2022 (10) TMI 187 - HC - Indian Laws

Court orders reinstatement of OTS scheme due to COVID-19 impact on real estate business

Md. Afroz Baig Versus State Bank of India

The court allowed the writ petition, setting aside the letters issued by the respondent bank canceling the OTS scheme due to minimal delay in payment by ... Seeking extension of time for repayment of outstanding loan - Cancellation of OTS - failure to pay entire outstanding amount together with interest - HELD THAT:- In the present case, it is specifically contended by the petitioner that he is doing real estate business, due to the present COVID- 19 pandemic situation, he sustained loss. However, to clear the loan, he sold the property and received money from the purchaser and deposited the same in the account and paid the entire loan amount including the interest vide his letter dated 28.07.2021. There is only one day delay. Therefore, according to this Court, it is a fit case to extend the time to the petitioner to repay the loan amount. The letters, dated 31-07.2021 and 06.08.2021 issued by 2nd respondent bank are set aside. 2nd respondent bank is directed to receive the said amount of Rs.37,87,567/- (Rs.35,09,995.38ps + interest of Rs.2,77,571.62ps) from the petitioner and close the loan account bearing No. A/c.No.35424522518 of the petitioner - Petition allowed. Issues Involved:1. Legality of letters dated 31.07.2021 and 06.08.2021 issued by the respondent bank.2. Compliance with the SBI OTS 2020 Circular and OTS sanction letter.3. Petitioner's delay in payment and its justification.4. Court's power to extend the period of settlement under OTS.Issue-wise Detailed Analysis:1. Legality of Letters Dated 31.07.2021 and 06.08.2021:The petitioner challenged the letters issued by the respondent bank, which canceled the OTS scheme due to non-payment by the stipulated date. The court found that the petitioner had submitted a cheque for the outstanding amount on 28.07.2021, just one day after the due date. The bank's refusal to accept the cheque and subsequent cancellation of the OTS was deemed unjustified given the minimal delay and the petitioner's efforts to comply.2. Compliance with the SBI OTS 2020 Circular and OTS Sanction Letter:The petitioner had applied for and was granted an OTS under the SBI OTS 2020 scheme, which required payment of the OTS amount in installments. The petitioner paid Rs.41,05,000/- before the due date but failed to pay the remaining amount by 27.07.2021. The court noted that the petitioner had made substantial payments and showed intent to comply with the OTS terms, but faced a delay due to the COVID-19 pandemic.3. Petitioner's Delay in Payment and Its Justification:The petitioner argued that the delay was due to the COVID-19 pandemic, which affected his real estate business. He managed to arrange funds by selling property and submitted the payment one day late. The court considered the pandemic's impact and the petitioner's efforts to comply, referencing similar cases where courts extended payment deadlines due to extraordinary circumstances.4. Court's Power to Extend the Period of Settlement Under OTS:The court referred to various precedents, including Anu Bhalla Vs. District Magistrate, Pathankot, and Samarth Woolen Mills Vs. Indian Bank, which established that courts have the power to extend OTS deadlines under Article 226 of the Constitution of India. The court emphasized that the petitioner's delay was minimal and justified, warranting an extension to fulfill the OTS terms.Conclusion:The court allowed the writ petition, setting aside the letters dated 31.07.2021 and 06.08.2021 issued by the respondent bank. The bank was directed to accept the payment of Rs.37,87,567/- from the petitioner and close the loan account. The petitioner was granted ten days to clear the amount along with interest, failing which the bank could proceed according to the law. The court's decision was based on the petitioner's bona fide efforts, minimal delay, and the extraordinary circumstances of the COVID-19 pandemic.