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Judgment
Ramesh Ranganathan, CJ
Heard Mr. Shikhar Kacker, learned counsel for the appellant and Mr. Ashish Joshi, learned counsel for the respondent-Bank and, with their
consent, the Special Appeal is disposed of at the stage of admission.
This appeal is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No.415 of 2020 dated 19.02.2020.
The appellant herein filed the said Writ Petition seeking a writ to quash the letter of the respondent-Bank dated 09.12.2019, pursuant to which the
respondent-Bank had rendered the compromise, entered into between the parties under the OTS (one time settlement) scheme, infructuous on the
ground that payment was made one day beyond the date on which the appellant-writ petitioner was required to deposit the second installment; a writ
of mandamus directing the respondent-Bank to accept the subsequent installments from the appellant-writ petitioner as per the terms of the OTS
scheme and, thereafter, release the original title deed of the mortgaged immovable property of the appellant-writ petitioner, upon payment of the entire
dues under the OTS scheme; and for a writ to quash the notice published by the respondent-Bank on 24.01.2020 scheduling e-auction, of the
immovable property of the appellant-writ petitioner, on 26.02.2020.
Facts, to the limited extent necessary, are that the appellant-writ petitioner availed an overdraft facility of Rs.60.00 lakhs, and a term loan of
Rs.40.00 lakhs, aggregating to Rs.1.00 crore from the respondent-Bank in February, 2015. These facilities were secured by the mortgage of the
appellant-writ petitioner’s immovable property at Haridwar. Both the appellant-writ petitioner and her husband stood as guarantors to the said
loan. These facilities were declared as non-performing assets by the respondent-Bank on 17.10.2016, and a notice under Section 13(2) of the
SARFAESI Act was issued on 25.10.2016 demanding a sum of Rs.1,01,42,139/-. The respondent-Bank, thereafter, took symbolic possession of the
immovable property of the appellant-writ petitioner pursuant to its possession notice dated 19.05.2017, and scheduled the e-auction of the said property
by way of newspaper publication dated 26.05.2017. The appellant-writ petitioner claims that the e-auction failed to receive any successful bid.
Physical possession of the immovable property was taken on 02.08.2017, and the property is said to be in the physical possession of the respondent-
Bank to the exclusion of the appellant-writ petitioner.
The appellant-writ petitioner invoked the jurisdiction of the Debt Recovery Tribunal by way of Securitization Application No.69 of 2017, and the
said application was disposed of by the Tribunal, by its order dated 29.08.2019, directing the respondent-Bank not to take coercive action against the
appellant-writ petitioner till 17.11.2019, as the appellant-writ petitioner had already deposited Rs.25.00 lakhs with the respondent-Bank, along with an
undertaking to repay the remaining dues by 17.11.2019.
While matters stood thus, the respondent-Bank came out with an OTS scheme which was offered to the appellant-writ petitioner on 27.09.2019.
The appellant-writ petitioner’s request for the OTS scheme was accepted vide proceedings dated 30.09.2019. A copy of the scheme was sent to
the appellant-writ petitioner by speed post on 04.10.2019, which the appellant-writ petitioner received on 07.10.2019. In terms of the said letter dated
30.09.2019, the appellant-writ petitioner was offered an OTS facility on payment of Rs.43,99,313/-. The schedule for repayment was 5%/15% of the
OTS amount within thirty days from the date of sanction of OTS, 20%/25% within sixty days from the date of sanction of the OTS, and the balance
amount, together with interest @one year MCLR on reducing balance basis effective from the date of the letter ie 30.09.2019 on or before
31.03.2020.
In terms of the OTS, the appellant-writ petitioner deposited Rs.2.00 lakhs on 30.10.2019 which was accepted by the respondent-Bank. The
appellant-writ petitioner was required to make payment of Rs.6,60,000/- towards the second installment of 20%. The appellant-writ petitioner, instead
of Rs.6,60,000/-, deposited a higher amount of Rs.8,80,000/-, with the respondent-Bank, on 30.11.2019.
While matters stood thus, the appellant-writ petitioner received letter dated 09.12.2019, from the respondent-Bank, cancelling the OTS facility
granted to the appellant-writ petitioner earlier, on the ground that there was one day’s delay on the part of the appellant-writ petitioner in
depositing the second installment payment under the OTS scheme. Aggrieve thereby, the appellant-writ petitioner invoked the jurisdiction of this Court.
In the order under appeal, the learned Single Judge found substance in the submission of the learned counsel for the petitioner that the action taken
by the respondent-Bank was too harsh, more so in the light of the fact that sanction of the OTS was communicated to the appellant-writ petitioner,
after a delay of seven days, on 07.10.2019. Without making any observations on merits, the learned Single Judge opined that ends of justice would be
met if the appellant-writ petitioner was permitted to make a representation on or before 26.06.2020, which should be considered by the respondent-
Bank on its merits. The Writ Petition was disposed of granting liberty to the appellant-writ petitioner to make a representation to the competent
authority in the Bank on or before 26.02.2020, along with an upfront payment of Rs.10.00 lakhs. The learned Single Judge observed that, if such a
representation is made, the Competent Authority in the Bank shall look into the matter and take an appropriate decision, in accordance with law, within
three weeks from the date of receipt of such a representation.
Mr. Shikhar Kacker, learned counsel for the appellant-writ petitioner, would submit that, as against the second installment of Rs.6,60,000/-, the
appellant-writ petitioner had paid Rs.8,80,000/- on 30.11.2019; the respondent-Bank had taken a hyper-technical stand that a sum of Rs.6,60,000/-
ought to have been paid by 29.11.2019; on the ground that the payment was made a day thereafter on 30.11.2019, they had cancelled the entire OTS
scheme entered into between the parties; even if time is held to be the essence of the contract, failure to adhere to the prescribed time limit would, at
best, render the contract voidable; the respondent-Bank, having received a sum of Rs.8,80,000/- on 30.11.2019, must be held to have waived its right
to terminate the contract merely for the delay of one day in making payment; the appellant-writ petitioner is ready and willing to make payment of the
balance OTS amount by 06.03.2020, as against the prescribed last date, for payment of the OTS amount, by 30.03.2020; and this Court may consider
setting-aside the order impugned in the Writ Petition, and direct the respondent-Bank to adhere to the sanctioned OTS scheme.
On the other hand Mr. Ashish Joshi, learned counsel for the respondent-Bank, would submit that the OTS sanction letter clearly specifies that the
first installment of 5% should be paid within thirty days from the date of sanction, and the second installment within sixty days from the date of
sanction; in terms of the sanction letter dated 30.09.2019, the first installment was required to be paid thirty days thereafter ie by 30.10.2019; the
appellant-writ petitioner had made payment on 30.11.2019, and this showed that he was aware of the time schedule prescribed in the sanction letter;
the second installment was liable to be paid by 29.11.2019, and the Bank was justified in revoking its offer of OTS for the failure on the part of the
appellant-writ petitioner to strictly adhere to the time schedule stipulated in the sanction letter.
The OTS scheme communicated to the appellant-writ petitioner, vide letter dated 30.09.2019, specifies that 5%/15% of the OTS amount will have
to be deposited as initial money within thirty days from the date of sanction of OTS, failing which the OTS sanction will be rendered infructuous.
While this sanction letter was, no doubt, communicated to the appellant-writ petitioner on 07.10.2019, the conditions stipulated in the letter dated
30.09.2019 is not for payment to be made within thirty days/sixty days from the date of receipt of the letter but from the date of sanction of the OTS
itself. Consequently, while the first installment of 5% was required to be paid by 30.10.2019, the second installment was required to be paid thirty days
thereafter by 29.11.2019 (October having 31 days). The appellant-writ petitioner has, admittedly, made payment one day thereafter on 30.11.2019.
While a strict construction of the proceedings dated 30.09.2019 may justify the respondent-Bank holding that the OTS sanction was rendered
infructuous for a delay of one day in making payment of the second installment, the fact also remains that, as against the second installment of
Rs.6,60,000/-, the appellant-writ petitioner had deposited a higher amount of Rs.8,80,000/- on 30.11.2019.
We find considerable force in the submission of Mr. Shikhar Kacker, learned counsel for the appellant-writ petitioner, that the action of the
respondent-Bank, in terminating the OTS scheme, does appear unduly harsh.
We see no reason, however, to examine the submissions urged by Mr. Shikhar Kacker, learned counsel, regarding the consequences of the failure
on the part of the appellant-writ petitioner to adhere to the time stipulated in the OTS sanction letter dated 30.09.2019, or to examine whether failure to
adhere to the stipulated time limit, even if time is held to be the essence of the contract, would only render the contract voidable, as also the question
whether the respondent-Bank had waived its right to terminate the OTS scheme having received Rs.8,80,000/- deposited by the appellant-writ
petitioner on 30.11.2019, for these are all matters for which evidence may be required to be led. The appropriate forum for adjudication of such
disputes is, ordinarily, the Civil Court of competent jurisdiction.
We are satisfied, however, that the learned Single Judge was justified in directing the respondent-Bank to re-consider the matter on condition that
the appellant-writ petitioner deposits a sum of Rs.10.00 lakhs within one week. Since the time limit specified for making payment of Rs.10.00 lakhs
would expire tomorrow ie 26.02.2020, we extend the period for making payment of Rs.10.00 lakhs till 28.02.2020.
In case such payment of Rs.10.00 lakhs is made by 28.02.2020, the appellant-writ petitioner submits a representation to the respondent-Bank by
then to make payment of the balance amount due under the OTS scheme by 06.03.2020, and makes such payment by that date, the respondent-Bank
shall consider whether, in the light of the facts and circumstances mentioned hereinabove, the delay of one day in making payment of the second
installment should be condoned, more so as the appellant-writ petitioner had, as against the second installment due of Rs.6,60,000/-, made payment of
Rs.8,80,000/- the very next day ie on 30.11.2019. Since the auction is scheduled to be held tomorrow ie 26.02.2020, suffice it to observe that, while the
auction proceedings may go on, the bid of the highest bidder shall not be accepted till an order is passed on the appellant-writ petitioner’s
representation, and in terms of the directions issued hereinabove.
Needless to state that, in case the appellant-writ petitioner fails to make payment of Rs.10.00 lakhs by 28.02.2020 and to make payment of the
balance OTS amount by 06.03.2020, it would be open to the respondent-Bank to accept the highest bid received in the auction, and take action
thereafter in accordance with law.
The order under appeal shall not disable the respondent-Bank, even if, they are not inclined to extend the benefit of the OTS scheme referred to in
the proceedings dated 30.09.2019, to offer an alternative schedule for payment of the loan amount to the appellant-writ petitioner.
The Special Appeal is, accordingly, disposed of. No costs.
Mr. Ashish Joshi, learned counsel for the respondent-Bank, is present in Court and undertakes to communicate the directions issued in this order to
the respondent-Bank today itself, since the auction is scheduled to be held tomorrow ie on 26.02.2020.
Let a certified copy of this order be furnished to the learned counsel for the parties, by 26.02.2020, on payment of the prescribed charges.