Kerala HC Directs SBI To Release Title Deeds Of Property Mortgaged By Businessman Despite His Delayed Payment Of Instalments Under OTS Scheme
The Kerala High Court directed State Bank of India (SBI) to release the title deeds of a property mortgaged by a textile business proprietor, despite his delayed payment of instalments under the bank's One-Time Settlement (OTS) schemes.
The Court noted that the Bank accepted the amount but never objected to the petitioner for not making the payment on time.
A Single Bench of Justice Dinesh Kumar Singh observed, "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that since the petitioner did not comply with the terms of the two settlement schemes, the settlement schemes were withdrawn, and the petitioner should pay the entire outstanding amount."
Advocate V.K. Peermohamed Khan appeared for the petitioner, while Advocate Jawahar Jose represented the respondents.
The petitioner secured two loans amounting to ₹25 lakhs and ₹10 lakhs from SBI, offering his residential property as security after suffering losses during the COVID-19 pandemic. However, due to the economic impact of the pandemic, the petitioner defaulted on his loan repayments, prompting SBI to initiate SARFAESI proceedings.
In an effort to resolve the matter, SBI introduced the “Rinn Samadhan 2021-22 Scheme” and the “SBI OTS Scheme 2021,” which were offered to the petitioner as a means of settling the outstanding dues.
The High Court noted that the bank had argued that the petitioner defaulted in remitting the second instalment on time and, therefore, the petitioner was not entitled to the benefit of the said schemes.
Although the petitioner had eventually cleared the entire amount within the broader time limits set by the OTS schemes, the bank contended that the delay in the second instalment nullified the settlement agreement, thereby denying the release of the property’s title deeds.
The Court held, “It is not disputed that the Bank has accepted the amount paid by the petitioner towards the discharge of liability in respect of the two OTS schemes offered to him within the outer time limit fixed by the Bank. After accepting the amount, the Bank never objected that the petitioner had not made the payment of the second instalment on time and, therefore, the OTS scheme had lapsed. No such communication was issued to the petitioner.”
The Court explained that the Bank should not have accepted the amount and addressed a communication to the petitioner stating 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 Court remarked.
Accordingly, the High Court allowed the petition.
Cause Title: Sham P.S. v. State Bank Of India & Anr. (Neutral Citation: 2024:KER:55913)
Appearance:
Petitioner: Advocates V.K. Peermohamed Khan, Girish Kumar V.C and Asna M.B.
Respondents: Advocate Jawahar Jose