OTS Benefit Can't Be Denied After Accepting Delayed Installment: Kerala High Court Asks SBI To Release Title Deeds

The Bank did not confer the benefit of the OTS Scheme to the petitioner, citing a delay in payment of the second instalment within the stipulated time.

Justice Dinesh Kumar Singh observed that the Bank did not raise an objection saying that the petitioner delayed the payments of the second instalment or that the OTS Scheme had lapsed. The Court thus observed that the Bank accepted the second instalment paid by the petitioner under the OTS Scheme, even if it was made with some delay.

“Once the petitioner has deposited the amount and the Bank has accepted, it would not be proper for the Bank to say that the petitioner did not comply with the terms and conditions of the two OTS schemes in not making the payment of the second instalment on time. The Bank should not have accepted the amount and addressed a communication to the petitioner saying that since the petitioner did not comply with the terms of the two settlement schemes, the settlement schemes were withdrawn, and the petitioner should pay the entire outstanding amount. In the absence of such communication and after accepting the amount paid by the petitioner in terms of the settlement scheme, though with some delay in making payment of the second instalment, the entire payment was made within the outer limit as per the settlement scheme, this Court finds the stand of the Bank untenable.

The petitioner is the proprietor of the firm who availed two loan facilities of rupees 25 lakhs and 10 lakhs for running his textile shop. The loan was availed by the petitioner from the State Bank of India by mortgaging the title deeds of his residential property. The petitioner who incurred losses due to Pandemics defaulted on loan payments leading to the initiation of SARFAESI proceedings against him.

The Bank provided the petitioner with an opportunity to settle his loan accounts by paying the outstanding debts under the Rinn Samadhan 2021-22 Scheme and the SBI One Time Settlement Scheme 2021, within a specified time frame.

The petitioner argued that he had paid the entire amount within the outer time limit as per the OTS scheme and that he was entitled for the release of his title deeds.

The Bank admitted that the petitioner paid the entire amount within the outer limit of making payment under the OTS Scheme. However, it was stated that the petitioner defaulted in remitting the second instalment within the time frame.

The Court noted that the Bank accepted the payments made by the petitioner under the OTS Scheme for settling his liabilities. It noted that the Bank accepted the delayed second instalment paid by the petitioner without objection. The Court thus noted that the entire outstanding amount was paid under the OTS Scheme.

The Court directed the petitioner to pay interest on the delayed payment of the second instalment to the Bank.

The Court allowed the petition and directed the Bank to release the title deeds of the petitioner's residential property on payment of the interest for delayed payment.

Counsel for Petitioners: Advocates V.K.Peermohamed Khan, Girish Kumar V.C, Asna M.B.

Counsel for Respondents: Advocate Jawahar Jose

Citation: 2024 LiveLaw (Ker) 536

Case Title: Sham P S v State Bank of India

Case Number: WP(C) NO. 43713 OF 2023

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