News By/Courtesy: Hricha priya | 19 May 2022 20:19pm IST


  • Supreme Court in a case considered an order given by the High Court of directing the bank the OTS proposal given by a farmer who had borrowed a loan from the bank
  • The bench comprising of Justices Dwarka Dhis Bansal and sujoy held that the Bank could not unilaterally change the Quantified amount to Rs. 50,50,000/- .
  • Further the petitioner challenged the Madhya Pradesh High court order in the form of SLP.

Supreme Court Rejects Bank’s Case Against Farmer

The Supreme Court in the case Bank of Maharashtra & Or’s v Mohanlal Patidar considered an order given by the High Court directing the bank to the OTS proposal given by a farmer who had borrowed a loan from the bank. The court pulled up the Bank of Maharashtra for challenging a high court’s order. The Bench comprising Justices DY Chandrachud and Surya Kant while rejecting the plea laying into Madhya Pradesh High Court’s order of 21st February 2022 remarked that ‘Go After Bigger fish, such a Litigation will destroy the families and Farmers financially. Further, the bench orally submitted you don’t file cases against the ones who rob 1000s of crores but whole law comes into place when a matter of Farmers comes, you accepted the down payments also’.

The fact of the case was

Formerly, in the writ petition between Shri Mohanlal, the petitioner had borrowed a loan from the respondent Bank of Maharashtra and intended to repay it in terms of One Time Settlement (OTS). The Bank discussed and communicates to the petitioner that as per the settlement Formula given in the Scheme, the OTS amount was quantified to be Rs. 36,50,000/-. In furtherance thereof, the petitioner deposited with Bank Rs.35,00,000/-. However, in its accordance later, the bank informed the petitioner that his proposal was put up before the competent authority, which sanctioned the compromise proposal on certain Terms and conditions through which the OTS amount was increased to 50.

50 lakhs as full and final settlement of the dues. Petitioner aggrieved with the same had approached the Madhya Pradesh High court. The counsel Representing Petitioner propounded that? The letter of 9th March 2021 showed the petitioner is required to pay a minimum of 10% of the OTS amount within the specified time and he had deposited the same as Rs.35,00,000 out of 36,50,000 within the fixed time? That is the only option left with the bank was to move further after the stage of issuance of ‘Imitation letter’ and if the petitioner was eligible, issue a sanction letter? The bank had dismally failed to accept the same and on the contrary, decided to increase the compromise amount to 50.50 Lakhs which was done without being communicated with the petitioner which was Contrary to the OTS scheme.

The bench comprising Justices Dwarka This Bansal and sujoy Paul while rejecting the impugned order held that the Bank could not unilaterally change the Quantified amount to Rs. 50,50,000/-after perfectly quantifying the OTS amount to be Rs.36,50,000/-. The same action of the Bank would be not only against the principles of natural Justice but also runs contrary to the doctrine of Legitimate expectations. The decision of the bank is irrational as it correctly quantified the OTS amount as per the scheme but enhanced the amount to Rs.50,50,000 without justifying the same, which ran against the scheme. The decision of the bank was suffered from illegality and procedural impropriety.

Further, the bank made a unilateral presumption of acknowledgement in a matter of this nature where no acceptance was ever given by the petitioner either directly or indirectly to pay the enhanced OTS amount. Further, the petitioner challenged the said order in the form of SLP. Allowing the plea of the petitioner, the court said that- ‘The OTS proposal given by the petitioner in both cases shall be acknowledged by the Bank along with the ‘sanction letters’ be issued and the bank should complete all the remaining formalities and shall also provide consequential benefits flowing therefrom to petitioners.’

Section Editor: KADAM HANS | 19 May 2022 21:17pm IST

Tags : #supremecourt #Delhi #leaders #MadhyaPradesh #OTS #orders #Judgement #Farmer #loan #bank

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