Extension of OTS payment deadline not automatic under Article 226; banks may mutually extend time under s.62

SC held that the High Court erred in extending the time to pay the balance under a sanctioned OTS beyond the expressly stipulated deadline. The borrower failed to pay as required by the OTS letter, which made the scheme infructuous if not paid by the specified date; subsequent offers by the bank were not accepted. The Court ruled that extension cannot be granted as a matter of right under Article 226, though the bank may mutually extend time under contract law (s.62, Indian Contract Act). The HC order granting extension was quashed and the appeal allowed.

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Issues Involved:
1. Extension of time for payment under the One Time Settlement (OTS) Scheme.
2. High Court's powers under Article 226 of the Constitution of India.
3. Applicability of precedents and binding decisions.

Issue-wise Detailed Analysis:

1. Extension of time for payment under the One Time Settlement (OTS) Scheme:
The State Bank of India (the Bank) had sanctioned a cash credit to the borrower, whose account was classified as NPA in 2015. The Bank offered an OTS Scheme on 01.09.2017, requiring the borrower to make payments within six months. The borrower accepted the OTS and made partial payments but failed to pay the balance by the stipulated deadline. The borrower sought an extension, which the Bank denied, leading to the borrower filing a writ petition. The High Court granted an additional six weeks for payment, which the Bank contested, arguing that the OTS terms were clear and binding, and any deviation would render the OTS infructuous. The Supreme Court noted that the borrower did not adhere to the payment schedule, and despite multiple OTS offers from the Bank, the borrower failed to settle the dues.

2. High Court's powers under Article 226 of the Constitution of India:
The Supreme Court examined whether the High Court was justified in extending the payment period under the OTS Scheme while exercising powers under Article 226. The Court referred to its decision in Bijnor Urban Cooperative Bank Limited vs. Meenal Agarwal, which held that:
- No borrower can claim the benefit of an OTS Scheme as a matter of right.
- The High Court cannot issue a writ of mandamus directing a bank to grant OTS benefits beyond the eligibility criteria.
The Supreme Court emphasized that the High Court's extension of time effectively modified the contract terms, which is not permissible under Article 226. The Court highlighted that the High Court should have followed the binding precedent set in Bijnor Urban Cooperative Bank Limited, which was directly applicable to the issue at hand.

3. Applicability of precedents and binding decisions:
The Supreme Court criticized the High Court for not adhering to the binding decision in Bijnor Urban Cooperative Bank Limited and instead relying on an earlier decision in Sardar Associates vs. Punjab & Sind Bank. The Court clarified that the Sardar Associates case was factually distinguishable as it dealt with RBI guidelines, whereas the present case involved adherence to the OTS terms. The Supreme Court reiterated that subsequent decisions on the point should be followed, and the High Court's deviation was unwarranted.

Conclusion:
The Supreme Court quashed the High Court's judgment granting further time for payment under the OTS Scheme, stating that it was unsustainable. The Court upheld the Bank's position that the borrower was bound by the original OTS terms and could not claim extensions as a matter of right. The appeal was allowed, and the original writ petition filed by the borrower was dismissed. The Court emphasized the importance of adhering to binding precedents and the limitations of judicial intervention in contractual matters under Article 226.

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