Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: The Division Bench of Rajan Gupta and Karamjit Singh, JJ., allowed the petition seeking writ of mandamus against the impugned order of District Magistrate whereby the Magistrate refused to restrain the respondent from taking physical possession of the mortgaged property of the petitioner on breach of the terms and conditions of the One Time Settlement (“OTS”).

In the instant petition, the petitioner was a partnership firm which availed a loan of Rs 1.55 crore from the respondent Bank. The petitioner defaulted in repaying the same and it was declared as Non-Performing Asset (NPA) by the Bank on 06-10-2018. The proceedings under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“the Act”), were initiated against it. The Bank also filed an application before the District Magistrate to take possession of the secured assets.

Subsequently, the petitioner effected OTS dated 31-05-2019 with the Bank, as per which, he was to pay Rs 1.29 crore by 30-11-2019. Pursuant to the said settlement, the petitioner deposited an amount of Rs 51,00,000. For the payment of the remaining amount, the petitioner was banking upon the assurance given by his son, Vikas Goel and his brother-in-law, Prem Nath Garg, who were running separate business of Commission Agent Firm. Prem Nath Garg handed over the keys to his Accountant. In the absence of both the partners, the said accountant had stolen the cheques and other important documents lying in the locker. Due to aforesaid unforeseen circumstances, the petitioner was unable to deposit the balance amount of Rs 78 lakhs as per OTS. Consequently, the petitioner made a request to the Magistrate for extension of time to make the payment of balance amount. However, the Magistrate rejected the said request.

It is contended by counsel for the petitioner, Aalok Jagga that the petitioner was ready to make payment of the balance amount within next six months alongwith reasonable interest for the period of delay. It was further argued that, the petitioner being a deserving borrower who is willing to clear his loan account should be given one opportunity to do so, by extending the time.

The Bank contended that the petitioner paid an amount of Rs 51 lakhs upto 31-10-2019 but failed to pay the balance amount of Rs 78 lakhs as per OTS. It was prayed by the Bank that the writ petition be dismissed.

The Court observed that in the present case, the amount paid was just 40% of the settled amount and reasons put forth by the petitioner for failure to pay the balance amount, were not plausible. The Court relied on Union Bank of India v. Anil Kumar Wadhera, 2017 SCC OnLine All 2942, where it was held that, no separate orders are required to be passed in the matter of the OTS having become defunct for non-compliance of its conditions by the borrowers and the logical consequence in case of breach of the terms and conditions of the OTS is that the Bank becomes free to recover the money outstanding in accordance with law irrespective of the OTS.

In light of the above, the Court observed that the petitioner itself affected OTS and agreed to pay the entire amount within a period of six months. The petitioner had failed to convince this Court that he failed to pay the balance amount within the stipulated period due to the reasons beyond his control and to show his bonafide intent to make the payment of balance amount. Therefore, it was held that no ground is made out for this Court to interfere in this case. Accordingly, the instant petition was dismissed, being devoid of merits. However, the Court stated that the petitioner is at liberty to avail the appropriate remedy available to under the law and to approach the Bank under the new OTS scheme. [Milkhi Ram Bhagwan Dass v. District Magistrate, 2020 SCC OnLine P&H 2293, decided on 23-12-2020]

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Delhi High Court: Sanjeev Sachdeva, J. addressed the urgent matter with regard to a direction being sought to Yes Bank regarding not taking any coercive steps against petitioner.

Yes Bank Limited had through emails informed the petitioner that his account will be declared as non-performing asset, due to non-payment of installments for the months of January and February, 2020.

Advocates for the petitioner, Saket Sikri and Nikhil Singhvi, contended that in view of the RBI Circular dated 27-03-2020, respondent cannot declare the account of petitioner as a non-performing asset and any action in that regards needs to be deferred till 01-06-2020.

Advocate for the respondent Ashwani Chawla submitted that,

Moratorium is applicable only with regard to instalments which fell due after 01-03-2020 and are not applicable in respect of the instalments that had fallen due as on 01-03-2020

Further the advocate has asked time to file response for the same.

Thus Court while providing time for response has listed the matter for 03-04-2020. [Anant Raj Ltd. v. Yes Bank Ltd., 2020 SCC OnLine Del 493 , decided on 01-04-2020]

Case BriefsHigh Courts

Madhya Pradesh High Court: This petition was filed before a 2-Judge Bench comprising of S.C. Sharma and Virender Singh, JJ., against a judgment passed in appeal by the Debts Recovery Appellate Tribunal, Allahabad.

Facts of the case were that petitioner took a loan and after non-payment of interest, the account was declared to be a non-performing asset. The details referred established that there was an outstanding balance continuously in excess of the sanctioned limit or drawing limit from the month of December, 2008 to February, 2009. Thus, petitioner’s property was kept in possession of Bank symbolically under Section 13(4) of the SARFAESI Act, 2002. Court was of the opinion that the account of the petitioner was rightly declared as NPA. While going through the process of auction, Court found no illegality on part of the Bank while recovering the dues from the mortgaged property.

High Court referred the case of Central Bank of India v. C.L. Vimla, 2016(1) MPLJ 101 and in light of the same, found no reason to interfere with the auction process conducted by the Bank, therefore, this writ petition was dismissed. [Mayunk Industries v. Union Bank of India, 2019 SCC OnLine MP 9, dated 03-01-2019]