Supreme Court: In an appeal arising out from the orders of the Madras High Court rejecting the appellant’s request to avail the benefit of an expired One Time Settlement (OTS) scheme and for release of the title deeds of her residential property mortgaged with the respondent Bank, a Division Bench of Surya Kant, CJI. and Joymalya Bagchi, J., granted equitable relief under Article 142 of the Constitution and permitted the appellant widow to settle the loan by payment of ₹33 lakhs and directing release of the mortgaged property upon compliance.
In the instant matter, the appellant’s husband was the proprietor of a concern known as FILSA Leathers and had availed credit facilities to the tune of ₹50 lakhs from the respondent Bank. A residential house measuring 3240 sq. ft. was mortgaged as security.
The appellant’s husband “unfortunately, passed away on 25-05-2021 in the second wave of the COVID-19 pandemic.” Till his death, he had been paying the due instalments and “the account was regular.”
After his death, the account was classified as NPA and proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) were initiated. The Bank offered a OTS of ₹34,69,000/- against outstanding dues of ₹71,00,000/- as on January 2024.
The appellant deposited the upfront amount of 10% i.e., ₹3,46,900/-, but could not pay the balance within the stipulated time. She later requested that she be granted the benefit of the first OTS offer. The Bank allegedly demanded an additional amount of ₹9 lakhs and thereafter issued a possession notice under Section 13(4) of the SARFAESI Act.
Aggrieved, the appellant approached the Madras High Court. The writ petition was dismissed by orders dated 10.09.2024 and 28.10.2024. These orders were challenged before the Supreme Court.
The appellant contended that she was deprived of the benefit of the first OTS “for no fault on her part” and that her liability should not exceed ₹31,22,000/-. She pleaded lack of resources and hardship caused due to the death of her husband. However, the Bank maintained that its demand was legally sustainable and that the appellant had failed to comply with the terms of the OTS within the stipulated period.
The Court noted that the case was marked by “unusual and unfortunate circumstances” and observed that the death of the appellant’s husband during the COVID-19 pandemic led to serious financial distress and the subsequent classification of the account as NPA.
While acknowledging that “the demand raised by the Bank is legally sustainable,” the Court observed that strict enforcement would “lead to extreme hardship for the appellant.”
Invoking its powers under Article 142 of the Constitution, the Court held that “the ends of justice would be adequately met” if the appellant was permitted to settle the account by depositing a slightly enhanced amount over the original OTS figure.
The Court directed that —
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The appellant shall deposit a sum of ₹33,00,000/-, over and above the upfront amount of ₹3,46,900/- already paid.
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The amount shall be deposited within eight weeks, upon which further interest shall remain frozen.
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On such deposit, the Bank shall issue a no-dues certificate and release the original title deeds.
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In case of default, “the law will take its own course.”
The Court clarified that the present order was passed “in the peculiar facts and circumstances of this case” and “shall not be construed as a precedent to be relied upon against the respondent Bank.”
[Sumaiya Parveen v. Central Bank of India, Civil Appeal arising out of SLP (C) Nos. 29289—29290 of 2024, Decided on 16-01-2026]