Borrower has no enforceable right to reopen an NPA sale or compel one-time settlement absent illegality, mala fides, or arbitrariness.

RBI guidelines governing sale of non-performing assets were treated as binding on banks, but a borrower had no enforceable right to prior notice, to participate as a purchaser, or to demand a one-time settlement. The debt remained the lender's recovery asset, and one-time settlement was a matter of commercial discretion rather than a legal entitlement. Acceptance of the highest bid in such a sale was also treated as a commercial decision not open to judicial substitution unless vitiated by illegality, mala fides or arbitrariness. A later higher offer by the borrower did not create any vested right to reopen the process. The challenge to the bank's sale therefore failed.

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Issues: (i) whether the bank was bound to give prior notice to the borrower before selling the non-performing asset under the RBI guidelines and whether the borrower could claim a right to be considered for purchase of the asset or for one-time settlement; (ii) whether the court could interfere in the bank's commercial decision to accept the highest bid and insist upon acceptance of a later higher offer by the borrower.

Issue (i): whether the bank was bound to give prior notice to the borrower before selling the non-performing asset under the RBI guidelines and whether the borrower could claim a right to be considered for purchase of the asset or for one-time settlement

Analysis: The RBI guidelines governing sale of non-performing assets were treated as binding on the bank under the statutory banking regime. The borrower could not claim any entitlement to prior notice for a transaction relating to the bank's own debt asset, nor could it insist on being allowed to participate as a purchaser when the guidelines confined such sales to banks, financial institutions and NBFCs. The claim that the asset belonged to the borrower was rejected because the debt remained an asset of the lender for recovery purposes. A one-time settlement was also held to be a matter of commercial discretion and not an enforceable right.

Conclusion: The borrower had no enforceable right to prior notice, participation in the sale, or insistence on a one-time settlement; the bank's action was lawful.

Issue (ii): whether the court could interfere in the bank's commercial decision to accept the highest bid and insist upon acceptance of a later higher offer by the borrower

Analysis: The acceptance of a bid for recovery of dues was treated as a commercial decision not amenable to substitution by judicial opinion unless tainted by illegality, mala fides or arbitrariness. The later higher offer made by the borrower did not create any vested right to compel the bank to reopen the process or enter into a fresh settlement. In contractual and commercial matters, writ jurisdiction was held to be inappropriate for enforcing a settlement or rescheduling of debt in the absence of any legal violation.

Conclusion: The court would not interfere with the auction outcome or compel acceptance of the borrower's later offer; the challenge failed.

Final Conclusion: The appeal was held to be without merit and the dismissal of the writ petition was affirmed, leaving the bank's sale of the non-performing asset to stand.

Ratio Decidendi: A borrower has no enforceable right to compel a lender to grant or revise a one-time settlement or to reopen a concluded commercial sale of a non-performing asset, and judicial review will not interfere with such decisions absent illegality, mala fides or arbitrariness.

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