Mr. Manne Guru Prasad vs M/S Pavaman Ispat Private Limited
2021 Latest Caselaw 2780 Kant

                                                               R
         IN THE HIGH COURT OF KARNATAKA
                 DHARWAD BENCH

       DATED THIS THE 13TH DAY OF JULY 2021

                         PRESENT

      THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT

                            AND

THE HON'BLE MR.JUSTICE PRADEEP SINGH YERUR


    WRIT APPEAL NO.100103/2021 (GM-RES)
  C/W. WRIT APPEAL NO.100109/2021 (GM-RES)

 IN W.A. No.100103/2021:
 BETWEEN:

 Mr. Manne Guru Prasad,
 S/o. M. Sanjappa,
 Aged about 41 years,
 R/o.: No.2/31, 2nd Cross,
 Kolagal Road, Vidhya Nagar,
 Bellary-583104.
                                                 ... Appellant

 (By Shri Ashok Harnahali, Sr. Counsel
  For Shri Mahantesh R. Patil, Adv.)


 AND:

 1.     M/s. Pavaman Ispat Private Limited,
        Having its registered office at:
        Plot No.152, 1st main road,
        Basaveshwar Nagar, Ballari-583103,
        Rep. by its Authorised representative,
        G. Lakshminarayana Shetty.
                           :2:



2.   The Chief Manager,
     Canara Bank, Bellary Main Branch,
     1st Floor, BDCCI Building,
     Bengaluru road, Bellary -583103.

3.   Karnataka Grameena Bank,
     (Formerly Pragathi Krishna Grameena Bank)
     Kalamma Street Branch, 1st Floor,
     Sona Complex, Kalamma Street
     Branch, Bellary-01.
     Rep. by its Manager.
                                       ... Respondents

(By Shri Uday Holla, Sr. Counsel
 for Shri Suhas B.Sappannavar, Adv. for R1;
 Shri S.C. Hiremath, Adv. for R2)


     This Writ Appeal is filed under Section 4 of the
Karnataka High Court Act, 1961, praying this Hon'ble
Court to set aside the order dated 06.04.2021, passed by
the learned Single Judge of this Hon'ble Court in matter
bearing W.P. No.100312/2021 and consequently, dismiss
the said writ petition bearing W.P. No.100312/2021.



In W.A. No.100109/2021:
BETWEEN:

Shri Ramappa S/o. Late Netappa,
Age 56 years, Occ: Business & Chairman Best School,
R/o.: Vidyanagar, Airport Road,
Bellary-583101.
                                            ... Appellant

(By Shri K.N. Phanindra, Sr. Counsel
 For Shri Jagadish Patil & Shri Santosh Malligawad, Adv.)
                             :3:



AND:

1.     M/s. Pavaman Ispat Private Limited,
       Incorporated under the provisions of
       Companies Act, having its registered
       office at: Plot No.152, 1st main road,
       Basaveshwar Nagar, Ballari-583103,
       Rep. by its alleged Managing Director,
       Smt. K.P. Vijayalakshmi.

2.     The Chief Manager, Canara Bank,
       Bellary Main Branch, 1st Floor,
       BDCCI Building, Bengaluru road,
       Bellary -583103.

3.     Karnataka Grameena Bank,
       Formerly 9Pragathi Krishna Grameena Bank)
       Kalamma Street Branch, 1st Floor,
       Sona Complex, Kalamma Street
       Branch, Bellary-01.
       Rep. by its Manager.
                                         ... Respondents

(By Shri Uday Holla, Sr. Counsel
 for Shri Suhas B.Sappannavar, Adv. for R1;
 Shri S.C. Hiremath, Adv. for R2)


       This Writ Appeal is filed under Section 4 of the
Karnataka High Court Act, 1961, praying this Hon'ble
Court to call for the records in W.P. No.100312/2021 and
to set aside the order dated 06.04.2021, passed in W.P.
No.100312/2021, by the learned Single Judge of this
Hon'ble Court in the interest of justice & equity.


       These Writ Appeals coming on for Prl. Hearing in 'B'
Group, having been heard and reserved on 09.07.2021,
this day, the Court pronounced the following:
                           :4:



                    JUDGMENT

The appeal in W.A. No.100103/2021 is by the

auction purchaser of the mortgaged properties that

secured the repayment of the loans in question; the

companion appeal in W.A.No.100109/2021 is by the

surety; both these Intra-Court appeals seek to lay a

challenge to the Judgment & Order dated 06.04.2021

rendered by a learned Single Judge of this Court in

borrower's W.P. No.100312/2021 (GM-RES) whereby he

has been handed relief; in re. the breach of OTS terms:

the respondent-Canara Bank's letter dated 27.01.2021

whereby the OTS offer was withdrawn having been

quashed, a direction has been issued to give effect (to

accept) to the OTS offer dated 22.01.2021 wherein a

sum of Rs.15.20 crore was offered.

2. The contesting respondent borrower having

entered caveat/appearance through it's counsel resists

the appeals making submission in justification of the

impugned order and the reasons on which it has been

constructed; it is pertinent to mention here itself that

during the course of hearing, the principal borrower,

surety & the auction purchaser were given an option to

revive their offers; both the appellants have come up

with much higher offers; the appellant surety came

forward with an offer of Rs.23 Crore and the auction

purchaser revised his offer from Rs.15,00,52,000/- to

Rs.25,20,99,999/-; the principal borrower did not avail

the opportunity; these aspects have been discussed by

us, infra.

3. BRIEF FACTS OF THE CASE:

(a) Under the Term Loan Agreement and

Hypothecation Agreement both dated 29.01.2009, the

writ petitioner had availed a loan of Rs.53.60 Crore & a

cash credit facility upto Rs.3 Crore from the respondent-

Canara Bank; the appellant Shri K.Ramappa was the

surety; the loans having bulged to above Rs.100 crore

now owing to run of time and not been repaid despite

demand, the coercive actions for recovery were resorted

to by the bank.

(b) The writ petitioner (hereafter 'borrower') vide letter

dated 22.04.2017 had offered to pay Rs.5 crore by way

of One Time Settlement; that was turned down by the

bank by letter dated 15.11.2018; later he revised the

OTS offer to Rs.11 crore vide letter dated 30.01.2019;

this was accompanied by Banker's Cheques in all for

Rs.20 lakh; the mortgaged properties were sought to be

put to e-auction vide notice dated 21.06.2019 u/s 14(2)

of SARFEASI Act, 2002 read with Rule 8(6) of Security

Interest (Enforcement) Rules 2002; fearing this, the

borrower remitted Rs.4 crore on 22.07.2019 and

requested the bank to defer the e-auction that was

scheduled held on 24.07.2019.

(c) After seeing the reluctance of the bank, the

borrower further revised his OTS offer to Rs.15 crore &

20 lakh; this having impressed the bank, it issued a

letter dated 30.11.2019 accepting the said offer on the

condition that the earlier paid amount of Rs.4.2 crore

being adjusted, the remainder i.e., Rs.11 crore should be

paid on or before 15.03.2020. In the meanwhile, the

Deputy Commissioner, Ballari District had issued section

14(2) notice dated 17.12.2019; the bank vide letter

dated 24.07.2019 requested the Deputy Commissioner to

withdraw the coercive notice in view of the OTS.

(d) The borrower vide letter dated 17.01.2020 had

requested the bank to accord consent for assigning the

outstanding debt (Rs.107,000,000/-) to the Asset

Reconstruction and Securitization Company; other back

up actions were also being worked out, is the version of

the borrower before us; to this, the bank did agree of

course subject to the rider of making the entire OTS

payment on or before 15.03.2020;

(e) The above condition of requiring the payment of

making entire OTS amount within the agreed time,

having not been adhered to, the bank withdrew the OTS

facility vide letter dated 27.01.2021; this was challenged

by the borrower in the subject writ petition in the first

week of February-2021; obviously the appellants were

not parties; the learned Single Judge by the interim

order dated 24.03.2021 had restrained confirmation of

then contemplated auction; thereafter the writ petition

came to be allowed on 06.04.2021 and the relief as

mentioned above has been accorded; hence, these

appeals, with leave.

4. Having heard the learned counsel for the

parties and having perused the papers, we are inclined to

accord leave and grant indulgence in the matter as under

and for the following reasons:

(I) A BRIEF LEGAL POSITION AS TO OTS SCHEMES:

(i) The field of banking business is occupied by

several legislations and the Rules/Regulations promulgated

thereunder; the Reserve Bank of India Act, 1934, the

Banking Regulation Act, 1949, The Recovery of Debts and

Bankruptcy Act 1993, SARFAESI Act, 2002, are a few to

name; the RBI is a watchdog of finance & economy of the

nation, apart from being the prime banking institution of

the country; it is conferred with the authority of issuing

binding directions inter alia to the Public Sector Banks vide

Central Bank of India V. Ravindra 2002 (1) SCC 367; the

One Time Settlement Schemes obtaining in the Banks &

Financial Institutions are governed by the Guidelines issued

by the RBI under Sections 21 & 35A of the 1949 Act; the

Banks are bound by the same under Section 21(3).

(ii) These OTS Schemes having statutory force

require the prescription of time lines for making the

payments as agreed; time schedules which are stipulated

consensually by the bank & the borrower are the essential

terms of bargain and ordinarily cannot be altered, subject

to all just exceptions; normally, OTS facility being a

statutory concession, and eventually result in some loss of

public money; the borrowers are bound to honour the

agreed terms OTS and the breach thereof entitles the

Banks to rescind the facility, and recall the entire loan too;

the schemes of the kind are intended to get back the debts

(minus the concession granted) to the lender institutions

swiftly & without much complication; loanees are also

benefited to the extent of differential of the amount offered

in the OTS and the amount otherwise actually payable by

them.

(iii) There is a duty cast on the banks and financial

institutions to ensure that the operation of OTS schemes

would not cause avoidable loss of public money and

therefore the concessions given in the form are

reasonable; whilst operating the OTS Schemes, they have

to practice principles of non-discrimination, fairness &

reasonableness, vide Sardar Associates V. Punjab & Sind

Bank, (2009) 8 SCC 257; in adjudging the validity of coercive

actions such as auctioning taken by the Banks for recovering

the loans on the failure of the borrower to adhere to OTS

terms, the dominant consideration is securing of best price,

vide KSIID Corporation Ltd. Vs. Cavalet India Limited (2005)

4 SCC 456; the actions of the bank falling short of these

standards obtaining in the realm, even in contractual matters

of the kind, may run the risk of invalidation.

(iv) The loan transactions entered into between the

Bank & borrower are essentially a matter of contract, is

undisputable; even then, the extant RBI Guidelines under

which the OTS Schemes have been evolved, regulate the

repayment of loans as per the terms agreed; the Public Sector

Banks being the instrumentalities of 'State' under Article 12 of

the Constitution, their actions/inactions even when filled with

contractual elements, are liable to suffer a restrictive judicial

scrutiny under Articles 226 & 227, depending upon the facts &

circumstances of each case, is also true.

(II) FOUNDATIONAL FACTS EMERGING FROM RECORD:

(i) The respondent Canara Bank is the lender; the

writ petitioner, who happens to be a respondent in the

appeals, is the principal borrower; appellant Shri K.

Ramappa is the surety for the term loan; repayment of

loan is secured by mortgage of immovable properties;

borrower's first OTS proposal dated 22.04.2017 in a sum

of Rs.5 crore was later upwardly revised to Rs.11 crore

on 30.01.2019; Bank having not agreed; the offer was

upwardly revised to Rs.15.20 crore on 21.11.2019;

borrower had already paid Rs.4.2 crore; all this happened

after the bank resorted to coercive acts of recovery;

(ii) the lender bank vide letter dated 30.11.2019,

had accepted the latest OTS offer of Rs.15.20 Crore, is

true; however, it had specifically stipulated the timeline as

under:

"iv. In the event of non-compliance with any of the terms of the sanction by you, including payment of the OTS amount as per the stipulated schedule, the OTS sanction stands automatically withdrawn without assigning any reasons for the same and the Bank reserves the right to proceed as it deems fit including proceeding legally for recovery of the entire dues."

It cannot be disputed that the timelines mandatorily

prescribed for making the payments in terms of OTS were

not adhered to, is not in dispute; the borrower had failed

to remit the agreed amount within the stipulated period i.e.

on or before 15.03.2020.

(iii) The borrower vide letter dated 13.03.2020 had

sought for elongation of stipulated period of payment up to

31.05.2020; the bank vide letter dated 30.05.2020

rescinded the OTS facility, the agreed amount not reaching

its hands in terms of OTS. The borrower vide

representation dated 26.06.2020 requested the bank to

withdraw the aforesaid Rescinding Letter dated 30.05.2020

stating that minimum 45 days were required for

assignment of debt and that he would pay interest on the

delayed payment, as well; the bank declined and went

ahead with the coercive acts of recovery since the conduct

of the borrower did not generate confidence.

(III) RECOVERY OF DEBTS, WRIT JURISDICTION AND APEX COURT DECISION IN CAVALET INDIA CASE:

(i) The vehement contention of learned Sr. Adv.

Mr. Uday Holla appearing for the borrower that already

Rs.4.20 crore was paid to the bank, and rest of the money

was being organized by intended assignment of debt done

with the consent of the lender bank, may be true; however,

the bank had specifically made it clear whilst granting consent

for the assignment of debt that in no circumstance the

timeline for payment in terms of OTS would be elongated; the

borrower having acquiesced in the same now cannot turn

around and contend to the contrary; the equity which he

seeks at the hands of this Court estopps him from blowing hot

and cold.

(ii) The OTS Schemes are in the nature of an apology to

the basic norm on which the law of contract is founded: pacta th sunt servanda (ascribed to Hugo Grotius, a 17 Century

Dutch Jurist) which means "do, as agreed"; the norm

requires that the debtor should repay the debt as per the

terms of loan agreement; these schemes are by their very

nature & effect a concession that mainly benefit the defaulting

borrowers; not the ideals of social contract, but the realities

gained through the experience of life dictate formation of such

policies; a person who avails the concession, cannot later turn

around and seek alteration of the terms subject to which such

concession was granted in accordance with the statutory

schemes like the OTS; an argument to the contrary, subject

to all just exceptions, would be unconscionable; ordinarily, the

Writ Courts do not grant relief where the grounds for prayer

are tainted with unconscionability.

(iii) In matters between the banker & borrower, a

Writ Court has no much say except in two situations: where

there is a statutory violation on the part of the bank/financial

institution, or where the bank acts unfairly/unreasonably;

Courts exercising constitutional jurisdiction u/A 226 do not sit

as Appellate Authorities over the acts & deeds of the bank and

seek to correct them; even the doctrine of

fairness/reasonableness does not convert the Writ Courts into

appellate authorities over administrative decisions concerning

the banking business; unless the action of the bank is

apparently malafide, even a wrong decision taken by it cannot

be interfered.

(iv) It is not for the Court or a third party to

substitute it's decision howsoever prudent or business like

it may be, for the decision of the bank; in commercial

matters, the Courts do not risk their judgments for the

judgments of the bodies to which that task is assigned; a

Public Sector Bank or a Financial Institution cannot wait

indefinitely to recover its dues; the fairness required of the

bank cannot be carried to the extent of disabling it from

recovering what is due; in matters of loan transactions,

fairness cannot be a one-way street; both the bank & the

borrower have to be equally fair to each other; nearly, thus

said the Apex Court in Cavalet India (Supra); these

observations equally apply to the appeals at our hands.

(v) As already mentioned above, the OTS offers

have been made by the borrower thrice; he was accorded

consent by the Bank to the assignment of loan to the

company in question subject to the rider that the timeline

for payment in terms of OTS would not be altered; the loan

transaction essentially being a matter of contract, the OTS-

like-arrangement is only a novatio & a new arrangement is

brought about by the bargain of parties namely the lender,

the borrower & the surety, done across the table; that

being the position, ordinarily, the Courts cannot alter the

terms of contract even when it has statutory elements; the

time within which the remittance of the amount has to be

made is an essential term of OTS, disentitles the defaulting

borrower from invoking the writ jurisdiction; the Division

Bench decision in Rama Industries Vs. the Assistant

General Manager, AIR 2006 P & H 95, strengthens this

view of ours; we do not subscribe to the view taken by a

learned Single Judge of this Court in W.P. No.3749/2007

(GM-DRT) between M/s. Kemtrode Private Ltd., Vs. The

Recovery Officer, DRT & Another, disposed of on

01.08.2008.

(vi) There is yet another reason for not agreeing

with the passionate submission of Mr.Holla: granting relief

to the defaulting borrower has to be consistent with the

statutory scheme of OTS; the Writ Courts cannot ask the

Bank to do something that offends the intent & content of

such schemes whereunder transactions have been

consciously struck between the parties; after all, Courts

cannot rewrite the contract between the parties in the

absence of statutory enablement; secondly, the concession

if shown by the Writ Courts to a defaulting borrower who

has availed the benefit under a statutory OTS Scheme,

would run the risk of being pressed into by unscrupulous

debtors as a precedent to defer, if not defeat, the banker's

actions for recovery of outstanding loans; this is

undesirable; it is not that, in extraordinary cases too, a

scrupulous litigant cannot be granted relief in writ

jurisdiction; however, no such case is made out before us.

(IV) LOCUS STANDI OF SURETY TO MAINTAIN APPEAL:

(i) The liability of the surety is co-extensive with that

of the principal borrower, edicts Section 133 of the Indian

Contract Act, 1872; such liability is co-terminus as well;

Mr. Holla is right in contending that once the OTS payment

is made, the surety too is discharged; when the law of

contract was enacted during the Colonial Regime about a

century & half ago, the proposition was as simple as it was

stated; but, now the matter has become a bit complex;

some implications ensue from the intervening legislation

namely, the Credit Information Companies (Regulation)

Act, 2005; the loan transaction culminating in the

availment of OTS facility and its subsequent rescinding by

the lender bank arguably constitute a 'credit information'

as defined u/s 2(d) of the Act; the guarantor of loan

answers the inclusive definition of 'client' given u/s 2(c);

similarly the borrower fits in Section 2(b) and the banker,

in the definition of 'credit institution' given u/s 2(f); the

surety arguably suffers an adverse 'credit scoring' as

defined u/s 2(g); thus, the surety has some legal stake in

the OTS deals, more particularly when the letter containing

the OTS offer was officially marked to him, as well.

(ii) However, the above having been said, there is

no contract between the borrower and the surety for

protecting the arguable 'credit scoring' of the later; a

surety is entitled to the protection of credit scoring so that

he will not be disfavoured when he goes to other banks for

borrowing, is understandable; having this in mind,

presumably, the surety had made the representation

alarming the bank that the auction of mortgaged property

would fetch more money than the OTS offer; he had

moved the Writ Court too; he himself has come up with an

offer of Rs.23 crore before us; this is about Rs.8 crore

more than the last OTS offer; however a caveat needs to

be entered: the right of contribution which the surety may

have qua the borrower may not exceed the value of the

said OTS offer; we hasten to add that we have not

expressed any opinion on these aspects here, the same not

falling within the focal point of our consideration.

(iii) The records disclose that the appellant surety

had vide representation dated 12.02.2019 objected to the

bank casually accepting the OTS offers to the detriment of

public money; he had approached the Writ Court in

W.P.No.109279/2019 which came to be disposed of on the

very same day vide order dated 06.04.2021 itself, directing

the bank to consider the said representation; both the

principal borrower and the lender banks being parties eo

nominee to the said writ petition were represented by

their advocates too; a copy of this order is now placed on

record; this itself invests sufficient locus standii in him.

(iv) During the course of hearing of these appeals,

the appellant surety came forward with the 'Memo of

Undertaking' dated 07.07.2021 which reads as under:

"The undersigned counsel for the appellant herein most humbly submits that, pursuant to the inquiry of this Hon'ble Court the appellant Sri K. Ramappa, that the appellant is ready to pay Rs.23,00,00,000/- (Rupees Twenty Three Crore only) Towards the one time settlement of the Loan. The appellant herein undertakes to pay the same within 30 days from the date of this Hon'ble Court... "

It is not that the borrower was not aware of surety's

representation dated 12.02.2019 in which he had stated

inter alia about the subject mortgaged property being

capable of fetching the auction price much higher than the

sums stated in the OTS offers; after all the surety has also

a stake in the loan transaction and he cannot escape the

liability; that being the position, the principal borrower in

all fairness ought to have arraigned him as a respondent to

the writ petition; that having not been done, he is not

justified in opposing surety's request for the grant of leave

to file the writ appeals; added to this, the borrower did not

avail the opportunity of revising his OTS offer; therefore,

we granted the leave as sought for and heard the appeals

on merits.

(V) LOCUS STANDII OF THE AUCTION PURCHASER:

During the pendency of the writ petition, the learned

Single Judge vide ad interim order dated 24.03.2021 had,

in a sense, permitted auctioning of the property by

restraining the confirmation of contemplated auction sale;

auction purchaser had also sought for his impleadment in

the writ petition; the e-auction was held on 08.04.2021

(presumably being unaware of the disposal of the writ

petition on 06.04.2021) and the highest bid of

Rs.15,00,52,000/- of the appellant in Writ Appeal

No.100103/2021 came to be accepted; he has also paid

Rs.78 lakh on 05.04.2021 being the pre-deposit for

participation in the auction; he has also remitted

Rs.2,97,13,000/- on 09.04.2021; that apart, he has now

come forward with a very high offer of Rs.25,20,99,999/-;

this is much higher than the revised OTS offer of the

borrower i.e., Rs.15,20,00,000/-; the borrower despite

giving the same opportunity as was given to the appellants

herein, declined to improve his offer figure; when the

public money is involved, a Writ Court has to scrutinize the

things with objectivity and ensure that no loss of such

money takes place. Therefore, leave is granted for

maintaining the appeal.

VI. LOAN TRANSACTION: BREACH OF OTS: DEBTOR'S EQUITY ARGUMENTS & JUDICIAL INTERVENTION:

(i) The learned Single Judge has granted relief to

the borrower on the doctrine of promissory estoppel; this

doctrine has several shades of meanings & limitations; it

cannot be operated as a thumb rule; several civilized

jurisdictions treat promissory estoppel as an offshoot of

equity; as already mentioned above, the equity & fairness

required of a Public Sector Banks cannot be carried too far

and to an unrealistic extent of disabling or delaying the

very recovery of the public money which they have lent;

while not insisting upon the borrower to honour the OTS

commitment undertaken by him, the Banks alone cannot

be shackled hand & foot by invoking the doctrine of

promissory estoppel.

(ii) After all, these equity-born-doctrines are not a

one-way traffic; equity seeker himself has a duty to be

equitable to the other side; this is how the Apex Court

alerted the writ courts in Cavalet India case (supra);

despite grating opportunity the borrower did not come

forward with the revised offer, whereas the appellants did;

where the public money is involved, a Writ Court has to

assume a realistic role of a trustee in ensuring that the

public money is not lost in the conundrums of

constitutional contentions; Courts have to have a

pragmatic approach when matters touching economics are

brought before them for adjudication.

(VII) THE SUSPICIOUS CONDUCT OF BANK OFFICIALS:

(i) As a constitutional Court, we will be failing in

our duty, if we do not say a few words about the way the

bank authorities, that be, treated the matter with a

culpable casualness if not in connivance; the term loan of

January 2009 coupled with the cash-credit facility runs into

more than Rs.100 crore rupees, more than a decade

having lapsed; in April 2017 the OTS offer of Rs.5 crore

was made; bank turned it down only in November 2018; in

January 2019, Rs.11 crore offer was made; this was later

revised to Rs.15.20 crore in November 2019; borrowers

writ petition was allowed on 06.04.2021; the same day

surety's writ petition was also disposed off directing the

bank to consider his representation wherein he has

specifically mentioned about the possibility of fetching a

much higher auction money;

(ii) Strangely the mortgaged property was

auctioned on 08.04.2021; the highest bid of

Rs.150,052,000/- of the appellant auction purchaser came

to be accepted; the very same buyer has revised the bid to

Rs.252,099,999/- before us; even the surety has come up

with an offer of Rs.23 crore; the OTS deal struck between

the bank and the borrower in a small sum of

Rs.150,052,000/- raises a strong suspicion as to there

being some 'shady deal' with the connivance of authorities

of the bank; this needs to be investigated into by the

Reserve Bank; matter merits attention of the Comptroller &

Auditor General of India, as well.

In the above circumstances, we make the following:

ORDER

(i) Both these appeals succeed in part; the impugned Judgment & Order made by the learned Single Judge are set at naught; Writ Petition No.100312/2021 of the borrower, is dismissed;

(ii) The lender bank shall accept the revised offer of the appellant auction-purchaser in a sum of Rs.25,20,99,999/- (Rupees twenty five crore, twenty lakh, ninety nine thousand, nine hundred & ninety nine) only; he shall remit the remainder of the said amount within a period of six weeks failing which, the amount which he has already deposited shall stand

adjusted to the credit of the principal borrower;

(iii) If what is directed in the immediately preceding paragraph (ii) above, does not materialize because of the fault attributable to the auction-purchaser, then the offer of the surety appellant Mr. K. Ramappa in a sum of Rs.23,00,00,000/- (Rupees twenty three crore) only shall be accepted; he shall remit 50% of this amount within four weeks and the remainder within next four weeks; if he fails to adhere to the undertaking given to this Court, he shall pay to the Bank on account of the borrower a sum of Rs.2.30 crore (Rupees two crore thirty lakh) only by way of forfeiture within next two weeks; the lender bank may recover this along with interest at the rate of 18% p.a. thereon for the delayed period;

(iv) If what is directed in the immediately preceding paragraph (iii) above does not materialize because of the fault attributable to the appellant surety, the bank shall accept the revised OTS offer of the principal borrower M/s. Pavaman

ISPAT Private Ltd. made in a sum of Rs.15,20,00,000/- (Rupees fifteen crore & twenty lakh) only; the balance of this amount shall be remitted by the borrower within a period of six weeks following the failure of the offer of the appellant-

surety, as mentioned in the preceding paragraph No.(ii) above; interest too is chargeable.

Costs made easy.

Registry to mark a copy of this judgment to the RBI

Governor and Comptroller & Auditor General of India, New

Delhi, forthwith.

Sd/-

JUDGE

Sd/-

JUDGE

Vnp* & Kms