Kerala High Court
Bindu Vijayakumar vs The Regional Manager on 3 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
MONDAY, THE 3RD DAY OF JANUARY 2022 / 13TH POUSHA, 1943
WP(C) NO. 19672 OF 2021
PETITIONER:
BINDU VIJAYAKUMAR
AGED 49 YEARS,W/O.VIJAYAKUMAR,
SIVASHYLAM,
EDUKKADOM.P.O, EZHIKONE,
KOLLAM-691505.
BY ADV R.GOPAN
RESPONDENTS:
1 THE REGIONAL MANAGER
STATE BANK OF INDIA, REGIONAL OFFICE,
RAVIS ARCADE, KOLLAM.P.O,
PIN-691013.
2 THE CHIEF MANAGER,
STATE BANK OF INDIA,
STRESSED ASSETS RECOVERY BRANCH,
LMS COMPOUND,NEAR MUSEUM WEST GATE,
VIKAS BHAVAN.P.O,
THIRUVANANTHAPURAM-695503.
3 THE BRANCH MANAGER
STATE BANK OF INDIA,
PATHANAPURAM BRANCH, KOLLAM-691013.
BY ADV JAWAHAR JOSE, SC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 24.11.2021, THE COURT ON 03.01.2022 DELIVERED
THE FOLLOWING:
W.P.(C) No.19672/21
-:2:-
"C.R."
BECHU KURIAN THOMAS, J.
-----------------------------------------
W.P.(C) No.19672 of 2021
----------------------------------------
Dated this the 3rd day of January, 2022
JUDGMENT
When the loan account of the petitioner was declared as a non
performing asset, proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for short, 'the Act') were initiated. While steps for
enforcement of the security interest were being carried on, a one
time settlement scheme (for short 'OTS') was offered to the petitioner
by the respondents, which was accepted. The dispute in this writ
petition arises from the failure of the petitioner to comply with the
terms of the OTS scheme in its entirety.
2. The liability of the petitioner arose under an overdraft facility
granted by the 3rd respondent. When default occurred, securitisation
proceedings were initiated against the petitioner. Subsequently, a
scheme for OTS was offered to the petitioner, referred as 'the SBI
OTS 2020' as per Ext.P2 dated 20-10-2020.
3. Under the scheme for one time settlement offered to the
W.P.(C) No.19672/21
petitioner, Rs.1,07,81,341/- (for short, 'OTS amount') was fixed as the
total amount of settlement payable. The scheme envisaged payment
of the amounts in four tranches. The first tranche of payment was 5%
of the OTS amount to be paid for processing the application. The
second instalment was a payment of 10% of the OTS amount, which
was liable to be deposited within 30 days from the date of sanction of
the OTS. A further 10% was liable to be deposited within 60 days
from the date of sanction and the balance was to be paid within eight
months from the date of sanction of the one time settlement scheme.
4. Petitioner paid the first three tranches under the OTS and a
further portion under the last instalment. However, petitioner could
not pay the last instalment by 30-07-2021, in its entirety and hence
she lost the benefit under the OTS scheme. When notices were
issued for the sale of the property, this writ petition was preferred
seeking a direction to permit the petitioner to pay the balance amount
due under the OTS scheme offered to the petitioner along with
interest due for the balance amount. Representations submitted
before the bank to the above effect are also sought to be disposed of
in a time-bound manner.
5. A counter affidavit was filed by the second respondent
W.P.(C) No.19672/21
referring to the past conduct of the petitioner and the defaults
committed by her in repayment of the overdraft facility. It was pointed
out that the bank had accepted the proposal for one-time settlement
for the OTS amount and that petitioner had paid only an amount of
Rs.41,81,000/- in place of Rs.1,07,81,341/-. Since, petitioner had
failed to pay the balance amount under the OTS, proceedings under
the Securitisation Act were continued and a sale notice dated
16.08.2021 was issued, scheduling the property for sale on
24.09.2021. It was further pleaded that, petitioner had approached
the bank by offering another settlement proposal in between Rs.1.75
crores and Rs.2 crores, which the bank was willing to consider.
However, in the meantime, the writ petition was filed.
6. In the reply affidavit, petitioner narrated the details of
amounts paid by her and stated that the last payment under the OTS
scheme was made on 30.03.2021 and that thereafter, due to the
lockdown declared in the State of Kerala from 08.05.2021 to
08.07.2021, all means of livelihood of the petitioner were curtailed
and there was no way to continue any business or earn any income.
Petitioner further averred that, as per the OTS scheme, the last date
for payment was 30.07.2021, as evident from Ext.P4, but within the
W.P.(C) No.19672/21
said period due to the lockdown imposed, petitioner lost the entire
two months and even though the respondent bank had granted
facilities to other persons similarly situated, by extending the period
for payment, petitioner was not given such benefits. Petitioner also
stated that the delayed amount could be paid with reasonable
interest so that the respondent bank will not be put to any prejudice.
7. I have heard Sri.R.Gopan, learned counsel for the petitioner
as well as Sri.Jawahar Jose, learned Standing Counsel for the
respondents.
8. Courts cannot vary the terms of an agreement especially in
the exercise of jurisdiction under Article 226 of the Constitution of
India. The terms of one-time settlement scheme cannot also be
interfered with or varied to the advantage or disadvantage of any
person by resorting to the powers under Article 226 of the
Constitution of India. A Division Bench of this Court in Asokan Vasu
v. State Bank of India (2020 SCC OnLine Ker. 4282) had observed
that "A loan is granted in terms of the contract, and grant of one time
settlement or re-scheduling of the loan amount is really a
modification of the contract, which can only be done by mutual
consent of the parties, vide Section 62 of the Contract Act, 1872.
W.P.(C) No.19672/21
The court cannot alter the terms of the contract."
9. In the aforestated decision, it was further observed that the
Court has no power to extend the terms of a one-time settlement and
that there must be judicial restraint to be observed by the court while
considering writ petitions under Article 226 of the Constitution of India
seeking extension of terms of one time settlement schemes.
10. While bearing in mind the aforesaid principles, this Court
cannot be oblivious of the circumstances that are peculiar to some of
the cases. The Supreme Court had in the decision in Vijayakumari
v. Indian Bank (AIR 2018 SC 759), observed that in exceptional
circumstances, the terms of settlement scheme can be extended
without causing prejudice to the respondents by compelling payment
of interest for the delayed payment. In the aforesaid decision the
Supreme Court observed as follows:
"8...............................There was undoubtedly some delay in
payment of the amount due as per the terms of the settlement
reached in the Lok Adalat. It was also agreed by and
between the parties that if the terms of payment including the
time schedule of payment is not adhered to, the respondent -
Bank will be at liberty to recover the entire amount due. The
DRAT in the impugned order had considered the matter and
had taken the view that even on the face of the express terms
W.P.(C) No.19672/21
between the parties that the bank would have a right to
recover the full amount due in the event of default on the part
of the appellants, the same was not the only course of action
or the sole option and that on the grounds shown for the
delay the same is liable to be understood in favour of the
borrower. Accordingly, the matter was closed. In the writ
petition filed by the Bank the position was reversed.
9. In the facts of the present case, the view taken by
the learned Appellate Tribunal (DRAT), as noted above,
cannot be said to be so wholly unreasonable or unsustainable
so as to justify interference by the High Court. If the agreed
amount stood paid though with some delay, condonation of
the delay is a possible course of action, if the grounds for
delay justified a departure from what was also agreed upon,
i.e., the right of a Bank to recover the entire dues. All would
depend on the facts of each case. Having regard to the totality
of the facts of the present case, we are of the view that the
ends of justice would be met if for the delay that had occurred,
the appellants are made liable to pay simple interest @ 24%
p.a. on the amount of Rs. 34.5 lakhs (as agreed to in the Lok
Adalat) for the period from the date of the Award of Lok
Adalat, i.e., 10.09.2004 to the date of last payment, i.e.,
29.10.2006. In addition, a further amount of Rs. 10 lakhs to be
paid by the appellants to the respondent - Bank as
compensation and costs."
11. In view of the above decision of the Supreme Court, which
decision was not brought to the notice of this Court in Asokan
W.P.(C) No.19672/21
Vasu's case (supra), it can be held that under certain exceptional
circumstances, a departure from the normal rule that the terms of
settlement cannot be varied by Court under Article 226, is possible.
The departure can be directed based upon the facts peculiar to each
case and exceptional circumstances available, on a consideration of
the entirety of the case.
12. It is evident from Ext.P2, that the OTS amount ought to
have been paid in four instalments, within a period of eight months
from the date of sanction of the OTS. In Ext.P4, there is an
observation that the OTS scheme was sanctioned to the petitioner on
30.11.2020 for an amount of Rs.1,07,61,341/-. The application for
settlement was processed on a deposit of Rs.5,40,000/-, which was
paid by the petitioner on 19.11.2020. Thereafter on 31.12.2020 an
amount of Rs.10,71,000/- was paid, which formed the second
instalment of the 10% of the OTS amount. Again, by 01.02.2021, a
further amount of Rs.10,70,000/- was paid, being the third instalment
of 10% of the OTS amount. The balance amount ought to have been
paid by the petitioner latest by 30.07.2021 as per the sanction letter.
However, instead of paying the balance amount within the stipulated
period, the petitioner could pay Rs.10,00,000/- on 29.03.2021 and
W.P.(C) No.19672/21
another Rs.5,00,000/- on 30.03.2021. Thus, a balance amount of
Rs.65,80,341/- was due from the petitioner under the OTS scheme
as on 30.07.2021.
13. While the economy of the State was recovering, though in
a snail's pace, from the initial restrictions and lockdown imposed in
the year 2020, the lockdown imposed in the year 2021 impacted the
economic recovery of the State drastically. There is no dispute that
the State of Kerala had declared complete lockdown from 05.05.2021
to 05.07.2021, which period of two months fell within the time of eight
months granted to the petitioner to clear the terms of OTS scheme.
Since the period of lockdown fell within the period of OTS scheme, it
is essential in the interest of justice that the petitioner is granted the
benefit of condonation of delay to repay the amount under the terms
of the OTS scheme. In Asokan Vasu's case (supra), the original
period of OTS expired by 23-03-2020, which was before the
lockdown was imposed, while in the instant case, the imposition of
lockdown happened during the period of OTS.
14. To compel a person to raise revenue during the period of
complete lockdown is akin to compelling a person to do an
impossibility. The reason for the grant of eight months' period from
W.P.(C) No.19672/21
the date of sanction of OTS scheme was to give an opportunity to the
petitioner to raise the amount due under the scheme. Since the
lockdown fell within that period, the benefit that was actually granted
to the petitioner could not be availed of by her to its full extent.
Therefore, this Court is of the opinion that the case of the petitioner
falls within the exceptional circumstances wherein acceptance of one
time settlement scheme can be enforced by permitting the
respondent bank to accept interest for the delayed period.
15. The decision relied upon by the respondents in Tamilnadu
Industrial Investment Corporation v. Millennium Business
Solutions Private Limited (2004 SCC OnLine Mad.840) had not
considered the impact of an unprecedented situation like lockdown
imposed on account of Covid-19 pandemic falling within the period of
one time settlement scheme. The decision in Asokan Vasu v. State
Bank of India (2020 SCC OnLine Ker.4282) though related to a
period during Covid restrictions, the impact of the complete lockdown
imposed on account of Covid-19 pandemic falling within the period of
OTS scheme were not considered. Further, the decision of the
Supreme Court in Vijayakumari v. Indian Bank (AIR 2018 SC 759),
was also not brought to the notice of this Court. The exceptional
W.P.(C) No.19672/21
circumstances that arise in the instant case compel a different
approach to be adopted. Therefore those decisions may not have a
strict application to the facts of the present case.
16. Further, in Anu Bhalla and Another v. District
Magistrate, Pathankot and Another (AIR 2021 Punjab And
Haryana 1), a Division Bench of the Punjab & Haryana High Court
held, after referring to various decisions that, a deserving borrower,
who had deposited substantial amounts within the originally
stipulated period of settlement proved his bonafides and if he is
willing to clear the remaining in a reasonable period and compensate
the Bank for the delay, it should be considered with some leniency to
attain the aim of such settlement. The following observations in the
aforecited decision is relevant. "Further, it is also to be noticed, that
invariably in all the settlement schemes or the policies, there are already
sufficient checks and balances to identify eligible borrowers to whom such
concessions can be extended to lead to an OTS. It is needless to mention
that settlement takes place, only after the case of the borrower has been
tested on the basis of criteria of eligibility for settlement provided under the
scheme or policy itself. For example, we see, that cases of wilful default
and fraud are normally excluded. Once the borrower is found to be eligible
W.P.(C) No.19672/21
and the settlement takes place, it is important to keep in mind, that during
the period of settlement, minor differences inter alia extension to pay the
remaining settled amount in deserving cases, are creased out, equities
are balanced in terms of the policy itself by the bank officials so that the
settlement achieves its final goal, aimed at the betterment of both the
parties. An amicable settlement is drawn up to achieve a win-win situation
for both the creditor and debtor. The former is able to recover the
amounts, in a more simplified manner and then use the same in its
commercial cycle to pump in more liquidity and resultant revenues. On the
other hand, the latter is able to settle a long dispute so as to focus its
attention to a more productive field, rather than being involved in a
litigative sphere. In such a situation, a deserving borrower, who has
deposited substantial amounts within the original stipulated period of
settlement, proved his bona fides and is willing to clear the remaining in a
reasonable period, and compensate the creditor with interest for the
period of delay, should be considered with some flexibility to achieve the
ultimate aim of such settlements. It is with this perspective, that
extensions can be considered to be granted to deserving cases."
17. The above observations apply in all its vigour to the instant
case. In fact in the counter affidavit, the respondents have admitted
that they are still not averse to granting another OTS scheme but for
W.P.(C) No.19672/21
a higher amount. The said averment indicates that the petitioner is
eligible for the benefit of yet another settlement scheme. The fact that
petitioner had paid three out of the four instalments and even a
portion of the fourth instalment under the scheme, cannot be ignored.
Coupled with the above payment, the imposition of complete
lockdown in the State for two months, within the period stipulated for
the payment of the last instalment under the OTS scheme, also
cannot be lost sight of.
18. The conduct of the petitioner till 31.03.2021 clearly evinced
a genuine intention to repay the amount. The first and second
instalments were paid on time. When the petitioner had time till
31.07.2021 to pay the last instalment, she paid a portion of the said
amount as early as on 30.03.2021. The pandemic situation in Kerala
started escalating towards the end of April and by 05.05.2021, the
State went into a lockdown. For the next two months, the State was
in complete lockdown and the business started to recover several
weeks after the lockdown restrictions were lifted. The unprecedented
restrictions during lockdown bring to the fore a situation that cannot
be guided or decided based upon precedents that have not taken
into reckoning situations of a like nature. As mentioned earlier, the
W.P.(C) No.19672/21
pleading in the counter affidavit that respondents are still willing to
consider a fresh settlement offer between Rs.1.75 crores and Rs.2
crores, is also indicative of the willingness of the respondents to
settle the liability of the petitioner through another one time
settlement scheme. In the above circumstances, this Court is of the
opinion that this case needs to be considered differently from other
cases. The peculiar situations arising in the instant case needs to be
considered in a special manner.
19. The deliberations as above, persuade this Court to permit
the petitioner to repay the balance amount due under the one-time
settlement scheme, sanctioned on 30.11.2021, within a limited
extended period. However, bearing in mind the judicial restraint
directed to be observed by this Court in Asokan Vasu's case (supra)
regarding extension of time in the matter of one time settlements, I
am of the opinion, that the representations filed by the petitioner as
Ext.P6 and Ext.P7 ought to be disposed of by the respondents on the
basis of the observations contained in this judgment and grant the
petitioner a limited extension of time, after fixing the interest payable
on the balance amount due from the petitioner from 30.07.2021 till
the date of payment and the period within which the balance amount
W.P.(C) No.19672/21
under the OTS Scheme with the interest so fixed should be paid by
the petitioner.
20. Accordingly, there will be a direction to the second
respondent to dispose of Ext.P6 and Ext.P7 representations filed by
the petitioner in the light of the observations contained in this
judgment and grant a limited extension of time for repayment of the
balance amount under the sanctioned OTS Scheme after imposing a
reasonable percentage of interest on the balance amount due from
the petitioner from 30.07.2021 till date of payment and also the
period within which the said payment must be made by the petitioner.
21. The decision as directed above shall be taken within a
period of 10 days from the date of receipt of a copy of this Judgment
after granting an opportunity of being heard to the petitioner. If the
amount fixed as directed above is not paid within the time stipulated,
the benefit of this judgment shall not enure to the petitioner.
The writ petition is allowed as above.
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
W.P.(C) No.19672/21
APPENDIX OF WP(C) 19672/2021
PETITIONER'S/S' EXHIBITS
EXHIBIT P1 PHOTOCOPY OF THE JUDGMENT DATED
30.1.2018 IN W.P.(C)NO.286/2018 OF THIS
HONOURABLE COURT
EXHIBIT P2 PHOTOCOPY OF THE SCHEME OF ONE TIME
SETTLEMENT SANCTIONED TO THE PETITIONER
DATED 20.10.2020
EXHIBIT P3 PHOTOCOPY OF THE STATEMENT OF ACCOUNT OF
THE PETITIONER'S LOAN ACCOUNT ISSUED BY
THE RESPONDET BANK DATED 31.8.2021
EXHIBIT P4 PHOTOCOPY OF THE LETTER DATED 3.8.2021
ISSUED BY THE 2ND RESPONDENT TO THE
PETITIONER
EXHIBIT P5 PHOTOCOPY OF THE SALE NOTICE ISSUED BY
THE 2ND RESPONDENT DATED 16.8.2021 TO
THE PETITIONER
EXHIBIT P6 PHOTOCOPY OF THE REPRESENTATION DATED
18.9.2021 SUBMITTED BY THE PETITIONER
BEFORE THE 1ST RESPONDENT
EXHIBIT P7 PHOTOCOPY OF THE REPRESENTATION DATED
18.9.2021 SUBMITTED BY THE PETITIONER
BEFORE THE 2ND RESPONDENT.
EXHIBIT P8 TRUE COPY OF REPRESENTATION SUBMITTED BY
THE PETITIONER BEFORE THE CUSTOMER
GRIEVANCE CELL, STATE BANK OF INDIA,
LOCAL HEAD OFFICE, POOJAPPURA
EXHIBIT P9 TRUE COPY OF REQUEST SENT BY THE SBI TO
THE PETITIONER DATED 27.9.2021
EXHIBIT P10 TRUE COPY OF JUDGMENT DATED 22.9.2020 IN
CIVIL WRIT PETITION NO-5518/2020 DATED
OF THE PUNJAB AND HARYANA HIGH COURT
EXHIBIT P11 PHOTO COPY OF REPRESENTATION DATED
23.9.2021 SUBMITTED BY THE PETITIONER
BEFORE THE 2ND RESPONDENT
