In Re: IA NO. GA-COM/2/2025
Facts:
2. Prayers from the master summons are quoted below :
(a) The plaint filed in the present suit, being CS-COM 63 of 2025
(Senbo Engineering Limited V/s Bank of Maharashtra) be rejected
and taken off the file;
(b) In the alternative, the present suit, being CS-COM 63 of 2025
(Senbo Engineering Limited V/s Bank of Maharashtra), be
summarily be dismissed;
(c) Stay of all further proceedings in the present action, being CS-
COM 63 of 2025 (Senbo Engineering Limited V/s Bank of
Maharashtra), till the disposal of the instant application;
(d) Ad-interim order in terms of prayer (c)
(e) Cost of the instant application to be borne by the plaintiff above
named;
(f) Such other order and/or orders as this Hon'ble Court may deed fit
and proper.
3. The plaint is annexed to the supporting affidavit at page 32 thereto. The
summary of the plaint case is that from time to time the plaintiff has availed
of advances and financial facilities/loans from the defendant-bank. The
plaintiff defaulted. The account of the plaintiff was declared as Non-
Performing Asset (in short NPA). On October 13, 2017 the defendant-bank
had served a notice under sub-Section (2) to Section 13 of the
Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (for short SARFAESI Act). On December
14, 2018 the defendant-bank has served notice in respect of the security
interests under sub-Section (4) to Section 13 of the Securitization Act.
Plaintiff has not challenged such actions taken by the bank under
Securitization Act. On March 5, 2019 the bank has filed an application
under Section 19 of the Debts Due to Banks and Financial Institutions
Act, 1993 (for short Debts Recovery Act), which has been registered before
the jurisdictional DRT as OA 183 of 2019. In 2020 the bank has initiated
proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016
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(for short IBC). At this juncture, a one-time settlement proposal (for short
OTS) was submitted by the plaintiff. As the OTS proposal was submitted
and was not considered by the bank, the said proceeding under Section 7 of
IBC which was initiated in 2020 was withdrawn. The said first OTS proposal
had failed as the bank did not agree. In or about March 2024, the bank has
initiated the second proceeding under Section 7 of IBC, the same is still
pending before NCLT. On December 27, 2024 at page 141 to the supporting
affidavit, the plaintiff has submitted its second OTS proposal. By a letter
dated January 21, 2025 at page 148 to the supporting affidavit the bank
has allegedly rejected the said second OTS proposal. Further plaint case is
that, from time to time under the said first OTS proposal, though not
fructified, plaintiff has made substantial payment. Similarly, under the said
second OTS proposal from time to time negotiations took place and the
plaintiff has made substantial payment to the bank, which was accepted by
the bank. As per asking of the bank the plaintiff has also enhanced its offer
and made further payment under the second OTS proposal. Further
negotiation took place by and between the plaintiff and the bank, as would
be evident from plaintiff's letter dated February 5, 2025 at page 151 to the
supporting affidavit and the bank had rejected the OTS proposal by its letter
dated February 13, 2025 at page 153 to the supporting affidavit.
4. In this conspectus of facts, the plaintiff contends that a concluded contract
has been arrived at by and between the parties on account of one-time
settlement of the dues of the bank and the bank cannot resile therefrom.
Both the parties have acted upon such agreement between the parties. The
plaintiff has altered its position upon being represented by the bank and
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paid the bank substantially. The bank, now cannot reject the one-time
settlement proposal proposed by the plaintiff.
5. In view of the above, the plaintiff has instituted the instant suit praying for
the reliefs :-
"(a) A decree of declaration that the acceptance of consideration
by the defendant bank against the enhanced offer of OTS
proposed by the plaintiff has resulted into a concluded contract;
(b) A decree of specific performance of the contract in respect of
the concluded contract between the plaintiff and the defendant
thereby directing the defendant bank to accept the remainder
amount of Rs.54 crores within 31st December, 2025 in lieu of full
and final discharge of all the liabilities of the plaintiff company
against the defendant bank;
(c) A decree of permanent injunction restraining the defendant
bank from taking any coercive steps against the plaintiff
company which frustrates the concluded contract of OTS between
the plaintiff and the defendant;
(d) Decree for delivery up and cancellation of the Letters of the
plaintiff dated 5th February 205 and 18th February 2025 and the
defendant's letters dated 21st January 2025, 13th February 2025
& 19th February 2025;
(e) Receiver;
(f) Injunction;
(g) Judgment upon admission;
(h) Attachment before judgment;
(i) Costs;
(j) Any further reliefs or reliefs as this Hon'ble Court may deem fit
and proper."
6. The defendant has applied for rejection of the plaint.
7. Pursuant to the direction of the Court the parties to the instant application
have filed and exchanged their affidavits.
Submissions :
8. Mr. Sourav Kr. Mukherjee, learned counsel being ably assisted by Mr.
Nirmalya Dasgupta, learned counsel appearing for the defendant/applicant
referring to the averments made in the plaint and the reliefs claimed therein,
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at the outset, submits that the present suit is nothing but a ploy to resist
the claims of the bank on account of default on the part of the plaintiff in
respect of the financial assistance provided to it by the bank. The records
would show that the OTS proposed by the plaintiff had not fructified.
9. Mr. Sourav Kr. Mukherjee, learned counsel further submits that, the
prayers made in the plaint specifically prayers (c) and (d) are clearly in
prohibition of the provisions made under Section 34 of the SARFAESI Act,
2002. Learned counsel further submits that the OTS proposal submitted by
the plaintiff was not in terms of any Reserve Bank of India guidelines (for
short RBI guidelines) neither in terms of any statutory scheme. Therefore, it
is not incumbent or binding upon the bank to accept such OTS proposal, in
the event, the bank authority thinks it fit not to be feasible or accepted by
the bank. The OTS proposal submitted by the plaintiff was rejected by bank.
10. Mr. Sourav Kr. Mukherjee, learned counsel appearing for the defendant-
bank submits that a defaulted borrower cannot claim OTS as a matter of
right. An OTS cannot be enforced by way of filing a suit for specific
performance. Inasmuch as the bank twice by its communications dated
January 21, 2025 at page 148 and February 13, 2025 at page 153 to the
supporting affidavit had rejected the OTS proposals of the plaintiff, as they
were not acceptable to the authority. 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 lessor amount under any OTS.
The rejection of OTS proposal at the end of the bank was in its commercial
wisdom. No borrower, as a matter of right, prays for grant of benefit of OTS.
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In support, Mr. Sourav Kr. Mukherjee has relied upon the following
decisions :
(a) In the matter of: Bijnor Urban Cooperative Bank Limited
Bijnor and Ors. Vs. Meenal Agarwal and Ors. reported at
(2023) 2 SCC 805.
(b) In the matter of: State Bank of India Vs. Arvindra Electronics
Private Limited reported at (2023) 1 SCC 540.
11. Mr. Sourav Kr. Mukherjee appearing for the defendant-bank submits that in
view of prayers made in the plaint, steps taken by the bank in exercise of
power under Section 13 of the SARFAESI Act, 2002, have also become
affected. He submits that there is a clear bar under Section 34 of the
SARFAESI Act, 2002, to file such a suit. In support, he has relied upon a
decision of the Hon'ble Supreme Court In the matter of: Authorised
Officer, State Bank of India Vs. Allwyn Alloys Private Limited and Ors.
reported at (2018) 8 SCC 120.
12. Mr. Sourav Kr. Mukherjee further submits that the bank has also initiated
proceeding under Section 7 of IBC which is pending before NCLT. Section 63
of IBC imposes a clear bar on the jurisdiction of civil court. In view of the
reliefs claimed in the plaint, he submits that the insolvency proceeding
initiated by the bank would also be affected. In view of the bar under Section
63 of IBC, the plaint filed in the instant suit should be rejected. Similarly, he
submits that the proceeding initiated before the jurisdictional DRT for
recovery of defaulted amount against the plaintiff borrower shall also be
affected because of the reliefs claimed in the instant plaint. The instant suit
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is also barred under Section 17 of the DRT Act, 1993. In view of the above,
Mr. Sourav Kr. Mukherjee, submits that the plaint should be rejected.
13. Mr. Dhruba Ghosh, learned Senior Advocate appearing for the plaintiff has
solely relied upon a judgment of the Hon'ble Supreme Court In the matter
of: Bank of Rajasthan Limited Vs. VCK Shares and Stocks Broking
Services Limited reported at (2023) 1 SCC 1 and made his submissions
to oppose the application filed by the defendant-bank.
14. Mr. Dhruba Ghosh, learned Senior Advocate appearing for the plaintiff
submits that before the said judgment of the Hon'ble Supreme Court In the
matter of: Bank of Rajasthan Limited (supra) was delivered, the
borrower had the only remedy to raise its counter-claim against the claim of
the bank before DRT if a proceeding is initiated by the bank under Section
19 of the DRT Act, 1993. Even though, there has been no provision for
transfer of borrower's suit to the tribunal but suits filed by the borrowers
over the country were transferred before the tribunal and were treated to be
the counter-claim of the borrowers. After the said judgment In the matter
of: Bank of Rajasthan Limited (supra) the law has changed to the effect
that the borrowers can either file a counter-claim before DRT in a
proceeding filed under Section 19 of the DRT Act, 1993 or maintain an
independent civil suit before a jurisdictional civil court.
15. Mr. Dhruba Ghosh, learned Senior Advocate then refers to the plaint and
relied upon various paragraphs therefrom and the reliefs claimed therein.
He submits that DRT does not have any jurisdiction for passing a decree for
declaration or for passing a decree for specific performance of any contract,
as claimed by the plaintiff in the instant plaint. According to him on a plain
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reading of the plaint it would be evident that, there had been a concluded
contract between the parties with regard to one-time settlement of the
alleged debts of the borrower-plaintiff but the bank resiled from it and
hence, the plaintiff has claimed specific performance of contract, as the OTS
has achieved the character of a concluded contract. If the plaint succeeds,
then automatically the defendant bank would have to be obliged to accept
payment from the plaintiff under the said OTS and the alleged debts of the
plaintiff would be settled once for all. Therefore, the instant suit is
maintainable. The plaintiff may succeed, may loose the suit, at the trial but
the plaint has to travel through the stage of trial.
16. On facts, Mr. Dhruba Ghosh, learned Senior Advocate submits that the first
OTS could not be made through. However, the second OTS proposal
submitted by the plaintiff was acted upon and accepted by the bank, as the
bank has accepted payments from time to time thereunder from the
plaintiff. As per demand of the bank, the plaintiff has enhanced its offer and
paid the amount on such enhanced offer and the bank has accepted the
same. He submits that a concluded contract had arrived at by and between
the parties on account of OTS and since the bank has resiled therefrom, the
instant suit has been filed praying for specific performance of the concluded
contract with consequential reliefs.
17. On this scope of IBC Mr. Dhruba Ghosh, learned Senior Advocate submits
that the jurisdiction of NCLT, while adjudicating an insolvency proceeding
under IBC, is very limited only to the extent to ascertain whether any default
is there. If the default is established then the further process for insolvency
proceeds according to the provisions laid down under IBC. Insolvency
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proceeding is not a debt collecting proceeding. In support, he has relied
upon a decision of the Hon'ble Supreme Court In the matter of: ES
Krishnamurthy and Ors. Vs. Bharath Hi-Tecch Builders Private
Limited reported at (2022) 3 SCC 161.
18. Referring the reliefs claimed in the plaint Mr. Dhruba Ghosh, learned Senior
Advocate submits that the plaintiff has not challenged the steps taken by
the bank under the SARFAESI Act neither the steps taken under IBC. In
fact, the proceeding for recovery of debt initiated by the bank under Section
19 of the DRT Act is also pending and is being proceeded with. The plaintiff
has also not challenged initiation of the said debt recovery proceeding
pending before the DRT. Therefore, the plaint is neither barred under
Section 34 of the SARFAESI Act nor under Section 63 of the IBC or under
any provisions of the DRT Act.
19. Accordingly, Mr. Dhruba Ghosh, learned Senior Advocate appearing for the
plaintiff submits that the application filed by the defendant praying for
rejection of the plaint is misconceived, not tenable in law and should be
dismissed. The plaint must stands for trial.
Decision:
20. After considering the rival submissions of the parties and on perusal of the
materials on record, this Court at the outset reiterates the law prevails on
rejection of plaint. To adjudicate an application praying for rejection of
plaint, it is the only duty caste upon the Court to read the plaint as it is, by
taking the statements made therein as true, correct and sacrosanct
including the reliefs claimed therein. If on a meaningful and plain reading of
the plaint, the Court finds without holding any detail fact-finding enquiry on
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it, that the plaint is barred by law and no triable issue is required to be
seen, the Court is empowered to reject the plaint summarily at any stage of
the proceeding.
21. On a plain and meaningful reading of the instant plaint together with the
reliefs claimed therein, it appears to this Court that, the plaint case is that
the borrower plaintiff is admittedly a defaulter. On harmonious reading of
the provisions under Rule 11 to Order VII of Code of Civil Procedure,
1908 (for short CPC) this Court is also of the firm and considered view that
even if a particular point of law is not raised by the defendant in an
application for rejection of the plaint, if the civil court on a plain reading of
the plaint comes to a finding that the suit is barred by law, the power,
authority and jurisdiction of the Court is plenary to reject the plaint without
even the point being taken by the defendant. Similarly, in case of an
undefended suit, the Court can summarily reject the plaint, if on a plain
reading of the plaint, the Court is of the view that the suit is barred by law.
22. The borrower plaintiff proposed one-time settlement twice. The first one had
failed. Insofar as the second one is concerned, mutual discussions and
negotiations took place by and between the plaintiff and the defendant bank
from time to time. Pursuant to such negotiations and discussions, the
plaintiff has raised its offer according to the demand of the bank. Amounts
paid by the plaintiff from time to time which were accepted by the defendant
bank including the amount under the enhanced offer, as was enhanced
pursuant to demand of the bank. Even then, the bank has allegedly resiled
from its promise and rejected the OTS, as the same was not acceptable to its
authority. In the conspectus of these facts the borrower plaintiff has filed
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the instant suit praying for specific performance of an alleged concluded
contract with regard to OTS along with other consequential reliefs.
23. The instant plaint with its reliefs, as it is framed, may not offend the steps
taken by the bank under the SARFAESI Act or IBC or the proceeding
pending under Section 19 of the DRT Act. However, on a plain and
meaningful reading of the plaint, this Court proceeds to examine whether
the plaintiff has a right to enforce an alleged contract of OTS in law.
24. Admittedly, plaintiff is a defaulter borrower. By virtue of furnishing OTS
proposal the plaintiff intends to settle its defaulted account at a lessor sum.
Had this proposal been accepted by the bank. Conclusively and without any
rejection, the plaintiff could have paid it and could become debt free. In the
facts of the instant case, twice the OTS proposals had been rejected by the
bank and last of such rejection was on February 13, 2025 at page 153 to
the supporting affidavit, as the proposal was not acceptable to the bank
authority. The rejection clearly shows a conscious decision of the bank while
rejecting the OTS. 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 lessor amount under any OTS proposal. When the
loan is disbursed by the bank and the borrower defaulted, the outstanding
amount due and payable to the bank, it will always take a conscious
decision in the interest of the bank and in its commercial wisdom. In
absence of any RBI scheme and/or any other statutory scheme, the OTS is
an arrangement between the bank and its defaulter borrower without any
statutory flavour, as in the instant case. Without the statutory flavour an
OTS is a policy decision of the bank in its commercial wisdom. No defaulted
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borrower can, as a matter of right, prays for grant of benefit of such one-
time settlement. It is pertinent to note that in the facts of the instant case,
plaintiff submitted its offer for OTS not under any statutory scheme but on
its own pursuant to the discussions and negotiations held with the bank, as
the plaint case is. Therefore, no right has been created in favour of the
plaintiff to enforce the said OTS by way of specific performance or otherwise.
25. If the plaintiff cannot claim any right to enforce the said OTS, the claim for
specific performance is not maintainable. Inasmuch as, the relief for specific
performance is equitable in nature. Hon'ble Supreme Court In the matter
of: Bijnor Urban Co-operative Bank Limited (supra) had observed as
under :
"11. 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.
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12. 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.
13. 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.
14. 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
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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.
15. In view of the aforesaid discussion and for the reasons
stated above, we are of the firm opinion that the High Court, in
the present case, has materially erred and has exceeded in its
jurisdiction in issuing a writ of mandamus in exercise of its
powers under Article 226 of the Constitution of India by directing
the appellant-Bank to positively consider/grant the benefit of OTS
to the original writ petitioner. The impugned judgment and order
passed by the High Court is hence unsustainable and deserves to
be quashed and set aside and is accordingly quashed and set
aside.
16. The present appeal is accordingly allowed. However, in the
facts and circumstances of the case, there shall be no order as to
costs."
26. The reliefs claimed in the plaint In the matter of: Bank of Rajasthan
Limited (supra) is quoted as under :
"5. A crucial development took place on 18.03.1998 when the
appellant sold the pledged shares of BFL Software Ltd. for a total
sum of Rs.5,77,68,000/- to adjust the amounts against the dues
in view of the authorisation available with them as a part of the
loan transaction. The respondent, as a sequitur, filed Civil Suit
no.129 of 1999 before the High Court of Calcutta on 09.03.1999
praying, inter alia, for the following reliefs:
i) A declaration that the sale of shares of BFL Software Ltd.
was void;
ii) a decree for return of pledged shares in respect of
overdraft facility account, and in default to pay Rs.48.95 crores;
and
iii) a declaration that no sum was payable by the
Respondent to the Appellant in respect of the term loan dated
27.07.1994 and Overdraft Account dated 19.09.1995 and that
the Appellant bank was not entitled to a decree for a sum of
Rs.8,62,41,973.36 from the Respondent."
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27. From the above, it would be evident that, the reliefs claimed in the instant
plaint and the reliefs claimed In the matter of: Bank of Rajasthan
Limited (supra) plaint are totally different by their nature and character.
From the reliefs claimed in the plaint In the matter of: Bank of Rajasthan
Limited (supra) it is clear that, there was a clear right to sue in favour of
the plaintiff and the plaint was not barred by law otherwise. Whereas on a
plain reading of the instant plaint and reliefs claimed therein, it is clearly
evident that the reliefs claimed in the instant plaint are barred by law, as
the plaintiff cannot enforce an OTS, as already discussed above. Therefore,
the instant plaint, as framed in its present form, is clearly barred by law.
28. Therefore, even if, there is no jurisdictional bar to maintain a civil suit
before a jurisdictional civil court but if on a plain and meaningful reading of
the plaint, it appears to Court that, the plaint as it is framed in its existing
form is otherwise barred by law, the same should be and liable to be rejected
under the provisions of Rule 11 to Order VII of Code of Civil Procedure.
29. In view of the forgoing reasons and discussions, the plaint filed in the
instant commercial suit being CS-COM/63/2025 stands rejected and is
directed to be taken off the file.
30. The suit register shall be rectified accordingly by the department.
31. Accordingly, the instant application being IA NO. GA-COM/2/2025 stands
disposed of without any order as to cost.
(Aniruddha Roy, J.)
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