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Facts of the case

  • Facts of the case were that the Petitioner, in the capacity of the Director of a company, stood as guarantor for a loan advanced by the Respondent Bank and had mortgaged his immovable property for the same. 
  • The loan was later declared as Non-Performing Asset by the Bank. After a round of negotiations, both parties agreed to settle the loan with the Bank proposing an OTS offer which was accepted by the Petitioner.
  • However, the Bank subsequently withdrew the offer. The Petitioner made multiple representations to the Respondent Bank against the withdrawal but to no anvil. Aggrieved, he approached the Court to challenge the actions of the Bank.

Arguments Made 

  • The Petitioner submitted before the Court that the Bank did not provide him with a justifiable reason to withdraw the OTS offer that was agreed upon by both the parties. 
  • He further pointed out that the Bank did not submit any pleading before the Court in his case, which went on to demonstrate that their decision was illogical. Therefore, it was asserted that his petition be allowed.


According to the court, the primary goal of the OTS Scheme is to recover the money, which is unquestionably public money, from an account that has become irregular and/or declared a non-performing account if the defaulter makes an acceptable offer to settle the dispute in its entirety it should be considered . This would prevent time-consuming court proceedings and energy-consuming efforts to recover the money.

In other words, the Bank may be writing off possibly substantial portion of its liabilities, but once it agrees, the borrower can take appropriate steps to raise the amount, and ordinarily, the bank should not resile from this arrangement.

To put it another way, the Bank might be eliminating a sizable portion of its responsibilities, but once it accepts, the Borrower can take the necessary procedures to raise the amount, and normally, the Bank should not back out of this arrangement.


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