Court Reaffirms that One-Time Settlement Schemes are Benefits, Not Rights; Dismisses Appeal by Raju Abraham Against State of Kerala
In a significant ruling, the Kerala High Court has dismissed the appeal of Raju Abraham and others challenging the recovery proceedings initiated by Vazhoor Farmers Service Co-operative Bank Ltd. The court underscored that borrowers cannot insist on specific benefits or waivers under One-Time Settlement (OTS) schemes, reaffirming that such provisions are benefits offered by banks and not entitlements for borrowers.
The Division Bench, comprising Justices Anil K. Narendran and Muralee Krishna S., upheld the decision of the single judge, who dismissed the writ petition by the appellants. The appellants had sought relief in the form of a waiver of interest and the payment of their loan liability in instalments under the OTS scheme. However, the court observed that the appellants had repeatedly failed to utilize the opportunities provided by the OTS schemes, despite multiple rounds of litigation aimed at delaying recovery proceedings.
The judgment emphasized that writ courts cannot interfere in the contractual relations between banks and borrowers to rewrite agreements, aligning with precedents set by the Supreme Court. The court cited past judgments, including the case of Bijnor Urban Cooperative Bank Limited v. Meenal Agarwal, where it was held that the benefit of an OTS scheme cannot be demanded as a matter of right and is subject to the eligibility criteria set forth in the scheme.
Despite the appellants’ claims of financial distress and health issues, the court found no grounds to grant the relief sought. The judgment noted that the appellants had been engaged in several rounds of litigation since 2021, each time delaying the bank's recovery proceedings. The court further observed that the appellants had not availed the substantial concessions already extended by the bank under previous OTS schemes.
The Kerala High Court's decision highlights the limitations of judicial intervention in the contractual relationships between banks and borrowers, particularly concerning OTS schemes. The ruling serves as a reminder that while these schemes offer a pathway for borrowers to settle their liabilities, they are not obligations on the part of the banks to extend additional concessions beyond the scheme's provisions.
The appeal stands dismissed, reinforcing the bank's position and its right to proceed with recovery actions as per the contractual terms agreed upon with the borrowers.
Bottom Line:
Borrower cannot insist on a specific benefit or waiver under a One Time Settlement (OTS) scheme, and courts cannot interfere in contractual relations between banks and borrowers to rewrite agreements.
Statutory provision(s): Kerala Co-operative Societies Act, 1969 Section 69, Article 226 of the Constitution of India
Raju Abraham v. State of Keralaf, (Kerala)(DB) : Law Finder Doc Id # 2833565
