JUSTICE D. DASH JUSTICE v. NARASINGH DATE OF FINAL HEARING
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.513 of 2017 In the matter of an application under Article 226 & 227 of the Constitution of India. ------------------ M/s. Magnum Polymers Private Limited …. Petitioners …. Opposite Parties -versus- 1. Industrial Promotion and Investment Corporation of Odisha Limited 2. Manager (INV), Industrial Promotion and Investment Corporation of Odisha Limited 3. State of Odisha, represented through its Secretary; Department of Industries For Petitioner : Mr. D.P. Nanda, Sr. Advocate For Opposite Parties : Mr. S.K. Padhi, Sr. Advocate Mr. Subham Sharma, Advocate CORAM: JUSTICE D. DASH JUSTICE V. NARASINGH DATE OF FINAL HEARING :21.08.2024 DATE OF JUDGMENT: 08.10.2024 V. Narasingh, J. 1. The petitioner has filed this writ petition with a prayer to issue direction to the Opp. Party no.1 i.e. IPICOL and their Page 1 of 24 authorities to implement the MDF-OTS 2007 scheme published under Annexure-2 and to issue appropriate direction to them for acceptance of the OTS proposal submitted by the petitioner company and to consider it under letter and spirit of the said 'MDF- OTS-2007 scheme. The petitioner has further prayed to declare the decision inserted by the Opp. Party No.1 IPICOL in clause VII (a) contained in para no.1 of the impugned Annexure-8 i.e. One Time Settlement (OTS) scheme 2016 is not binding on the petitioner company and accordingly to declare the said scheme non-est in the eye of law. For convenience of reference the prayer of the writ petition is extracted hereunder: “In view of the above noted facts and circumstances, it is most respectfully prayed that this Hon‟ble Court may kindly be pleased to Admit this writ petition, Call for the Records, Issue Rule Nisi calling upon the O. Ps to show cause as to why the O. P Nos. 1 and 2 with their authorities shall not be directed to implement the „MDF – OTS ~ 2007 Scheme‟ published under Annexure - 2 to this writ petition in case of the petitioner - company. If the O. Ps fail to show cause or show in-sufficient cause, issue appropriate writ/s, direction/s and order/s commanding the O.Ps and their authorities to implement the „MDF - OTS - 2007 Scheme‟ published under Annexure - 2 to this writ petition in case of the petitioner - Company and direct them to accept the proposal for OTS submitted by the petitioner - Company and to consider it under letter and spirit of the said „MDF - OTS - 2007 Scheme‟. Further, be pleased to hold and decide that the impugned decisions inserted by TPICOL‟ i.e. O. P Nos. 1 in Clause vii), a) Page 2 of 24 contained Para- 1 of the aforesaid „One Time Settlement (OTS) Scheme, 2016‟ published under Annexure - 8 of this writ petition is not binding on the petitioner - Company and accordingly nonest.” 2. It is submitted by the petitioner that the Opp. Party No.1 IPICOL introduced a scheme called One time Settlement Scheme under the MDF-OTS 2007 which was floated in the year 2009 w.e.f. 4.8.2009 being ratified by the state government, keeping in view of the guideline issued by the Reserve Bank of India as well as basing upon recommendation given by the SIDBI. It is contended by the petitioner that after keeping the proposal submitted by the petitioner pending for a long period of 7 years, the IPICOL cannot apply a new scheme introduced in the name and style of „One Time Settlement scheme 2016‟making it applicable to the pending case like that of the petitioner. 3. The undisputed facts as advanced by the petitioner are as follows :- 3-A. The petitioner company had set up a PP Rope and HOPE twine manufacturing unit at Mancheswar Industrial Estate, Bhubaneswar availing Term Loan of Rs.269.68 lakhs, Cyclone loan of Rs. 49.00 lakhs and Short Term Loan of Rs. 35.00 lakhs from the Opposite party No.1- Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) between 1990 to 2003 by mortgaging and hypothecating all its assets. Further the company had also availed Term Loan and working Capital assistance from OSFC and State Bank of India respectively. The company had executed agreements with IPICOL to repay the loan along with interest as per the schedule. For the compelling reasons the Page 3 of 24 petitioner company could not repay the loan even after rephasement of said loan. 3-B. In the year 2009, one time settlement scheme was floated in the name and style of MDF-OTS 2007 scheme (Annexure-2) by the Opp. Party No.1-IPICOL, with the approval of the State Govt as well as following the RBI Guidelines, to give relief to loss-making industrial units. Under the above MDF-OTS-07 scheme, proposals were invited by IPICOL in July 2009 to give relief to the loss making industrial Units. The petitioner being an eligible loss-making SSI unit accepted the promise/offer of IPICOL & OSFC for settlement of the outstanding Loans as per the MDF-OTS-07 Scheme. 3-C. After assessing the petitioner company as a non performing industrial unit, to settle its loan outstanding dues within the parameter of said scheme, the petitioner company was qualified as a beneficiary and accordingly it submitted its application after making the initial deposit prescribed under the said scheme on 27.08.2009 (Annexure-4) acting in terms of IPICOL‟s letter dated 04.08.2009 at Annexure-3. 3-D. It is the stand of the petitioner that once a loanee qualified within the frame work of the scheme, the authority has no option but to extend the benefit of the scheme to the loanee and it is obligatory on the part of the authority to implement the scheme in its letter and spirit. However, in the present case as the Opp. Party No.1- IPICOL has backed on of its obligation, by introducing the „One Time Settlement Scheme 2016‟ more particularly incorporating prejudicial terms at para no.1 (vii) (a), which is not permissible as it is hit by the principle of promissory estoppel. For convenience of ready reference the same is extracted hereunder: Page 4 of 24 “1. (vii) Switch-over from earlier OTS schemes (a) The earlier scheme of Amended OTS-07 Scheme and MDF Amended OTS-07 Scheme stand withdrawn. Borrower who had applied under MDF’OTS-07 or Amended -MDF-OTS-07 or had opted for switchover from MDF-OTS-07 to Amended MDF-OTS-07 are eligible to apply under OTS-2016 scheme.” 3-E.
Legal Reasoning
In such background of facts it is contended by the petitioner company that being a commercial production unit starting its function w.e.f. 30thJune 1984,it availed loan both from Orissa State Finance Corporation (OSFC) and IPICOL to meet the investment and for the expansion of unit from time to time in joint financing by both OSFC and IPICOL having paripasu charge over the assets. The petitioner company never defaulted in making payment of its loan dues rather very promptly cleared its loan liability. However due to global and international bleak scenario of petrochemical industries during the period from 2006-2009 all plastic industries across the world and all over India including the petitioner‟s company were facing acute crisis in running their respective units as the basic raw materials HDPE granite required for the manufacturing process was in dearth and beyond to the affordable limit of the manufactures concerned to procure them in order to meet even their minimum demand. Consequently it affected the financial backbone of the petitioner company causing it incapable to repay its loan liabilities for the first time since its inception since 1984. 3-F. In the meantime both OSFC as well as IPICOL invited proposal from the loss making units to avail the said facilities and to close loan liabilities under the parameter of the scheme MDF-OTS 2007 scheme. After introduction of such scheme the petitioner company applied for the settlement of its loan liabilities after Page 5 of 24 establishing that the petitioner company satisfies all the essential parameters and criterion prescribed under the scheme. The petitioner also made the initial deposit of 10% of the outstanding dues to the tune of Rs.95,65,202/- obtaining receipt thereof on 27.8.2009. It is submitted by the petitioner that the proposal for OTS alongwith the initial deposit as stated above were accepted by both Opp. Party No.1 and 2 for the purpose of consideration and acceptance of the same in terms of 2007 scheme in force. 3-G. However, it is further added that the settlement formula laid down under 2007 scheme are quite reasonable and keeping in view the interest of both IPICOL and commercial unit whose accounts have become NPA. More so, the basic aim of the said policy is to recover the total loan amount outstanding from the NPA loan accounts with 12% interest which does not affect the interest of IPICOL in any way. Accordingly, the 2007 scheme was approved by IPICOL in its 214th Board of Directors meeting held on 17.06.2009. 3-H. It is contended by the petitioner that both OSFC and IPICOL had launched their respective OTS scheme in 2009. The schemes have identical and having similar parameter and were introduced being ratified by the state government. The petitioner company had also submitted the proposal for settlement of the entire outstanding of the term loan before the OFSC in terms of 2007 scheme and after acting upon it, the OFSC had issued No Due Certificate as per letter dt. 2.2.2010 in favour of the petitioner. 3-I. While the proposal for OTS under the OTS scheme 2007 was under consideration before the IPICOL, a new amended OTS scheme was introduced by the IPICOL in the year 2011 (Annexure- 6). As per the said amended scheme, the provisions of switch over option was available to the units who had already made their application under the aforesaid 2007 scheme. The petitioner did not Page 6 of 24 accept the said option and in its letter dt. 16.08.2011 (Annexure-7) requested the authorities of the IPICOL settle its account under the 2007 scheme itself. It is contended that, although the petitioner is pursuing since 2009 to settle the loan account under the 2007 scheme but it could not materialized and it is learnt by the petitioner from reliable sources that IPICOL had kept said scheme in abeyance for reasons best known to them. Accordingly the petitioner after submission of its OTS application did not pay any further amount to the IPICOL. On the other hand, IPICOL also did not pursue its loan recovery as the aforesaid OTS proposal was open and the application filed by the petitioner was under consideration. While the matter stood thus, the IPICOL through its letter 21.7.2016 at Annexure-L/1 intimated the petitioner with regard to introduction of a new scheme i.e. OTS scheme 2016 withdrawing the aforesaid earlier two OTS Scheme of 2007 and amended 2007 scheme. 3-J. It is the submission of the petitioner that by way of bringing such new scheme of OTS in the year 2016, the Opp. Party No.1 has illegally, arbitrarily withdrawn the former scheme which has cause prejudice to the right of the petitioner. More particularly on account of insertion of stringent conditions making the repayment terms for the industrial units more onerous. It is submitted that under the new OTS scheme; such as under the new scheme the IPICOL tries to gain the incremental value of the fixed assets based on present market price though the original loan was disbursed against the then price of mainly plant, machinery and building. Similarly, the new OTS scheme has been redesigned Page 7 of 24 linking assets value along with the computation of principal and interest and the cut-off date as the date of making of application under the new OTS scheme, 2016. A new concept of Minimum Expected Amount i.e. MEA has been introduced in the new scheme 2016 which is calculated as the amount disbursed by IPICOL with simple interest @ 10% till the date of application minus repayment. So also the concept of value of security has been introduced to evaluate present market valuation of the total capital assets of the defaulter loanee. 3-K. It is also contended that under the new scheme, OTS amount would not fall below the principal outstanding which is ex- facie discriminatory qua the bonafide loanees like the petitioner‟s unit which has already paid substantially towards principal and interest till date. It is submitted by the petitioner that by introducing a new scheme, during pendency of its OTS application under the old OTS scheme, fixing a cutoff date being the date of making application under new scheme, the petitioner is arbitrarily being saddled with huge unpaid interest between 2009-2016 and also interest prior to 2009 notwithstanding that in terms of OTS 2009 floated by IPICOL the application of the petitioner along with initial deposit was pending consideration in terms of OTS 2009. It is asserted that the opposite parry IPICOL is undue advantage of its inaction. 3-L. In view of the aforesaid factual backdrop as advanced by the petitioner and relying upon principle in the case of State of Gujarat Financial Corporation vrs. Lotus hotel ltd. reported AIR 1983 SC 848, the petitioner has raised his grievance with respect to non applicability of new scheme to his pending application contending that the withdrawal of the previous scheme of 2007 pending consideration of its OTS application and introduction of a Page 8 of 24 new scheme incorporating conditions different to the earlier schemes which have been introduced with the cut-off date attracts the application of doctrine of promissory estoppel and the Opp. Party No.1 has no authority to act in contrary to the same and has prayed for a direction to dispose of its application pending since 2009 in terms of the MDF-OTS-2007. The petitioner has also relied upon another decision of this Court in the case of Orissa Alloys Ltd. Vrs. Secretary Deptt. of Industry and others reported 2009 (1) OLR 891 wherein it has been held by this Court that it is obligatory on the part of the corporation to implement the scheme in its letter and spirit. Under such factual background and legal position, it is further argued by the petitioner that the proposition of the law as decided by Hon‟ble Supreme Court in case of M/s Sardar Associates and others vrs. Punjab and Sindh Bank and others reported in 2009 Vol.II OLR SC 597, the Opp. Party No.1 &2 being the state owned corporation are bound to follow the policies formulated by the Reserve Bank of India and direction can be issued by this Court under Article 226 of the Constitution of India, for one time settlement in terms of the guidelines issued by the RBI. As the OTS scheme introduced IPICOL in the year 2007 in terms of which the petitioner‟s company has already submitted its application since 2009 has been formulated as per the RBI guidelines, therefore, the manner in which it has been withdrawn by introducing the new scheme under 2016 before finalizing the application pending under the old scheme, is not sustainable in the eye of law. COUNTER AFFIDAVIT 4. Answering the aforesaid issues more particularly the competency of O.P. no1-IPICOL to issue a new OTS scheme in the Page 9 of 24 year 2016 in terms of the RBI guideline when the proposal under the OLD OTS scheme 2007 were pending, the Opposite party No.1 has filed a counter justifying their action as follows : 4-A. The OTS scheme of 2007 was introduced with the approval of the Board of Directors of IPICOL. Under such OTS policy the petitioner company had applied on 21.7.2009. However, few anomalies were observed during processing of the said OTS application under the policy of 2007. Accordingly suggestions, amendments were placed before 215th meeting of Board of Directors of IPICOL held on 23.9.2009 at Annexure-A/1. There the Board observed that the scheme of 2007 was not suitable for IPICOL as the sacrifices were to be made under the said scheme were substantial. Accordingly, in public interest the said policy was kept under suspension. After that a modified policy namely amended MDF-OTS- 2007 were approved by 217th Board of Directors meeting held on 23.02.2010 at Annexure-B/1 subject to approval of the state govt. The same was approved by the government of Odisha in Industries Deptt. vide its letter dt. 26.5.2011 and the same was placed in 222ndBoard of Directors meeting held 25.6.2011 for adoption and on the said day Board accorded its approval for adoption of such amended scheme. 4-B. Accordingly, it was intimated to the petitioner company regarding adoption of the modified amended policy, 2007 as much as suspension of 2007 scheme as per their letter no.2003 dt. 4.7.2011 at Annexure- C/1 with a request to the petitioner to apply afresh under the new OTS scheme. But the petitioner company without applying afresh vide letter dt. 16.8.2011 at Annexure-D/1 questioned the new amended scheme. Accordingly, IPICOL issued a letter on 11.01.2012 at Annexure-E/1 by justifying the implementation of Page 10 of 24 new scheme and requested the petitioner company to apply afresh. But the petitioner company did not apply for OTS under the amended MDS scheme. It is stated by O.P.1-IPICOL that 17 numbers of applicants have requested for settlement of outstanding dues amounts for the corporation under the amended scheme 2007 either through switch over or by way of applying afresh. However, the petitioner company did not apply. 4-C. Out of the above two proposals of the OTS were placed before IPICOL Board in its meeting held on 28.01.2013 at Annexure-F/1. The board discussed the proposal and approved one proposal on account of decision of BIFR and rejected the other as it was not in the interest of the O.P.1 as well as the Govt. In the meantime the Board had authorized CMD, IPICOL to move the govt. for amendment of the then OTS policy i.e. Amended MDF-OTS-07 as it is not linked with the assets and securities of the defaulting company which may result in huge sacrifices of public money with the changing scenario and sky rocketing of land price in urban areas. The Board further resolved that till the receipt of the government orders, the CMD IPICOL will be authorized to keep the existing OTS scheme in abeyance. 4-D. The O.P.No.1 vide letter dt. 01.03.2014 at Annexure-G/1 intimated the petitioner company that a new OTS policy is in the process of formulation with an advice to render all possible cooperation to IPICOL officers for verification of fixed assets of the company. The new OTS policy i.e. OTS-2014 was drafted after due consultation and inputs from the different authorities and it was placed before 235th Board of Directors meeting held on 05.05.2014 Page 11 of 24 and the board suggested some modification. Thereafter such OTS was prepared incorporating such modifications and the proposal was sent to the government on 23.5.2014 at Annexure-H/1. The Industries Deptt. vide their letter dtd. 14.01.2015 at Annexure-J/1 sought for more clarification regarding tentative sacrifices for implementation of OTS policy 2014 which was clarified by IPICOL 24.02.2015. After that the Industries Dept. vide their letter dtd.05.07.2016 at Annexure-K/1 has intimated that the OTS scheme 2016 of IPICOL has been approved by the cabinet in its 27th meeting held on 26.6.2016. 4-E. Accordingly, the petitioner company vide letter dt.21.7.2016 at Annexure-L/1 was intimated that IPICOL has launched a new OTS Scheme 2016 and the scheme is effective from 15.7.2017. 4-F. The petitioners company applied for settlement of dues under OTS 2016 scheme with the condition that the filing of this application shall be subject to the final verdict of the Hon‟ble High Court in the present writ petition. Although it is required under the scheme to withdraw all the pending cases but the petitioner did not submit any undertaking for withdrawal of the case. 4-G. It is further contended by the OP no.1 that in terms of the new scheme the earlier applicants under MDS-OTS scheme 2007 and amended MDSOTS 2007 can switch over to the new scheme. Therefore, the OP No.1 has expressed his intention to settle the dues of the petitioner company as per the new OTS Scheme 2016. 4-H. It is submitted by the Opposite party no.1-IPICOL that the recovery strategy followed by IPICOL cannot be comparable with that of OSFC. Page 12 of 24 IPICOL had financed the borrowers having higher equity base. Hence, the scheme introduced by OSFC was not suitable for IPICOL, for recovery from the defaulting borrowers. IPICOL being an independent public institution with different set up has to act as per its policies and decisions. It is neither fair nor reasonable to compare both the institutions on the same scale. REJOINDER 5. In reply to the stand taken by the OP No.1 in their counter, that the petitioner has submitted his application in terms of OTS 2016 scheme without prejudice to his right, it has been clarified by the petitioner by submitting rejoinder that the application submitted under new scheme 2016 was rejected by the IPICOL as per their letter dt. 05.12.2017 at Annexure-10. It is further contended that the stand taken by the petitioner in his writ petition regarding applicability of different case laws and the principles decided therein not being specifically controverted by the OP 1, otherwise establishes that such principles are applied to the present case. As a result the OTS application of the petitioner deserves to be considered under the old Scheme under which it had applied and the authorities had accepted his application. His case ought not to be covered under the new OTS scheme of 2016. ADDITIONAL AFFIDAVIT BY IPICOL 6. The OP 1-IPICOL by way of affidavit, further clarified that the MDF-OTS 2007 scheme was recommended by its Board of Directors and was approved by the government for which the provisions of MDF-OTS 2007 scheme automatically gets superceded. It is contended that the IPICOL being the public financial institution is the custodian of public money. OTS is considered as the last resort for recovery of loan dues. There are other alternatives available for recovery due to involvement of the Page 13 of 24 high value of security borrowing units, the financer becomes duty bound to adopt ultimate scheme or other avenues to maximise recovery. Accordingly to ensure the same earlier OTS scheme was withdrawn in public interest to safeguard the public money. With respect to rejection of the application submitted under the OTS 2016 while considering the case of the petitioner company it is clarified that though the petitioner company had submitted an undertaking to withdraw the pending case while submitting application under OTS Scheme in terms of letter dt. 01.05.2017, but at the time of consideration under OTS 2016, the OTS offer was withdrawn vide IPICOL dt.5.12.2017 at Annexure-10 for non payment of the settlement amount. 7. The petitioners rely upon following decisions of Apex court in order to fortify their claim. i. M/s. Devidayal Castings Pvt. Otd. Vs. Haryana Financial Corporation & Ars ( 2016) SCC OnLine SC 1134) ii. Orissa Alloys Ltd. Vs. Secretary, Department of Industry 2009 (1) OLR 891) iii. Gujurat State Financial Corporation Vs. Lotus Hotels Pvt. Reported in AIR 1983 SC 848: iv. U.P.Power Corp and Alloys (P) Ltd. & Ors vrs Sant steel (2008) 1 SCC 90 v. Anu Bhalla and Ors. vs. District Magistrate, Pathankot (MANU/PH/1689/2020) vi. Order in W.P (C ) No-6118 of 2012( COSBOARD Industries Limited Vs. Industrial Promotion and Investment of Odisha Limited.) of this Court. vii. SARDAR ASSOCIATES vrs P & S BANK (2009)8SCC257 Page 14 of 24 ANALYSIS OF THE JUDGMENTS RELIED UPON BY THE PETITIONER 7-A. In case of M/S Devidayal Castings Pvt Ltd vs Haryana Financial Corporation relied upon by the petitioner, issue for consideration before the Apex court runs thus:- “The short issue that would require consideration of the Court is whether the decision of the Executive Committee dated 22nd December, 2005 as approved by the Board of Directors of the Corporation not to accept the settlement amount under the policy in force in cases where the value of the secured properties is more than the said settlement amount, amounts to a change of policy to the detriment of the borrower and, therefore, the Corporation should be held bound to accept the settlement amount as per the policy in force.” Applying the said issue discussed in Devidyal case‟ in the present case it can be safely concluded that the facts are completely at variance. In Devidayal case the policy and scheme was in vogue whereas the Board took different decision but in the present case the scheme has been amended from time to time after due deliberation and such changed schemes are not under challenge rather the applicability of such new amended scheme is under challenge. Therefore, the case law relied upon by the petitioner is completely distinguishable on facts and as such do not enure to the benefit of the petitioner. 7-B. In the matter of Gujarat State Financial Corporation Vs. Lotus Hotels Pvt. Ltd. reported in AIR 1983 SC 848, the Apex court took note of the fact that the Financial Institution cannot make Page 15 of 24 a “u” turn in denying to finance a loanee after sanctioning the same when on such promise to finance the company has already invested a huge amount and any such back track shall affect the company in terms of the well settled principle of Promissory Estoppel. The facts and the issue in the present case are completely distinguishable and decision has been relied upon by the petitioner bereft of its factual context. 7-C. Similarly, the petitioner has placed reliance upon in the matter of Orissa Alloys Ltd. Vs. Secretary, Industry and Ors, reported in 2009 OLR(1) 891 ,wherein this Court has held that the One Time Settlement, 2007 Scheme was floated and it was obligatory on the part of the O.S.F.C to implement the Scheme in its letter and spirit. Once a loanee qualifies within the frame-work thereof there is no option but to extend the benefits of the Scheme. In this case there is no denial on the part of IPICOL to extend the benefit of OTS rather the dispute revolves around the applicability of amended OTS in supersession of the existing OTS. As such the principle decided therein has no application. 7-D. The other decisions relied upon by the petitioner are also completely distinguishable in the present factual backdrop of the case and do not lend any assistance to the case at hand. 8. From a perusal of record and after hearing the learned
Legal Reasoning
senior Counsel Sri D.P. Nanda for the Petitioner and Sri S.K. Padhi for IPICOL at length and on close scrutiny of the pleading, the moot point that arises for adjudication is that whether the Petitioner-loanee has a right to claim for one time settlement and whether a direction can be passed by this Court to the opposite party to implement MDS-OTS 2007 when admittedly the said scheme is not in vogue being superseded by OTS-2016. Page 16 of 24 9. Admittedly one Time Settlement Scheme of MDF-OTS- 2007 is not in Vogue being superseded by OTS Amendment in the year 2011 since unimplementable anomalies were detected and the resultant sacrifices of public money thereunder were substantial. The Petitioner admittedly did not opt for switch over to the OTS Amendment scheme and in the meanwhile the MDS-OTS 2007 as well as OTS Amendment scheme were scrutinised keeping in view its cascading impact over the public money held by the IPICOL and in this premises MDS-OTS-2016 was introduced. The events leading to supersession of old OTS-2007 and introduction of new OTS-2016 being of seminal significance for adjudication of the case are reiterated hereunder at the cost of brevity. The OTS scheme of 2007 was introduced by IPCOL (Opposite party no.1) in the year 2009. Since, few anomalies were observed during processing of the said OTS application under the policy of 2007, suggestions, amendments were placed before 215th meeting of Board of Directors of IPICOL held on 23.09.2009 at Annexure-A/1. There the Board observed that the scheme of 2007 was not suitable for IPICOL as the sacrifices were to be made by IPICOL a Public sector undertaking under the said scheme were substantial. Accordingly, the said policy was kept under suspension. After that a modified policy namely amended MDF-OTS- 2007 was approved by 217th Board of Directors meeting held on 23.2.2010 subject to approval of the state govt. The same was approved by the government of Odisha in Industries Deptt. vide its letter dt. 26.5.2011 and the same was placed in 222ndBoard of Directors meeting held 25.6.2011 for adoption and on the said day Board accorded its approval for adoption of such amended scheme. Page 17 of 24 On 04.07.2011 (Annexure-C/1 of the counter affidavit) the petitioner was intimated regarding suspension of the OTS, 2007. Justification of the implementation of new scheme is on record in IPICOL‟S letter on 11.01.2012 at Annexure-E/1 which was addressed to the petitioner. It is also on record that 17 numbers of applicants have requested the IPICOL for settlement of their outstanding dues under the amended scheme 2007 either through switch over or by way of applying afresh. However, the petitioner company did not choose to apply. Be that as it may, OTS proposal of the Petitioner as well as COSBOARD were taken up for consideration. And the IPICOL Board Meeting held on 28.1.2013 at Annexure-F/1 discussed the proposal and approved one proposal of COSBOARD in the background of BIFR award and rejected the proposal of the Petitioner since the same was found to be not in the interest of the O.P.1-IPICOL as well as the Govt. In the meantime the Board had authorized CMD, IPICOL to move the govt. for amendment of the then OTS policy as it is not linked with the assets and securities of the defaulting company which may result in huge sacrifices of public money with the changing scenario and sky rocketing of land price in urban areas by following extant procedure. The Board further resolved that till the receipt of the government orders, the CMD IPICOL will be authorized to keep the existing the OTS scheme in abeyance. Accordingly the new OTS policy was drafted by IPICOL considering the views of different authorities and it was placed before 235th Board of Directors meeting held on 5.5.2014 and the board suggested some modification and recommendation to send the OTS proposal of IPICOL to the government for necessary approval. Page 18 of 24 Accordingly, with necessary modification/amendments the proposal was sent to the government on23.5.2014. The Industries Deptt. vide their letter dtd. 14.1.2015 sought for more clarification regarding tentative sacrifices for implementation of OTS policy 2014 which was clarified by IPICOL 24.2.2015. After that the Industries Dept. vide their letter dtd.5.7.2016 has intimated that the OTS scheme 2016 of IPICOL has been approved by the cabinet in its 27th meeting held on 26.6.2016. Thereafter, the petitioner company vide letter dt.21.7.2016 at Annexure- L/1was intimated that IPICOL has launched a new OTS Scheme 2016 and the scheme is effective from 15.7.2017. The petitioner‟s company applied for settlement of dues under OTS 2016 scheme with the condition that the filing of such application shall be subject to the final verdict of this Court in the present writ petition. 10. Admittedly, in the present case the OTS scheme has been amended from time to time after taking into account chaning scenario and keeping in view public interest, and such changed schemes are not under challenge rather the applicability of such new amended scheme is under challenge. As there is no challenge to such decision and scheme of the authorities this court finds no merit with the contention of the petitioner as to prescription and application of the OTS, 2016 vis-à-vis the petitioner. 11. It is apposite to note that letter dated 04.07.2011 at Annexure- C/1 by which the IPICOL intimated the petitioner regarding suspension of OTS-2007 is not assailed. Having not done so the petitioner is precluded from making any prayer for disposal of his application under the OTS 2007. From the record it can be seen that a conscious decision was taken by the Board/IPICOL after due deliberation which is Page 19 of 24 reflected from the Board‟s resolutions from time to time, to protect public money and such decision taken by the IPICOL is not arbitrary, but in public interest, as rightly asserted by Opposite party no.1-IPICOL. It is also on record that such changes and decisions were intimated to the petitioner from time to time. Further, the petitioner being fully aware of the terms and conditions of the OTS-2016 applied for the same and having done so it is not open for the petitioner to challenge the applicability of the said scheme vis-à-vis the petitioner company. 12. As held by the Apex Court in catena of judgments, borrower cannot claim one time settlement as matter of right and directing the lending authority to consider the OTS application of the borrower would amount to rewriting the contract. Law is well settled that High Court cannot invoke writ jurisdiction to grant the benefits of one time settlement of loan since the same is the exclusive prerogative of the lending authority. So far as the second relief claimed by the petitioner, it is covered by the Apex Court decision in the case of The Bijnor Urban Cooperative Bank Limited, Bijnor Vs. Meena Agarwal & Ors. reported in (2023) 2 SCC 805 , wherein in it has been unequivocally held that no writ of mandamus can be issued by the High Court in exercise of power under Article 226 of the Constitution of India directing a financial institution/Bank to positively grant the benefit of OTS to a borrower. The Apex Court has further held that the OTS is always subject to eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time and any decision has to be be left to commercial wisdom of the lending institution. Relevant observation of the Apex Page 20 of 24 Court thereunder germane for adjudication in the present case runs thus:- “Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by selling the mortgaged/secured properties, either from the borrower and/or guarantor. This is because under the OTS Scheme a debtor has to pay a lesser amount than the actual amount due and payable under the loan account. Such cannot be the intention of the bank while offering OTS Scheme and that cannot be purpose of the Scheme which may encourage such a dishonesty. 10. If a prayer is entertained on the part of the defaulting unit/person to compel or direct the financial corporation/bank to enter into a one-time settlement on the terms proposed by it/him, then every defaulting unit/person which/who is capable of Page 21 of 24 paying its/his dues as per the terms of the agreement entered into by it/him would like to get one time settlement in its/his favour. Who would not like to get his liability reduced and pay lesser amount than the amount he/she is liable to pay under the loan account? In the present case, it is noted that the original writ petitioner and her husband are making the payments regularly in two other loan accounts and those accounts are regularised. Meaning thereby, they have the capacity to make the payment even with respect to the present loan account and despite the said fact, not a single amount/installment has been paid in the present loan account for which original petitioner is praying for the benefit under the OTS Scheme. The sum and substance of the aforesaid discussion would be that no writ of mandamus can be issued by the High Court in exercise of powers under Article 226 of the Constitution of India, directing a financial institution/bank to positively grant the benefit of OTS to a borrower. The grant of benefit under the OTS is always subject to the eligibility criteria mentioned under the OTS Scheme and the guidelines issued from time to time. If the bank/financial institution is of the opinion that the loanee has the capacity to make the payment and/or that the bank/financial institution is able to recover the entire loan amount even by auctioning the mortgaged property/secured property, either from the loanee and/or guarantor, the bank would be justified in refusing to grant the benefit under the OTS Scheme. Ultimately, such a decision should be left to the commercial wisdom of the bank whose amount is involved and it is always to be presumed that the financial institution/bank shall take a prudent decision whether to Page 22 of 24 grant the benefit or not under the OTS Scheme, having regard to the public interest involved and having regard to the factors which are narrated hereinabove.” (Emphasised) 12A. The said decision of the Apex Court is followed by it in the case of State Bank of India Vs. Arvindra Electronics Pvt. Ltd. reported in 2023 (1) SCC 540. 13. In the factual matrix of the case at hand as discussed the claim of the petitioners militates against the settled law that a borrower/guarantor has no vested right to claim OTS and that financial institution/bank should not be directed to positively grant benefit of OTS to a borrower and neither can extension of time granted in terms of an OTS be directed to be afforded as it would tantamount to rewriting/modification of contract. And more so in the case at hand there is no ground to accept the submission of the learned senior Counsel for the petitioner that there has been discrimination refers to the claim of the COSBOARD. Since the alleged claim of discrimination referring to extending the benefits of OTS to COSBOARD another loanee is per se misconceived. Extending the benefits of OTS to COSSBORD is ex-facie distinguishable in the background of the award of BIFR. 14. By applying the aforesaid principle of law, the petitioner‟s prayer seeking a direction to consider its application under the One time Settlement Scheme-2007, which has been admittedly suspended in the year 2011 and superseded by OTS-2016, cannot be entertained. 15. This court is also not persuaded to accept the contention of the petitioner that since its application under OTS-2007 is pending consideration before the IPICOL, the petitioner is entitled to the benefit under the said scheme, in as much, it is well established on the basis of record that the circumstances warranting changes and Page 23 of 24 consequential suspension and supersession of the OTS Scheme 2007 by OTS-2016 were well within the knowledge of the petitioner. Rather by applying under new OTS 2016 the petitioner has surrendered its right to be considered under the old OTS 2007 and prayer to be governed by the said scheme is thus untenable. 16. This Court finds no merit in the writ petition and
Decision
accordingly, the writ petition is dismissed. No costs. (V. Narasingh) Judge D. Dash, J. I agree (D. Dash) Judge Orissa High Court, Cuttack, Dated the 8th October, 2024/Ayesha Signature Not Verified Digitally Signed Signed by: AYESHA ROUT Designation: Junior Stenographer Reason: Authentication Location: High Court of Orissa Date: 02-Nov-2024 12:24:15 Page 24 of 24