By Indu Bhan
Copyright indiatimes
A defaulting borrower cannot claim the benefit of one-time settlement (OTS) scheme without satisfying all the conditions laid by banks, including the requirement of an up-front payment, the Supreme Court held in a significant ruling. While setting aside an Andhra Pradesh High Court 2022 judgement that directed the State Bank of India to reconsider Tanya Energy Enterprises proposal for OTS, a bench led by Justice Dipankar Datta said that its earlier orders had settled the law that no court can direct a secured creditor (bank) to positively grant the OTS benefit to a defaulting borrower as this is always subject to the eligibility criteria being fulfilled. The apex court said that that a defaulting borrower not being covered by the SBI’s clause 2.1 of the 2020 OTS scheme, which laid down cases as “not eligible,” does not necessarily lead to the conclusion that it was automatically entitled to have the loan account settled on the basis of the 2020 scheme. “Crossing the hurdle of eligibility per se would not entitle a defaulting borrower to claim consideration of his/its application unless the application itself satisfies the other stipulated conditions,” the judgment stated. In this case, Tanya Energy had availed credit facilities from SBI by mortgaging seven immovable properties. Since the company had defaulted in its obligation to repay, it applied for the bank’s 2020 OTS scheme. However, the firm faltered in not adhering to the express terms of the scheme by not depositing 5% of the outstanding dues as up-front payment, thereby rendering its application disentitled to be processed even, far less deserving a favourable consideration, the court said. Live EventsAllowing SBI’s appeal, the bench said that Tanya Energy, which faced demand notice of Rs seven crore and proceedings under SARFAESI Act, disabled itself to have a fair and objective consideration for OTS due to its conduct. However, the apex court permitted the bank to proceed in accordance with law for enforcement of the security interest. It granted the defaulting company an opportunity to submit a fresh proposal for OTS but not under the OTS 2020 Scheme. “If the terms and conditions put forth by the respondent (Tanya) are found reasonable, workable and acceptable, SBI may take such a decision on it as deemed fit and proper in the circumstances,” the court added. The court also asked SBI to ascertain and fix responsibility as to how Tanya’s application could be processed when it did not comply with the terms of the OTS 2020 Scheme. Add as a Reliable and Trusted News Source Add Now!
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Read More News ondefaulting borrowerOTS benefitSupreme Courtbank’s conditions2020 OTS schemeState Bank of IndiaTanya Energy EnterprisesSARFAESI Actotsapex court
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(You can now subscribe to our Economic Times WhatsApp channel)Read More News ondefaulting borrowerOTS benefitSupreme Courtbank’s conditions2020 OTS schemeState Bank of IndiaTanya Energy EnterprisesSARFAESI Actotsapex court(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless
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