Writ jurisdiction can extend one-time settlement timelines where delay is compensable and the insolvency moratorium does not bar relief.

Writ courts may, in deserving cases, extend the time fixed under a one-time settlement where the borrower has made substantial payment and any delay can be compensated by interest. On the facts noted, the petitioners were treated as bona fide because they had paid part of the settled amount, continued deposits during proceedings, and faced financial difficulty linked to delayed reimbursement and the COVID-19 situation; extension of time with interest was therefore considered justified. The document also explains that a moratorium under insolvency law does not bar proceedings seeking time to pay into the creditor's coffers, as such relief is not adversarial and does not defeat the object of insolvency protection.

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Issues: (i) whether the High Court, in exercise of writ jurisdiction, could extend the time stipulated under a one time settlement; (ii) whether the petitioners were entitled to extension of time to pay the balance settlement amount on the facts proved; and (iii) whether the writ petition was barred by the moratorium in insolvency proceedings against the respondent financial service provider.

Issue (i): whether the High Court, in exercise of writ jurisdiction, could extend the time stipulated under a one time settlement.

Analysis: The Court held that extension of time under an OTS is legally permissible in deserving cases. It relied on earlier decisions where delay in payment under settlement was condoned on payment of interest, and noted that several banking policies themselves contain clauses enabling extension or condonation of delay. The Court reasoned that where the borrower has already made substantial payment and the delay is capable of being compensated, equitable relief can be granted under Article 226 of the Constitution of India.

Conclusion: The High Court has jurisdiction to extend the period for payment under a one time settlement.

Issue (ii): whether the petitioners were entitled to extension of time to pay the balance settlement amount on the facts proved.

Analysis: The Court found that the petitioners had paid a substantial part of the settled amount, had continued to make deposits during the pendency of the petition, and had shown bona fides by complying with interim directions. It accepted that financial difficulty arose from delayed reimbursement under the scholarship scheme and also took note of the impact of the COVID-19 situation. The Court held that the request for extension was reasonable and that the creditor could be compensated by interest on delayed payment.

Conclusion: The petitioners were entitled to extension of time to pay the remaining settlement amount, with interest.

Issue (iii): whether the writ petition was barred by the moratorium in insolvency proceedings against the respondent financial service provider.

Analysis: The Court interpreted Section 14 of the Insolvency and Bankruptcy Code, 2016 and Rule 5 of the 2019 Rules in light of their object, which is to preserve the corporate debtor and protect its assets during resolution. It held that the present proceedings were not adversarial against the respondent, but were aimed at enabling payment into the respondent's coffers. The Court further held that such a request for extension of OTS did not fall within the prohibition contemplated by the moratorium.

Conclusion: The writ petition was maintainable notwithstanding the insolvency proceedings.

Final Conclusion: The Court allowed the petition and granted the petitioners six months to clear the balance under the settlement in two instalments along with simple interest, while holding that the writ jurisdiction could be used to extend OTS time and that the insolvency moratorium did not bar the relief.

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