IN THE HIGH COURT OF JUDICATURE AT PATNA
CWJC No.13296 of 2011
1. Shafique Ahmad son of Md. Safir Ahmad,
Resident of Abgilla, P.O. Buniyadganj, P.S. Mufassil, Town and
District-Gaya.
Proprietor of M/s Royal Shoe a Proprietorship firm having its place
of business at Abgilla, P.O. Buniyadganj, P.S. Mufassil, Town and
District-Gaya.
2. Nahid Nasreen wife of Shafique Ahmad,
Resident of Abgilla, P.O. Buniyadganj, P.S. Mufassil, Town and
District-Gaya.
.......Petitioners.
Versus
1. The State Bank of India, a Banking Company constituted under the
State Bank of India Act, 1955 having its Corporate Office at State
Bank Bhawan, Madame Cama Road, Mumbai-400021 through its
Chairman-cum-Managing.
2. The Branch Manager, State Bank of India, Manpur, Gaya.
3. The Authorised Officer, State Bank of India, Manpur, Gaya.
.......Respondents.
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For the petitioners : Mr. Gautam Kejriwal, Advocate.
For the respondents : Mr. Kaushalendra Kumar Sinha, Advocate.
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ORDER
04/ _14.11.2011 1. This writ petition has been filed by the petitioners for the
following reliefs:-
(i) For issuance of a writ in the nature of mandamus
directing the respondents to accept the proposal of
petitioner no.1 for settlement of Cash Credit Loan
Account of its business firm namely M/s New Royal
Shoe, Gaya in terms of the SBI OTS SME, 2010
scheme (hereinafter referred to as the „OTS Scheme‟)
which proposal is lying pending with the respondents
since long without any response;(ii) For issuance of a writ in the nature of mandamus
directing the respondents to allow the petitioner to
liquidate the dues of aforesaid account in terms of the
aforesaid OTS Scheme which is itself perfectly
applicable in the case and the proposal in connection
whereof along with 10% of the upfront/pre-deposit has
-2-already been submitted with the respondents well
within the prescribed time and manner as provided
under the OTS Scheme;(iii) For issuance of a writ in the nature of mandamus
directing the respondents not to take any action of
coercive recovery of the outstanding dues relating to
the Cash Credit Loan Account of petitioner no.1 under
the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002
(hereinafter referred to as the „SARFAESI ACT‟ ) in
view of the petitioner‟s case being fully covered by
the aforesaid OTS Scheme and also that the petitioner
having already applied with the requirements thereof
with bonafide intention of liquidating the dues of
respondent;(iv) For grant of any other relief(s) to which the petitioner is
found entitled to in the facts and circumstances of the
present case.2. Learned counsel for the petitioners stated that petitioner
no.1 is the proprietor of the business firm namely M/s New Royal Shoe
dealing in retail trade of foot wears, whereas petitioner no.2 is the
guarantor of the cash credit loan account of petitioner no.1 which was
granted by the respondent-Bank in the year 2004 and which was availed
by petitioner no.1 to the tune of Rs.7,00,000/- against securities, including
equitable mortgage of residential house of petitioner no.2.
3. It was also stated by learned counsel for the petitioners
that in the year 2005 petitioner no.1, who was the principal man to handle
the affairs of the firm, fell seriously ill and in the year 2006 met with a
severe accident which forced him to stay bed ridden for more than six
months due to which the entire trade activity of the firm came to stand
still and finally petitioner no.1 lost his business completely, but till the
year 2006 petitioner no.1 somehow managed to make payments to the
respondent-Bank in different spells against his aforesaid loan account,
-3-but thereafter he lost his capacity to make any further payment and
intimated the Bank about his adversities and requested to set out a
convenient method for petitioner no.1 to discharge his liability against the
aforesaid cash credit loan account, but the respondent-Bank never
entertained the request of petitioner no.1.
4. It was also claimed by learned counsel for the petitioners
that in the year 2010 petitioner no.1 received an undated letter (Annexure-
2) from the Bank intimating him about the One Time Settlement Scheme,
2010 circulated by the Bank vide letter dated 05.03.2010 (Annexure-1)
fixing 31.05.2010 as the last date for filing application and 30.06.2010 as
the last date for final payment. However, by subsequent letter/circular the
last date for receipt of application and for processing application was
extended and the petitioner filed his application with his proposal for One
Time Settlement Scheme within the extended time, i.e. 10.06.2010
(Annexure-3) along with 10% earnest money as required in the Bank
letter.
5. Learned counsel for the petitioners also submitted that the
proposal sent by petitioner no.1 was neither processed by the authorities
as required under the Scheme nor any communication regarding
acceptance or rejection of petitioner‟s proposal was sent by the authorities
of the Bank, although steps to be taken by the sanctioning authority in
that regard had been specifically provided in paragraph-3 of the OTS
Scheme, 2010 which was offered by the Bank to petitioner no.1. The said
steps are as follows:-
“3.1. As the Scheme is non-discretionary and non-
discriminatory, in all cases where the proposal is
strictly in accordance with the guidelines of SBI OTS –-4-
SME, 2010, the concerned Branch Managers/ Head of
Processing Cells like SARC, SMECCC, etc. can
themselves sanction the OTS in respect of branches
linked to them, without going through the Screening
Committee process.
3.2. In all such cases, it should be clearly mentioned in the
proposal itself that the compromise amount has been
arrived at strictly as per SBI OTS-SME, 2010. The
proposals should be made available for scrutiny by the
Inspecting Officials, if required.
3.3. In the event of the loan having been sanctioned by the
official, now in position to sanction the OTS, the
decision on the compromise settlement in such cases
should be taken by the next higher authority.
3.4. All compromises sanctioned under the proposed OTS
Scheme will be required to be promptly reported for
control to the controlling authority who shall scrutinize
such reports immediately. The control returns would
need to be submitted account-wise.”
6. Learned counsel for the petitioners also claimed that in
spite of the aforesaid facts, petitioner no.1 did all what was required by
him and even deposited Rs.1,00,000.00 in the said account on 31.03.2011
(Annexure-5). However, petitioner no.1 was surprised to receive a letter
dated 15.07.2011 (Annexure-6) from the Bank asking petitioner no.1 to
settle the matter in the Lok Adalat on payment of Rs.10,06,780.41. The
details of the account given in the said letter are as follows:-
Total Rs. 8, 12, 101.41
Already paid by
petitioner no.1 Rs.1, 80, 000.00
Balance Rs.6, 32,101.41
Interest Rs.2, 99,732.00
Recovery Agent Rs.0, 63,000.00
Auction fee Rs.0, 11, 947.00
Total Rs.10, 06,780.41
-5-
7. Learned counsel for the petitioners stated that in response
to the said letter of the Bank, petitioner no.1 sent his reply dated
17.07.2011 (Annexure-7) stating that his offer for One Time Settlement
Scheme having been accepted by the Bank, there was no occasion for
such a demand although the fault was totally of the Bank which neither
processed the application of petitioner no.1 nor sent any intimation to him
in that regard. However, he specifically stated that if the Bank was ready
to give a rebate of 15% to the actual amount he was ready to immediately
pay Rs.5, 10, 286.00 for settlement of his loan account. However, when
the said letter of petitioner no.1 remained unheeded and un-replied he
filed the instant writ petition in this Court on 12.08.2011.
8. Learned counsel for the petitioners argued that petitioner
no.1 was throughout ready and willing to abide by the terms and
conditions of the OTS Scheme, 2010 for which he had made his proposal
within the extended time prescribed along with 10% of the loan amount,
but it was the fault of authorities of the Bank who did not make any
response nor even processed his application as required under the
Scheme, hence, the respondent-Bank was not justified in raising the claim
as made by the authorities vide letter dated 15.07.2011. In this regard, he
relied upon a decision of this Court dated 07.07.2011 passed in CWJC
no.6079 of 2011 in which the respondent-State Bank of India was also a
party represented by its counsel.
9. On the other hand, learned counsel for the respondents-
Bank vehemently opposed the contentions of learned counsel for the
petitioners and submitted that the proposal of petitioner no.1 dated
-6-
10.06.2010 (Annexure-3) submitted along with earnest money of
Rs.80,000.00 was accepted by the authority of the Bank on the same date
as would be clear from the entry on the left side of the letter itself, hence
there was no need for any other intimation as petitioner no.1 very well
knew about the said acceptance and deposited Rs.1,00,000.00 on
31.03.2011 and the same was admitted by petitioner no.1 in his letter
dated 17.07.2011 (Annexure-7).
10. Learned counsel for the respondents also submitted that
petitioner no.1 did not pay the remaining amount as per the OTS Scheme,
but inspite of the said fact a second opportunity was given to petitioner
no.1 by the Bank vide letter dated 15.07.2011 (Annexure-6) after
deducting Rs.1,80,000.00 which had already been deposited by petitioner
no.1, hence the concessions demanded by petitioner no.1 vide his letter
dated 17.07.2011 after expiry of the period of OTS Scheme of 2010 on
31.03.2011 cannot be legally granted to him. Hence, he submitted that no
relief as claimed by the petitioners in this writ petition can be granted to
them.
11. After hearing learned counsel for the parties and after
perusing the materials on record it is quite apparent that the letter
(Annexure-2) sent by the Bank to petitioner no.1 with respect to OTS
Scheme, 2010 dated 05.03.2010 (Annexure-1) was an invitation for offer
and within the prescribed time petitioner no.1 sent his offer/proposal
along with requisite money within time. Hence, the authorities of the
respondent-Bank were duty bound to inform the petitioners about the
acceptance of the offer and amount so settled by the Bank, but although a
-7-
period of more than eight months lapsed and even the date fixed in the
Scheme and the letter of the Bank expired, no such information was
sent/given by the respondents-authorities of the Bank to petitioner no.1.
12. So far noting on the left side of petitioner‟s letter dated
10.06.2010 (Annexure-3) is concerned, it is quite apparent that after
receiving the said letter the receiving authority had signed after writing
the words “Accept OTS, 2010 letter”. This clearly shows that the word
“Accept” used in the said sentence was only with respect to the letter of
petitioner no.1 and it cannot be legally assumed to be acceptance of the
offer made in the said letter, especially when for accepting an offer the
sanctioning authority had to process the application and follow certain
steps as prescribed in the Scheme and only thereafter the offer had to be
accepted. Admittedly, no such steps had been taken by the authorities of
the respondent-Bank nor any intimation with respect thereto had been
sent by the authorities of the Bank to petitioner no.1 although they were
legally required to do so.
13. Neither the respondent bank or its authorities had made
any statement nor had produced any material before this court to show
that petitioner‟s proposal had ever been processed by them or that they
had ever sent any intimation to petitioner no.1 with respect thereto within
the period prescribed in the Scheme in question, namely OTS Scheme
2010 of the Bank. Hence, the authorities of the respondent-Bank cannot
be legally allowed to take benefit of their own wrong nor they can be
allowed to squeeze out the blood of the loanee, although they are entitled
only to a pound of flesh as required in the Scheme which petitioner no.1
-8-
is ready to pay.
14. In the aforesaid facts and circumstances, this writ
petition is allowed and the authorities of the respondent-Bank are
directed to accept the petitioners‟ proposal for settlement of the cash
credit loan account in the respondent-Bank in terms of OTS Scheme,
2010 after processing the proposal/offer of the petitioners within two
months from the date of receipt/production of a copy of this order and
fixing the settled amount as per the OTS Scheme, 2010 deeming it to
continue for the purposes of this case and inform the petitioners about the
same within the said period directing/allowing him to pay the amount so
settled within six months thereafter.
15. Since the claim of the petitioners and the respondent-
Bank is fully under the OTS Scheme, 2010, which is extended for the
purposes of this case, the authorities of the respondent-Bank shall not take
any coercive action for recovery of the outstanding dues relating to the
cash credit loan account under the provisions of the Act till the date of
payment by the petitioners which is going to be fixed by the authorities of
the respondent-Bank in the light of the aforesaid directions.
(S. N. Hussain, J.)
Sunil