TaxTMI 
TaxTMI 
2026 (8) TMI 1207
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....ad availed OCC loan to the extent of Rs. 20,00,000/- (Rupees Twenty lakh only) and OD loan for a sum of Rs. 55,00,000/- (Rupees Fifty five lakh only). They had created a security interest over the subject property by executing a Memorandum of Deposit of Title Deeds dated 16.03.2018 over the land measuring 2 acres and 81/2 guntas out of 4 acres 17 guntas comprising in Survey No.99/1 of Kannur Village, Bidarahalli Hobli, Bengaluru East Taluk, Bengaluru [subject property] and also deposited the title deeds in respect of the subject property. Admittedly, the respondents defaulted in their repayment obligations to the Bank. Resultantly, on 30.05.2019, the Bank classified the respondents' loan account as a Non Performing Asset [NPA]. Thereafter, the Bank issued a notice dated 29.07.2019 under Section 13(2) of the SARFAESI Act calling upon the respondents to pay an outstanding amount of Rs. 76,62,623/-(Rupees Seventy Six Lakh Sixty Two Thousand Six Hundred and Twenty Three only) within a period of sixty days from the date of the said notice. 3. Concededly, the respondents failed to pay the amount as demanded within the stipulated period. Accordingly, the Bank issued a notice dated ....
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....7. The Bank, in its statement of objections, filed on 18.07.2023, had quantified the total amount payable by the respondents at Rs. 1,01,00,000/- (Rupees One Crore and One Lakh only), and the said amount was not deposited. The respondents' case was that the Bank had agreed to settle the amount under an OTS for a sum of Rs. 58,00,000/-. In this context, the learned Single Judge observed that the respondents could not be permitted the benefit of an interim order unconditionally and directed them to deposit a sum of Rs. 40,00,000/- in two instalments; Rs. 20,00,000/- within four weeks from the said date and the balance Rs. 20,00,000/- within two weeks thereafter. The learned Single Judge further clarified that if the respondents failed to make the payments as directed, the interim order would stand vacated. 8. The respondents deposited the amounts as directed. However, there was a delay of one day in complying with the time schedule. The Bank claims that on account of the said delay, the interim order stood vacated. 9. On 01.04.2024, the learned Single Judge passed an order accepting the Bank's contention that a one-day delay had resulted in the interim order being vacat....
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....ate of 12% per annum from 01.01.2022 till the date of the first payment and 12% on the reducing balances till payment. The learned Single Judge further directed the respondents to pay the amount within a period of three months from the date of the order and restrained the Bank from proceeding with further action. REASONS AND CONCLUSIONS 13. The learned counsel appearing for the Bank has assailed the impugned order on three fronts. First, he contended that in view of the efficacious alternate remedy available under Section 17 of SARFAESI Act against an order passed under Section 14 of the said Act, the writ petition ought not to have been entertained and was liable to have been rejected. Second, he submitted that the terms of the OTS could not be modified. He contended that the parties had not entered into an OTS and that the notation in the letter to the effect that the OTS was accepted was a mere acknowledgement, which was issued without any authority. The branch official who had signed the said letter was not authorised to enter into any OTS on behalf of the Bank with the respondents and, therefore, the same was not binding on the Bank. However, even if it is accepted that ....
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.... Tribunal. Although the said provisions do not exclude the remedies available under Article 226 of the Constitution of India, it is well settled that in a case where the relevant statute provides an alternate remedy, the High Court would ordinarily refrain from exercising the said jurisdiction. 19. In United Bank Of India vs. Satyawati Tondon (2010) 8 SCC 110, the Supreme Court had faulted the High Court in entertaining a petition under Article 226 of the Constitution of India against a notice issued under Section 13(4) of the SARFAESI Act and order under Section 14 of the SARFAESI Act. The relevant extract of the said decision, which is instructive, is set out below: "42. There is another reason why the impugned order should be set aside. If Respondent 1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14.....
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....fective alternative remedy by filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. * * * 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 20. Clearly, the decision of the learned Single Judge to entertain the writ petition and to pass the impugned order therein runs contrary to the principle of self-restraint as enunciated by the Supreme Court in Satyawati Tondon (supra) 21. In South Indian Bank Limited and Others vs. Naveen Mathew Philip and Another (2023) 17 SCC 311, the Supreme Court referred to the earlier decisions including the decision in Satyawati Tandon (supra) and held as under: "18. While doing....
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.... Satyawati Tondon (supra) and referred to the observations made by the Supreme Court in paragraph 55 of the decision in Satyawati Tondon (supra) which is set out hereinbefore. 24. The challenge in the present case is not covered under any of the exceptions mentioned in PHR Invent Educational Society (supra). Therefore, the writ petition ought not to have been entertained on the ground of alternate remedy. The impugned order is liable to be set aside for this reason alone. 25. The impugned order is also unsustainable as, in effect, it seeks to impose a contract between the parties. The impugned order is also unsustainable for the reason that it effectively adjudicates a factual dispute that involves questions of fact. It was the case of respondent No.2 that he had visited the office of the Bank and had furnished an OTS proposal. The offer letter submitted by respondent No.2 is set out below: "OFFER LETTER Place: Bengaluru Date: 02/08/2021 From: Name: Rajanna Address: S/O Late Ramalah To: The Manager Canara Bank SUB: 0432256000392 & 0432261000373 I have availed subject loan/s from your Bank. I coul....
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....rably in one lump sum, immediately on receipt of sanction. b) In deserving cases where borrowers are unable to pay the entire amount in one lump sum, Bank may consider recovering 25% of the amount of settlement upfront at the time of sanction and the balance amount of 75% should be recovered within a period of 3 months from the date of sanction. However, if the parties request for further time, another 3 months time can be permitted subject to recovering interest @ One Year MCLR (prevailing as at 01.04.2021) + 0.50% from the date of sanction of OTS till the date of final payment." 28. The said circular also provides that the decision on the OTS and the consequent sanction of waiver of unapplied interest and / or write off shall be taken by the competent authority in accordance with the delegation of powers under the Loan Recovery Policy of the bank (Circular No.284/2021 dated 03.05.2021), and that such decisions are subject to reporting and review. 29. In view of the above, the dispute as to whether the parties had entered into a OTS would necessarily require examination of, first, whether the official who is said to have signed the notation on the offer letter was a....