Supreme Court Upholds SBI's Rejection of OTS Application by Tanya Energy Enterprises
Apex Court Validates SBI's Decision Citing Non-Compliance with Upfront Payment Requirement Under OTS Scheme
In a significant judgment, the Supreme Court of India on September 15, 2025, upheld the decision of the State Bank of India (SBI) to reject an application by Tanya Energy Enterprises for a One-Time Settlement (OTS) of outstanding dues. The bench, comprising Justices Dipankar Datta and Augustine George Masih, overturned the Andhra Pradesh High Court's orders that had directed the reconsideration of the application under the OTS 2020 Scheme.
The case revolved around Tanya Energy Enterprises, a borrower from SBI, which had defaulted on its repayment obligations. Following the classification of its account as a non-performing asset, SBI initiated recovery proceedings under the SARFAESI Act. Despite an earlier compromise agreement, which Tanya Energy failed to honor, the respondent sought to benefit from the OTS 2020 Scheme introduced by SBI.
Key to the Supreme Court's decision was the requirement under the OTS 2020 Scheme for borrowers to make an upfront payment of 5% of the outstanding dues at the time of application submission. The court noted that Tanya Energy had failed to comply with this critical condition, rendering its application incomplete and unqualified for processing under the scheme.
Justice Datta, delivering the judgment, emphasized that while the High Court had directed a reconsideration of the application, it had overlooked the mandatory upfront payment clause, a fundamental aspect of the OTS 2020 Scheme. The court further clarified that even though the rejection letter from SBI did not explicitly cite this ground, the factual narrative and records supported SBI's decision.
The judgment highlighted the principle that administrative orders could be upheld based on alternative grounds evident from the records, provided the affected party is given notice and a chance to respond. The Supreme Court found Tanya Energy's failure to adhere to the OTS conditions significant enough to justify the rejection of its application, thus prioritizing compliance with stipulated requirements over procedural technicalities.
In concluding, the Supreme Court allowed SBI to proceed with the enforcement of its security interest in accordance with the law. However, it also afforded Tanya Energy an opportunity to submit a fresh proposal for settlement outside the OTS 2020 Scheme, contingent on the terms being reasonable and acceptable to SBI.
This judgment underscores the judiciary's stance on strict adherence to the terms of financial settlement schemes, reinforcing that benefits under such schemes cannot be claimed as an absolute right without fulfilling all requisite conditions.
