petitioner.
17. The allegation that the Bank denied the request of the petitioner stating that cash hours were closed and only SBI cheques could be considered, is also denied.
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18. With these averments, and stating that the amount cannot be received after the stipulated date under OTS letter, the writ petition is sought to be dismissed.
19. No reply affidavit is field by the petitioner.
20. From the above, the undisputed facts are that the 2nd respondent - Bank offered OTS scheme to the petitioner vide letter dated 19.10.2020, where under the petitioner is required to pay 5% upfront amount of Rs.9,27,97,005.60 ps. on or before 23.11.2020, for processing the OTS proposal of the petitioner.
21. In the writ affidavit, the petitioner has not stated when the said OTS letter dated 19.10.2020 was received by him, and it only stated that the said letter was despatched on 06.11.2020. In the counter affidavit filed by the 2nd respondent - Bank, it is categorically stated that the said letter was received by the petitioner on 07.11.2020. This shows that the petitioner had time till 23.11.2020. Further there cannot be any dispute that the OTS scheme is non-discretionary and non-discriminatory.
22. It is also not in dispute that petitioner addressed letter dated 21.11.2020, requesting the Bank to extend the time for payment of 5% of upfront amount till 15.12.2020 and the balance till 31.01.2021, and the said request was rejected by the Bank vide letter dated 23.11.2020. 9
23. In the writ affidavit, it is stated that on 23.11.2020 immediately after receipt of letter dated 23.11.2020 from the Bank, on the very same day, petitioner mobilized cash to a tune of Rs.46,40,000/-, but the Bank refused to receive the same on the ground that cash hours were closed, then the petitioner requested the Bank to accept the cheques drawn on Bank of Baroda and HDFC Bank for Rs.23,20,000/- each, but the Bank refused to receive, on the ground that only SBI cheques would be considered. These averments have been specifically denied by the 2nd respondent - Bank in the counter affidavit. Assuming for a moment, that Bank has not received cheques on 23.11.2020, to show its bona fides, petitioner ought to have sent the same immediately on the very same day by way of registered post with acknowledgement due. It did not do so. However, these being disputed questions of facts, cannot be gone into under the writ jurisdiction.
24. The admitted fact which remains on record is that vide letter dated 26.11.2020, petitioner sent two cheques dated 23.11.2020 to the 2nd respondent, and the said letter is stated to have been received by the Bank on 02.12.2020, and that on the very same day, Bank addressed letter SAMB/HYD/ESN/2020-21/1105 dated 02.12.2020, returning the cheques sent by the petitioner and informing the petitioner that the scheme is non- discretionary and non-discriminatory and that the time for OTS scheme is closed. These circumstances show that the petitioner sent cheques beyond the time stipulated in the OTS letter dated 19.10.2020. 10
25. In the present case, though the petitioner, contended that Bank has violated the guidelines issued by RBI, no such guideline has been brought to the notice of this court. Therefore, the only question that arises for our consideration in this writ petition is, whether the petitioner, who failed to comply with the stipulation of time, is entitled to seek for implementation of OTS scheme?.
26. The above issue is no longer res integra. A Division Bench of this court in the decision reported in M.APPA RAO vs. DY. GENERAL MANAGER
- CUM -AUTHORIZED OFFICER4 held that if the borrower fails to comply with time stipulation, he would no longer be entitled to the benefit of reduction in his dues as per such OTS scheme. The relevant portion of the judgment is as under:
18. . . .To begin with, the bank deals with public monies deposited by its customers and having extended loan facilities on the strength thereof to borrowers, such as the petitioner, the very fact that it is settling for a far lesser amount than is actually due from such borrower, in terms of repayment of the principal loan amount along with accrued interest thereon, is itself against commercial and public interest. However, as banks do resort to such settlements so as to cut their losses by at least making part-recovery of their lawful dues, such options exercised by banks cannot be held to be unlawful. However, when banks approve such reduced One Time Settlement offers to defaulting borrowers, it cannot be doubted that an indulgence is being shown to such borrowers and they cannot, as a matter of right, demand that they should be given sufficient time, as per their own convenience, to pay even such reduced dues. The very scheme and thrust of a One time Settlement is aimed at enabling the bank to make recovery of the reduced dues, at least, within the stipulated time. If the borrower fails to comply with this time stipulation, he would no longer be entitled to the benefit of reduction in his dues as per such One Time settlement."
27. In an other judgment, a Division Bench of this court in SWETHA EXPORTS, KAKINADA v. BANK OF INDIA5, considering the facts and circumstances held that the petitioner therein was not able to show any 4 2018(3) ALD 206 (DB) 5 2017(6) ALD 465 (DB) 11 transgression of RBI guidelines relating to OTS scheme by respondents, and, therefore, not entitled to seek Mandamus from High Court directing respondent bank to extend to petitioners therein OTS benefit offered to them earlier, despite their having failed to adhere to conditions stipulated therein, and that the manner in which OTS should be formulated is a matter for RBI and concerned banks to decide and that the court would not interfere therewith, as it lacks expertise.
28. In view of the above facts and circumstances of the case, as the petitioner failed to adhere to the stipulation of time under the OTS offer letter dated 19.10.2020, it is not entitled to seek for implementation of the said scheme, and the writ petition is devoid of any merits and liable to be dismissed.
29. The decision of the Apex Court in SARASWATHY v.
SOMASUNDARAM CHETTIAR (2 supra) relied on by the petitioner, to contend that the payment by cheque realised subsequently on the cheque being honoured and en-cashed, relates bank to the receipt of the cheque and that in law the date of payment is the date of delivery of the cheque; is concerned, is unexceptionable, but cannot be made applicable to the facts of the present case, for the reason that Bank has not realised the cheques sent by the petitioner, as they were sent beyond the time stipulated in OTS letter dated 19.10.2020 and, as noted above, the OTS scheme is non-discretionary and non-discriminatory and once the 12 petitioner failed to adhere to the time stipulated, as held by this court in the above cited decisions (4 and 5), it is not entitled to the benefit under the scheme.
30. Similarly the other judgment reported in Sardar Associates v. Punjab and Sind Bank (3 supra), is also not applicable, since the petitioner in the present case, has not pointed out any breach of RBI guideline by the 2nd respondent - Bank.
31. The petitioner also relied on the judgment of a Division Bench of this court in W.P.No.9408 of 2020 dated 02.07.2020, wherein this court extended time for an additional period of 90 days for payment of OTS amount. The facts of the said case disclose that petitioner therein initially paid 20% of the OTS amount, and to pay the balance 80% he sought time, and considering the facts and circumstances, this court extended the time for payment of balance amount by the end of August, 2020.
32. In the present case, the petitioner has not even paid the 5% upfront amount within the time stipulated, which is post Covind - 19 pandemic, and as the facts and circumstances in the present case are different, the judgment of this court in W.P.No.9408 of 2020 dated 02.07.2020, cannot be made applicable in all fours.
33. For the foregoing reasons, the writ petition is dismissed. 13
34. Interlocutory applications pending, if any, shall stand closed. No order as to costs.
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A.RAJASHEKER REDDY,J
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DR.SHAMEEM AKTHER,J DATE:23 --04--2021 avs