Case Note & Summary
The dispute arose from a judgment by the High Court of Punjab and Haryana, which granted an extension of six weeks to Arvindra Electronics Pvt. Ltd. to pay the balance amount under a One Time Settlement (OTS) scheme with the State Bank of India. The Bank had sanctioned a cash credit to the borrower, which was classified as a Non-Performing Asset (NPA) in 2015. An OTS was offered in 2017, requiring the borrower to pay a total of Rs.10,53,75,069.74 against an outstanding amount of Rs.13,99,89,273.99. The borrower made partial payments but failed to meet the full payment deadline of 21.05.2018, leading to the writ petition for an extension. The Bank opposed the extension, arguing that the High Court's decision violated the terms of the OTS and that the borrower had no right to claim further time. The High Court's ruling was based on the premise that the Bank acted arbitrarily by not extending the OTS to the borrower while doing so for others. The Supreme Court analyzed the legal principles surrounding the OTS and the powers of the High Court under Article 226, ultimately concluding that the High Court had overstepped its authority by modifying the contractual obligations of the OTS. The Court quashed the High Court's order, emphasizing that the borrower must comply with the original terms of the OTS and that extensions could only be granted by mutual consent. The appeal was allowed, and the original writ petition was dismissed without costs.
Headnote
A) Constitutional Law - Powers under Article 226 - Extension of Time for Payment - Article 226 of the Constitution of India - The High Court's extension of time for payment under the OTS Scheme was held to be unsustainable as it modified the contractual obligations without mutual consent. The Supreme Court emphasized that the borrower must adhere to the terms of the OTS and cannot claim extensions as a matter of right (Paras 6-8).
Issue of Consideration
Whether the High Court was justified in extending the period to make the payment of balance amount under the sanctioned OTS Scheme beyond the time granted under the sanctioned OTS Scheme.
Final Decision
The Supreme Court allowed the appeal, quashed the High Court's order extending time for payment, and dismissed the original writ petition.
Law Points
- Article 226 of the Constitution of India
- One Time Settlement Scheme
- Indian Contract Act
- 1872
- eligibility criteria for OTS
- binding nature of court precedents
