High Court of KeralaSingle Judge2021-11-10Writ petition disposed of with directions as st...

Naziya Farook and others v. State Bank of India and its Branch Manager, Ponkunnam Branch, and Assistant General Manager, Stressed Asset Recovery Branch, SBI

Case / Petition Number:WP(C) No.21316/21

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Bechu Kurian Thomas
Judgment Date: 2021-11-10
Court Decision / Holding: The writ petition is allowed in part. The Court directs SBI to treat the last instalment paid by the petitioners as sufficient compliance with the terms of Ext. P4 OTS Scheme and to issue a certificate discharging the petitioners’ liability. If the cheque for Rs.46,01,077/- had been encashed, it shall be returned within 10 days from the copy of the judgment; if it had not been encashed, it should be returned to the respondents forthwith.
Final Disposition: Writ petition disposed of with directions as stated above: SBI to treat the last instalment as compliance with Ext. P4 and issue a discharge certificate; return of cheque as appropriate.

Parties to the Case

Appellants / Petitioners

Naziya Farook
Shalu V.A
Shyla T.M

Respondents

The State Bank of India, State Bank Bhavan, Mumbai (represented by its Chairman)
Branch Manager, State Bank of India, Ponkunnam Branch, Ponkunnam
Assistant General Manager, Stressed Asset Recovery Branch, State Bank of India

Legal Representation & Advocates

Counsels for Petitioners

• Sri. Surin George Ipe
• Sri. Adithya Rajeev

Counsels for Respondents

• Adv. Jithesh Menon, SC

Case Synopsis & Summary

This writ petition under Article 226 of the Constitution of India challenges the State Bank of India’s handling of a one-time settlement (OTS) offer made in 2020 for two loan facilities – a term loan and a cash credit facility – defaulted by the petitioners. SBI had extended an OTS on 27.11.2020 requiring payment of Rs. 1,03,23,400.69 in four instalments by 31.07.2021. The petitioners paid a substantial portion by the deadline (Rs. 60,85,000) and, in a belated instalment, Rs. 42,40,000 on 27.08.2021, with interest for the delay paid as well. The bank accepted the delayed final payment and later returned the balance via a bankers cheque on 14.09.2021, while still offering settlement. Petitioners argued that the nationwide lockdown from 01.05.2021 to 31.07.2021 essential compelled business closure, justifying the delay and compelling reconsideration of the scheme’s terms, and pointed to Supreme Court guidance permitting extension of limitation in exceptional circumstances. The respondents contended the instalment was late beyond the scheme’s expiry and that the bank was not bound to reopen the settled amount. The Kerala High Court held that, given the extraordinary context and the bank’s acceptance of late payment with interest, the OTS scheme must be applied in light of the totality of facts, citing In Re Cognizance for Extension of Limitation and P. Vijayakumari. It directed SBI to treat the last instalment as compliance and to issue a discharge certificate, with cheque return directions if encashed.

Legal Doctrines & Maxims

Condonation of delay is a possible course of action if grounds justify departure from what was agreed (P. Vijayakumari and Another v. Indian Bank)
Non-discretionary nondiscriminatory nature of OTS 2020 scheme must be considered with the totality of facts
Extension of limitation may be invoked in extraordinary circumstances (In Re Cognizance for Extension of Limitation)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued that the SBI’s OTS 2020 was a non-discretionary, non-discriminatory scheme intended to settle genuine defaults. They had partially performed by paying substantial instalments and settled the interest on a delayed final payment. The nationwide lockdown severely impacted their ability to operate and generate funds, justifying the delayed last instalment. Given SBI’s acceptance of the late payment and the extraordinary public-interest context, the petitioners urged the Court to treat the last instalment as substantial compliance with Ext. P4 and to compel the bank to issue a discharge certificate and not to penalize them for delays caused by circumstances beyond their control.

Contentions of Respondents

The bank contended that the final instalment was paid after the stipulated deadline, even though it accepted the late payment along with interest. It argued that the schemeExpiration and the lack of discretionary flexibility justified treating the late amount as non-compliant. The bank emphasized adherence to the terms of the OTS scheme and argued that reopening or waiving terms would undermine the scheme’s integrity and the bank’s recovery interest.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
In Re Cognizance for Extension of Limitation v. (2021 (5) KHC 508)	2021 (5) KHC 508	Positive	The judgment relies on the Supreme Court’s extension of limitation principles in extraordinary circumstances, supporting leniency in applying deadlines.
P. Vijayakumari and Another v. Indian Bank Represented by its Chief Manager	(2018) 14 SCC 735	Positive	The Supreme Court observed that condonation of delay is possible when grounds justify departure from an agreed upon date, supporting equitable considerations in loan settlements.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **WEDNESDAY, THE 10[TH] DAY OF NOVEMBER 2021/19TH KARTHIKA, 1943** # **WP(C) NO. 21316 OF 2021** ## **PETITIONERS:** **1 NAZIYA FAROOK AGED 33 YEARS, W/O. SHALU V.A, PROPRIETORIX, M/S. VAZHEMADTHIL JEWELLERS, MOHANA SHOPPING COMPLEX, PONKUNNAM, KOTTAYAM DISTRICT - 686509. 2 SHALU V.A S/O. ABDUL KADAR, VAZHEMADTHIL HOUSE, MARIYATHURUTHY P.O, KOTTAYAM DISTRICT - 686027. 3 SHYLA T.M W/O. ABDUL KADAR, AGED 67 YEARS VAZHEMADTHIL HOUSE, MARIYATHURUTHY P.O, KOTTAYAM DISTRICT - 686027.** **BY ADVS. SRI.SURIN GEORGE IPE SRI.ADITHYA RAJEEV** ## **RESPONDENTS:** **1 THE STATE BANK OF INDIA STATE BANK BHAVAN, MADAME CAMA MARG, MUMBAI PIN - 400021. REPRESENTED BY ITS CHAIRMAN** - **2 BRANCH MANAGER, STATE BANK OF INDIA, PONKUNNAM BRANCH, PONKUNNAM,** W.P.(C) No.21316/21 ## **-:2:-** **KOTTAYAM DISTRICT, PIN - 686519.** **3 ASSISTANT GENERAL MANAGER, STRESSED ASSET RECOVERY BRANCH, STATE BANK OF INDIA, 32/1747, K1, 7TH FLOOR, VANKARATH TOWERS, PALARIVATTOM, ERNAKULAM DISTRICT,PIN- 682024.** **BY ADV.SRI.JITHESH MENON, SC** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.21316/21 ## **-:3:-** ## **BECHU KURIAN THOMAS, J.** **----------------------------------------W.P.(C) No.21316 of 2021 ----------------------------------------** Dated this the 10[th] day of November, 2021 ## **JUDGMENT** Petitioners had two liabilities with the 2[nd] respondent; the first arising out of a term loan and the other arising from a cash credit facility. When default in repayment occurred, petitioners were offered a one time settlement scheme in tune with SBI OTS 2020. As per the scheme offered to the petitioners, they had to pay a total amount of Rs.1,03,23,400.69 towards one time settlement in four instalments. As per the terms of the scheme granted to the petitioners on 27.11.2020, they had to pay the entire amount by 31.07.2021. 2. By the date stipulated, petitioners could pay only an amount of Rs.60,85,000/- and the last instalment of Rs.42,40,000/- was paid only on 27.08.2021. The delayed instalment payment was accepted by the bank and interest for the delay was also demanded. The interest for the delayed last instalment, as demanded by the W.P.(C) No.21316/21 ## **-:4:-** respondents, was also paid by the petitioners on 31.08.2021. 3. After accepting the balance instalment and interest, respondents had a rethinking. Realising that the period stipulated in the scheme had expired, bank returned the amount by issuing a bankers cheque on 14.09.2021. Even while returning the last instalment and interest, bank offered the option of settlement to the petitioners in its letter dated 14.09.2021. 4. Though respondents returned the entire last instalment and its interest to the petitioners, the cheque remaining unencashed, contends the learned counsel for the petitioners. The learned counsel further contended that the total lockdown imposed by the State from 01.05.2021 to 31.07.2021 compelled the petitioners to close down their business resulting in the delay of 27 days in repayment of the last instalment. Adv.Adithya Rajeev also contended that petitioners had to pledge gold ornaments and indulge in other personal borrowings to raise the amount for the last instalment and that in this moment of despair, it will be unreasonable to deny the settlement scheme to the petitioners. 5. I have heard Adv.Adithya Rajeev, learned counsel for the petitioners and Adv.Jithesh Menon, learned Standing Counsel for the W.P.(C) No.21316/21 **-:5:-** respondents. 6. Petitioners had paid substantial portion of the amount due under the OTS Scheme as per the terms stipulated. The last instalment was paid with a delay of 27 days and that payment was accepted without any demur. Interest was demanded for the delayed payment and that was also paid immediately by the petitioners. The aforesaid facts require this case to be treated differently. 7. Though the OTS SBI 2020 is a non-discretionary nondiscriminatory scheme, the totality of the facts have to be reckoned, while considering each case. In this context, the extension of limitation by the Supreme Court in the decision in **In Re : Cognizance for Extension of Limitation v. (2021 (5) KHC 508)** cannot be ignored. Unprecedented circumstances prevailed in the nation which warranted a novel approach by the Supreme Court. 8. Petitioners had pleaded that from 01.05.2021 till 31.07.2021, the business had to be shut down. The said closure was obviously under compulsion from the State on account of public interest. The closure of business cannot be lightly brushed aside as it was in public interest and not due to any private interest. This Court cannot be oblivious of the fact that the above referred closure ## W.P.(C) No.21316/21 ## **-:6:-** fell during the period when petitioners had to pay the last instalment. 9. In this context, the decision of the Supreme Court in **P.Vijayakumari and Another v. Indian Bank Represented by its Chief Manager** [(2018) 14 SCC 735] assumes significance. In the aforesaid decision it was observed by the Supreme Court that “if the agreed amount stood paid though with some delay, condonation of the delay is a possible course of action, if the grounds for delay justified a departure from what was also agreed upon, i.e., the right of a Bank to recover the entire dues. All would depend on the facts of each case.” 10. Taking into reckoning the acceptance of the last instalment by the respondent bank even after expiry of the time limit stipulated in Ext.P4 and even demanded interest thereon for the delay, I am of the view that facts of this case warrants the respondent bank to be compelled to abide by the terms of the one time settlement scheme offered to the petitioners, even though the last instalment was paid belatedly. 11. Accordingly, there will be a direction to the respondent bank to treat the last instalment paid by the petitioners as sufficient compliance of the terms of Ext.P4 OTS Scheme and issue a W.P.(C) No.21316/21 ## **-:7:-** certificate discharging the liability of the petitioners. If the petitioners had encashed the cheque of Rs.46,01,077/- the same shall be returned within 10 days from the date of receipt of a copy of this judgment. If the cheque had not been encashed the cheque shall be returned to the respondents forthwith. The writ petition is disposed of as above. Sd/- **BECHU KURIAN THOMAS JUDGE** vps W.P.(C) No.21316/21 ## **-:8:-** ## **APPENDIX OF WP(C) 21316/2021** ## **PETITIONER'S/S' EXHIBITS** **EXHIBIT P1 A TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT DATED 14.12.2018.** - **EXHIBIT P2 A TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT DATED 15.07.2019 IN WP(C) NO. 18444 OF 2019.** **EXHIBIT P3 A TRUE COPY OF THE LETTER DATED 22.10.2020 ISSUED TO THE 1ST PETITIONER.** - **EXHIBIT P4 A TRUE COPY OF OTS SANCTION LETTER DATED 27.11.2020 ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P5 A TRUE COPY OF THE SCREENSHOT OF THE WHATSAPP COMMUNICATION BETWEEN THE 3RD RESPONDENT AND THE 2ND PETITIONER ALONG WITH THE CERTIFICATE UNDER SECTION 65B OF THE INDIAN EVIDENCE ACT.** - **EXHIBIT P6 A TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE 1ST PETITIONER BEFORE THE 3RD RESPONDENT.** - **EXHIBIT P7 A TRUE COPY OF THE LETTER DATED 14.09.2021 ISSUED BY THE 3RD RESPONDENT TO THE 1ST PETITIONER.** **EXHIBIT P8 A TRUE COPY OF G.O(RT) NO. 459/2021/DMD DATED 07.06.2021.** **EXHIBIT P9 A TRUE COPY OF G.O(RT) NO. 467/2021/DMD DATED 15.06.2021.** - **EXHIBIT P10 A TRUE COPY OF THE JUDGMENT DATED 22.09.2020 IN ANU BHALLA AND ANOTHER V.DISTRICT MAGISTRATE, PATHANKOT AND ANOTHER (CIVIL WRIT PETITION NO. 5518 OF 2020 (O & M)OF THE HON'BLE HIGH COURT OF PUNJAB & HARYANA.**