The Supreme Court has said a borrower cannot claim further extension of time as a matter of right for making payment under the one-time settlement (OTS) scheme.
The apex court said the borrower has to establish any right in its favour to claim the extension as a matter of right.
A bench of Justices M R Shah and Krishna Murari quashed the Punjab and Haryana High Court judgement delivered in March, which had granted further six weeks to a borrower, a company, to make the payment of balance amount with interest to the State Bank of India according to the sanctioned letter of OTS.
The top court observed that rescheduling the payment under the OTS scheme and granting extension of time would tantamount to “rewriting the contract”, which is not permissible while exercising the powers under Article 226 of the Constitution.
The modification of the contract can be done only by mutual consent under section 62 of the Indian Contract Act, it said.
Article 226 of the Constitution deals with the power of high courts to issue certain writs.
“The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS scheme, still it be granted further extension as a matter of right. There cannot be any negative discrimination claimed,” the bench said.
The top court delivered its verdict on an appeal filed by the SBI against the high court judgement.
It noted that the bank had sanctioned a cash credit in favour of the borrower.
Later, the bank came out with OTS scheme in September 2017 which specifically provided for making payment as settled under the scheme within six months from the date of sanction, else infructuous.
The apex court noted that the bank sent OTS offer to the borrower, who accepted it.
It said under the sanctioned OTS, the borrower was required to deposit 25 per cent of the amount by December 21, 2017, and the balance amount with interest was to be deposited within six months from the date of the letter.
The borrower requested extension of eight to nine months for repayment of balance amount of Rs 2.52 crore, which the bank declined and directed it to make the payment by May 21, 2018.
The borrower then approached the high court seeking eight to nine months to pay the outstanding amount beyond May 21, 2018.
In its verdict, the apex court noted that the bank had floated other OTS schemes and offered to the borrower to settle the account but the company did not opt for them.
It said the question which arises for consideration of the top court is whether in the facts and circumstances of the case, the high court was justified in extending the period to make the payment of balance amount under the sanctioned OTS scheme while exercising powers under Article 226.
The bench said in the sanctioned letter dated November 21, 2017, it was specifically provided that the entire payment was to be made by May 21, 2018.
“It is an admitted position that the borrower did not make the payment due and payable under the sanctioned OTS scheme on or before the date mentioned in the sanctioned letter,” it said.
While allowing the appeal, the bench said the judgement passed by the high court granting further time to the borrower to make balance payment under the OTS scheme in exercise of powers under Article 226, was “unsustainable and the same deserves to be quashed and set aside and is accordingly quashed and set aside”.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)