M/S Al Laham Frozen Foods Private ... vs Union Of India And 3 Others
2022 Latest Caselaw 8502 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 29
 

 
Case :- WRIT - C No. - 12055 of 2022
 

 
Petitioner :- M/S Al Laham Frozen Foods Private Ltd.
 
Respondent :- Union Of India And 3 Others
 

 
Counsel for Petitioner :- Sundeep Agarwal,Bharti Kashyap
 
Counsel for Respondent :- A.S.G.I.,Neeru Devi,Sanjai Singh
 

 
Hon'ble Pritinker Diwaker,J.

Hon'ble Ashutosh Srivastava,J.

1. The writ petitioner is aggrieved by the order dated 18.01.2022 passed by the Respondent No.3, Circle Sastra Head, Punjab National Bank, Sastra Centre, Moradabad, whereby the One Time Settlement approved in favour of the petitioner has been canceled. A further prayer in the nature of mandamus directing the respondent-Bank to revive the One Time Settlement (OTS) and accept the balance payment with delayed interest within a reasonable time as fixed by the Court has been prayed for.

2. It is contended on behalf of the petitioner that it is engaged in the business of exporting frozen foods. The petitioner was extended cash credit facility of 6 Crores for conduct of its business by the Punjab National Bank in the year 2014. The petitioner suffered losses on account of non-payment of its dues by the overseas clients. The losses resulted in the petitioner defaulting in its payment towards the Cash Credit Limit. It was the case of the petitioner that it's losses on account of non-payment by its buyers was covered by the Export Credit Guarantee Corporation of India and the petitioner was liable to be indemnified. The petitioner approached this Court by filing Civil Misc. Writ Petition No.15561 of 2018 (M/s A1 Laham Frozen Foods Pvt. Ltd. Vs. State of U.P. & others) which writ petition was finally disposed of vide order dated 30.04.2018 granting liberty to the Bank to consider request made by the petitioner in accordance with law. The respondent-Bank by the impugned order dated 18.01.2022 has rejected the One Time Settlement application.

3. We have heard learned counsel for the petitioner and have perused the record.

4. The Apex Court in Civil Appeal No.7411 of 2021 (The Bijnor Urban Cooperative Bank Limited, Bijnor & others Vs. Meenal Agarwal & others) decided on 15.12.2021 while considering the questions as to whether benefit under the One Time Settlement Scheme can be prayed as a matter of right and whether the High Court in exercise of powers under Article 226 of the Constitution of India can issue a writ of mandamus directing the Bank to positively consider the grant of benefit under the One Time Settlement Scheme and that too dehors the eligibility criteria mentioned under the One Time Settlement Scheme observed as under:-

"8. While passing the impugned judgment and order, the High Court, in response to the submissions on behalf of the Bank that, there are all possibilities of recovery of the loan amount and the efforts are being made to recover the amount by initiating proceedings under the SARFAESI Act and that the properties mortgaged can be auctioned, has observed that the proceedings under the SARFAESI Act have remained pending for seven years and the Bank has been unable to recover its dues and therefore the hope of recovery is illusory. This conclusion is not supported by any material on record. Merely because the proceedings under the SARFAESI Act have remained pending for seven years, the Bank cannot be held responsible for the same. No fault of the bank can be found. What is required to be considered is a conscious decision by the Bank that the Bank will be able to recover the entire loan amount by auctioning the mortgaged property and a due application of mind by the Bank that there are all possibilities to recover the entire loan amount, instead of granting the benefit under the OTS Scheme and to recover a lesser amount. It is ultimately for the Bank to take a conscious decision in its own interest and to secure/recover the outstanding debt. No bank can be compelled to accept a lesser amount under the OTS Scheme despite the fact that the Bank is able to recover the entire loan amount by auctioning the secured property/mortgaged property. When the loan is disbursed by the bank and the outstanding amount is due and payable to the bank, it will always take a conscious decision in the interest of the bank and in its commercial wisdom.

9. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty.

10. If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of paying its/his dues as per the terms of the agreement entered into by it/him would like to get one time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/installment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme.

11. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove."

5. In view of the above, we are not inclined to entertain the writ petition at the instance of the petitioner for the reliefs claimed here in this writ petition. The writ petition fails and is, accordingly, dismissed.

 
Order Date :-29.07.2022
 
pks
 

 
(Ashutosh Srivastava,J.)      (Pritinker Diwaker,J.)