Case Note & Summary
The dispute arose from a writ petition filed by the original writ petitioner against the Bijnor Urban Cooperative Bank regarding the rejection of her application for a One Time Settlement (OTS) under the OTS Scheme. The petitioner had taken a loan of approximately Rs. 1 crore, which was categorized as a Non-Performing Asset (NPA). After her application for OTS was rejected, she deposited Rs. 60 lakhs to improve her eligibility but was still denied the benefit. The Bank contended that the loan was recoverable through auctioning mortgaged properties and that the petitioner did not meet the eligibility criteria for OTS. The High Court directed the Bank to reconsider her application, which led to the Bank's appeal. The Supreme Court analyzed whether the High Court had the authority to issue such a mandamus and concluded that the benefit under the OTS Scheme cannot be claimed as a matter of right. The Court emphasized that the Bank's decision was based on its commercial wisdom and the potential for full recovery of the loan amount. Ultimately, the Supreme Court quashed the High Court's order, affirming the Bank's discretion in handling OTS applications.
Headnote
A) Constitutional Law - Writ of Mandamus - Jurisdiction of High Court - Article 226 of the Constitution of India - The High Court exceeded its jurisdiction by issuing a writ of mandamus directing the Bank to grant benefit under the OTS Scheme, which is subject to eligibility criteria. The decision of the Bank and Settlement Advisory Committee was based on a conscious assessment of the borrower's eligibility and recovery prospects, thus the High Court's order was unsustainable (Paras 12).
Issue of Consideration
Whether the High Court can issue a writ of mandamus directing the Bank to consider the grant of benefit under the OTS Scheme?
Final Decision
The Supreme Court allowed the appeal, quashed the High Court's order, and held that the benefit under the OTS Scheme cannot be claimed as a matter of right.
Law Points
- Article 226
- One Time Settlement Scheme
- eligibility criteria
- mandamus
- commercial wisdom
- natural justice
