High Court of KeralaSingle Judge2024-03-04Writ petition dismissed

UMA SANKAR alias ARUN KUMAR v. THE AUTHORIZED OFFICER, STATE BANK OF INDIA

Case / Petition Number:WP(C) No.44053/2023

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2024-03-04
Court Decision / Holding: Writ petition dismissed; the High Court held that it cannot vary the terms of the One Time Settlement and relied on State Bank of India v. Arvindra Electronics Private Limited to reject the petition.
Final Disposition: Writ petition dismissed

Parties to the Case

Appellants / Petitioners

UMA SANKAR alias ARUN KUMAR

Respondents

THE AUTHORIZED OFFICER STATE BANK OF INDIA, STRESSED ASSETS RECOVERY BRANCH, LMS COMPOUND, OPP: MUSEUM WEST GATE VIKAS BHAVAN P.O., THIRUVANANTHAPURAM, PIN – 689672

Legal Representation & Advocates

Counsels for Petitioners

• Adv VISHAK K. JOHNSON

Counsels for Respondents

• Adv JAWAHAR JOSE

Case Synopsis & Summary

The petitioner, Uma Sankar alias Arun Kumar, availed a loan from the State Bank of India and defaulted. The bank issued a Section 13(2) notice under SARFAESI and filed proceedings to take possession, leading to the appointment of an Advocate Commissioner. Amid ongoing proceedings, the petitioner proposed a compromise settlement (Ext.P1) amounting to ₹75 lakhs, which the bank accepted. Ext.P1 required an upfront ₹11.25 lakhs, 10% of the settlement on approval, and the balance ₹56.25 lakhs within six months from approval. The petitioner paid around ₹72 lakhs, but the bank later cancelled the OTS by Ext.P2, contending non-compliance with the agreed terms and deadlines (the OTS deadline being January 2020). The petitioner argued there was no wilful default and offered to pay the remaining ₹3 lakhs plus interest to complete the OTS, seeking to treat the settlement as executed and to close the account. The respondent bank resisted, asserting that the terms of Ext.R1(a) were categorical about upfront payment and timing, and that the OTS could not be modified by court. Relying on Supreme Court precedents such as State Bank of India v Arvindra Electronics, the High Court dismissed the petition, holding that a High Court cannot vary OTS terms. The court observed that substantial compliance does not entitle relief where the agreement’s terms are clear and time-bound. The petition is dismissed.

Provisions of Law Cited

SARFAESI Act, 2002 - Section 13(2)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that there was no wilful default and that the OTS under Ext.P1 should be treated as executed since ₹72 lakhs were already paid and only ₹3 lakhs plus interest remained. He argues that if the bank accepts the ₹3 lakhs and interest, the balance could be settled and the account closed; he seeks extension of the OTS terms and non‑enforcement of possession actions, alleging the bank unilaterally cancelled the compromise despite substantial compliance.

Contentions of Respondents

The bank relies on Ext.R1(a), which set the OTS terms (₹11.25 lakhs upfront; 10% on approval; ₹56.25 lakhs within six months). It submits that the OTS deadline expired in January 2020 and argues that payments after the deadline cannot fulfill the terms; the petition should be dismissed as the bank cannot be compelled to modify the OTS terms by Court and the OTS is not a matter of right.

Cited Precedents (6)

Case Name	Citation	Treatment	Explanation
P. Vijayakumari and others v. Indian Bank	(2018) 14 SCC 735	Mentioned Only	Cited by petitioner, but the judgment’s outcome was not adopted; the court did not apply Vijayakumari’s reasoning to extend the OTS.
K.P. Umasankar v. The Punjab National Bank	(W.P.(C) No. 4909/2020)	Mentioned Only	Referenced as having a similar view, but not controlling for the present decision.
State Bank of India v. Arvindra Electronics Private Limited	(2023) 1 SCC 540	Positive	Held that High Courts cannot vary terms of an OTS; this principle governs the present dismissal.
Bijnor Urban Co-operative Bank Limited, Bijnor and others v. Meenal Agarwal and others	(2023) 2 SCC 805	Positive	Cited by respondents to support non-variation of OTS terms.
Bindu Vijayakumar v. Regional Manager, SBI, Kollam and others	(2022) 1 K LT 659	Positive	Cited to reinforce the stance against altering OTS terms.
Muhammed Kutty T. v. State Bank of India	(2024 SCC Online Ker 615)	Mentioned Only	Cited by respondents, but the court ultimately aligns with Arvindra, not Kutty T.

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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 N.NAGARESH** **MONDAY, THE 4[TH] DAY OF MARCH 2024 / 14TH PHALGUNA, 1945** **WP(C) NO. 44053 OF 2023** **PETITIONER:** **UMA SANKAR ALIAS ARUN KUMAR AGED 56 YEARS S/O. BALAKRISHNAN NAIR, GOVINDAMANGALATHU HOUSE, VALAMUCHUZHY, PATHANAMTHITTA P.O., PATHANAMTHITTA, PIN – 689645** **BY ADV VISHAK.K.JOHNSON** **RESPONDENT:** **THE AUTHORISED OFFICER STATE BANK OF INDIA, STRESSED ASSETS RECOVERY BRANCH, LMS COMPOUND, OPP: MUSEUM WEST GATE VIKAS BHAVAN P.O., THIRUVANANANTHAPURAM, PIN – 689672** ## **BY ADV JAWAHAR JOSE** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.44053/2023 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.44053 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 4[th] day of March, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner, who has availed a loan from the State Bank of India, is challenging Ext.P2 communication cancelling a compromise settlement and seeking to direct the respondent to extend OTS Scheme allowed to the petitioner as per Ext.P1. 2. The petitioner availed a loan from the State Bank of India. The petitioner could not repay the loan promptly. The Bank therefore issued Section 13(2) notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereafter, the Bank filed MC No.41/2019 in the Chief Judicial Magistrate's Court, Pathanamthitta seeking aid to take over physical W.P.(C) No.44053/2023 : 3 : possession of the secured asset. The Court appointed an Advocate Commissioner. The Advocate Commissioner issued a notice dated 30.03.2019 to the petitioner. 3. The petitioner in the meanwhile approached the Bank with an offer for compromise settlement. The respondent-Bank accepted the compromise proposal and the loan accounts were agreed to be settled for a total amount of ₹75 lakhs as per Ext.P1. 4. As per Ext.P1, the petitioner has to pay the remaining amount of ₹63.75 lakhs at the earliest. The petitioner states that Ext.P1 did not provide a specific date to close the accounts. The petitioner made part payments towards the compromise settlement. 5. To the surprise of the petitioner, the respondent issued Ext.P2 letter intimating the petitioner that the petitioner had not made full payments towards compromise settlement. Ext.P2 stated that the compromise settlement of ₹75 lakhs stands cancelled. Now, the Advocate Commissioner has issued Ext.P4 notice proposing to take W.P.(C) No.44053/2023 : 4 : over physical possession of the secured asset. 6. The petitioner states that there is no wilful default on the part of the petitioner in complying with the OTS proposal. The benefit of settlement therefore cannot be unilaterally denied. Out of total ₹75 lakhs payable under the settlement, the petitioner has paid ₹72 lakhs. The petitioner is ready and willing to clear off the balance amount of ₹3 lakhs. Therefore, if the Bank accepts ₹3 lakhs from the petitioner along with permissible interest, the compromise settlement should be treated as executed. The petitioner is entitled to get the account closed under the settlement already entered into. 7. The respondent opposed the writ petition. The respondent stated that as per Ext.R1(a) compromise offer, out of ₹75 lakhs, an amount of ₹11.25 lakhs was to be paid as upfront amount. The petitioner should thereafter pay ₹7.5 lakhs being 10% of the compromise amount on approval and the entire balance amount of ₹56.25 lakhs within six months from the date of approval. W.P.(C) No.44053/2023 : 5 : 8. The respondent submitted that the petitioner paid a total amount of ₹54.75 lakhs between 30.09.2019 and 29.07.2021. As on 22.10.2023, the petitioner is obliged to pay ₹1,21,04,625/-. The petitioner cannot seek the One Time Settlement as matter of right, urged the respondent. 9. Relying on the judgment of the Hon’ble Apex Court in _**P. Vijayakumari and others v. Indian Bank** [(2018) 14 SCC 735]_ , the counsel for the petitioner argued that when the terms of a One Time Settlement are substantially complied with and a small part of the amount is remaining to be paid, the borrowers can be permitted to pay the balance amount payable under the One Time Settlement along with interest so as to treat the OTS conditions as satisfied. This Court has also taken a similar view in K.P. Umasankar v. The Punjab National Bank (W.P.(C) No.4909/2020). 10. The Standing Counsel representing the respondent, on the other hand, relied on the judgment of this Court in _**Muhammed Kutty T. v. State Bank of India** [2024 SCC Online Ker 615]_ to contend that this Court in exercise of W.P.(C) No.44053/2023 : 6 : the powers under Article 226 of the Constitution of India cannot vary the terms of a One Time Settlement. The Standing Counsel also relied on the judgment of the Apex Court in _**Bijnor Urban Co-operative Bank Limited, Bijnor and others v. Meenal Agarwal and others** [(2023) 2 SCC 805]_ and a judgment of this Court in _**Bindu Vijayakumar v. Regional Manager, SBI, Kollam and others** [2022 (1) KLT 659]._ 11. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the respondent. 12. Ext.R1(a) is the compromise proposal accepted by the Bank. The settlement amount as indicated in Ext.R1(a) is ₹75 lakhs. Ext.R1(a) would indicate that the petitioner has to pay ₹11.25 lakhs as upfront payment. 10% of the settlement amount has to be paid on approval. ₹56.25 lakhs has to be paid within six months from the date of approval. 13. The respondent would submit that the petitioner has not paid ₹11.25 lakhs as upfront payment within the W.P.(C) No.44053/2023 : 7 : stipulated time. The OTS deadline was in the month of January, 2020. The petitioner paid only ₹7.5 lakhs by that time. It may be true that the petitioner has paid ₹72 lakhs altogether after the OTS settlement. But, such payments are made far beyond the period stipulated in Ext.R1(a). 14. The Hon’ble Apex Court has held in the judgment in _**State Bank of India v. Arvindra Electronics Private Limited** [(2023) 1 SCC 540]_ that the High Court in exercise of the powers under Article 226 of the Constitution of India cannot vary the terms of a One Time Settlement agreement. In the circumstances of the case, no relief can be granted to the petitioner. The writ petition is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/01.03.2024 W.P.(C) No.44053/2023 : 8 : ## **APPENDIX OF WP(C) 44053/2023** ## **PETITIONER'S EXHIBITS** **Exhibit P1 TRUE COPY OF COMPROMISE SETTLEMENT LETTER ISSUED BY THE RESPONDENT BANK TO THE PETITIONER HEREIN DATED 05/10/2019** **Exhibit P 2 TRUE COPY OF LETTER ISSUED BY THE RESPONDENT BANK TO THE PETITIONER HEREIN DATED 05/01/2023** **Exhibit P3 TRUE COPY OF LETTER ISSUED BY THE KERALA STATE LEGAL SERVICE AUTHORITY TO THE PETITIONER HEREIN AND OTHER BORROWERS** **Exhibit P4 TRUE COPY OF THE NOTICE ISSUED BY THE ADVOCATE COMMISSIONER TO THE PETITIONER HEREIN DATED 06/12/2023** **RESPONDENT'S EXHIBITS** **Exhibit-R(1)(a) True copy of the compromise offer letter dated 9-7-2019 executed by the petitioner to the bank.**