Assistant General Manager, State Bank of India & Anr. vs Tanya Energy Enterprises through its Managing Partner Shri Alluri Lakshmi Narasimha Varma

2025 INSC 1119 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11134 OF 2025 [ARISING OUT OF SLP (CIVIL) NO. 2456 OF 2025]

ASSISTANT GENERAL MANAGER STATE BANK OF INDIA & ANR. … APPELLANTS

VS.

TANYA ENERGY ENTERPRISES THROUGH ITS MANAGING PARTNER SHRI ALLURI LAKSHMI NARASIMHA VARMA … RESPONDENT

JUDGMENT

DIPANKAR DATTA, J.

THE APPEAL

1. In this appeal, by special leave, a challenge has been mounted to the

judgment and order dated 21st December, 2022 passed by a Division

Bench of the High Court of Judicature of Andhra Pradesh at Amravati1.

An intra-court writ appeal2 of the Assistant General Manager and the

Deputy General Manager3 of the State Bank of India4 came to be

1 High Court 2 Writ Appeal No. 918 of 2022 3 the appellants 4 SBI

1 dismissed thereby. The writ appeal was directed against the judgment

and order dated 22nd September, 2022 of a Single Judge, who allowed

the respondent’s writ petition5.

THE FACTS

2. The facts leading to presentation of this appeal are not in dispute.

a) SBI is a “secured creditor” and the respondent a “borrower” as

defined in Section 2(zd) and 2(f), respectively, of the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 20026.

b) Having availed credit facilities from the SBI by mortgaging 7

(seven) immovable properties, the respondent failed to adhere to

the payment schedule and defaulted in its obligation to repay.

Additional time granted for regularising the payments proved

abortive.

c) Respondent’s account was then classified as “non-performing

asset”, triggering a demand notice dated 31st May, 2017 under

Section 13(2) of the SARFAESI Act. A sum of Rs. 7 crore

(approximately) was demanded from the respondent, with further

interest from 1st June, 2017.

d) Such demand not having been met by the respondent, recovery

proceedings under Section 19 of the Recovery of Debts and

5 Writ Petition No. 22706 of 2020 6 SARFAESI Act 2 Bankruptcy Act, 19937 were initiated by the SBI on 22nd

December, 2017 by filing an original application8 before the Debts

Recovery Tribunal, Vishakhapatnam9. A decree was sought in a

sum of Rs. 8 crore approximately, with future interest at 13.65%

till date of realisation.

e) On 14th May, 2018, while transferring Rs.50 lakh to the account

of the SBI, the respondent requested for full and final settlement

of the total dues of Rs.8.14 crore by paying Rs.5 crore. The first

appellant acceded to the request and issued a “compromise

sanction letter” on 23rd November, 2018 containing the following

terms and conditions:

“a. Up-front amount of Rs 0.50 crores was already paid by you, which is kept in parking account will be appropriated immediately towards your settlement amount

The balance amount of Rs 4.50 crores to be paid as under:

Rs. 0.25 crore to be paid on or before 30 11 2018. Rs. 1.00 crore to be paid on or before 20 02 2018. Rs. 1.00 crore to be paid on or before 20 05 2019. Rs. 1.00 crore to be paid on or before 20 08 2019. Rs. 1.25 crore to be paid on or before 20 11 2019.

b. If entire compromise amount is not paid within 4 months, interest at minimum MCLR for the balance compromise amount paid after 4 months shall be charged from 30th day from the date of letter conveying approval of the compromise to the borrower.

c. If, for any reason, the compromise amount or any installment, as agreed, is not received within scheduled period, the Bank reserves the right to cancel the compromise settlement and entire dues of the Bank along with interest and costs will become due for payment.”

7 RDB Act 8 OA No. 4013 of 2017 9 DRT

3

f) Respondent did not adhere to the terms and conditions, as a

sequel whereto the sanction letter was cancelled on 22nd February,

2019.

g) Thereafter, while making a request to the appellants on 13 th

August, 2019 not to take possession of the secured assets, the

respondent made a further payment of Rs.50 lakh.

h) On 16th October, 2019, measures under Section 13(4) of the

SARFAESI Act were initiated by issuing sale notice in respect of

the 7 (seven) properties mortgaged as security by the

respondent.

i) Respondent challenged the sale notice before the DRT on 25th

October, 2019 by filing an application under Section 17 of the

SARFAESI Act10. DRT, vide order dated 21st November, 2019,

granted interim stay of the sale till 23rd December, 2019 subject

to payment of Rs. 1 crore (in two instalments) by the respondent

in 30 days. Although deposit of Rs.50 lakh was made, the

respondent failed to deposit the balance amount of Rs.50 lakh.

This resulted in the DRT declining extension of time, as prayed by

the respondent.

j) The stay order having stood vacated, a fresh sale notice was

issued on 12th February, 2020. Respondent again challenged this

10 S.A. No. 399 of 2019 4 notice by filing an interim application11 in the pending application

under Section 17 of the SARFAESI Act. DRT declined to pass an

order of stay; instead, granted liberty to the appellants to proceed

with the sale. In pursuance thereof, one of the mortgaged

properties was sold in an auction on 18th March, 2020 and sale

confirmation letter was issued to the auction purchaser on 15 th

April, 2020.

k) While things stood thus, on 12th October, 2020, SBI introduced a

scheme for One Time Settlement12 of outstanding dues in excess

of Rs. 20 lakh and up to Rs. 50 crore, as on 31st March, 202013. A

week later, a clarificatory circular under the OTS 2020 Scheme

was issued publishing an internal legal opinion dated 29th August,

2019 on the applicability of the aforesaid scheme in respect of

proceedings pending before judicial fora for decision wherein

measures under Section 13(4) of the SARFAESI Act were under

challenge.

l) By his letter dated 19th October, 2020 addressed to the first

appellant, the respondent referred to 3 (three) payments of Rs.

50 lakh each made by him for liquidating the dues and queried as

to whether such amount had been adjusted with the dues of the

SBI. Reference was also made to a meeting that the respondent

had with the Chief Manager of SBI on 15th October, 2020, wherein

11 I A No 637 of 2020 12 OTS 13 THE OTS 2020 Scheme

5 a proposal for settlement through new compromise for a sum of

Rs. 5,07,44,250/- had been given to the respondent upon

granting 25% rebate on the total outstanding dues of Rs.

6,76,59,000/-, as on 31st March, 2020. According to the

respondent, the amount of Rs. 5,07,44,250/- “specified for new

compromise” was very high considering the earlier compromise

amount of Rs. 5 crore, of which Rs. 1.5 crore had already been

paid. A counter proposal was given by the respondent to accept

Rs. 3,75,00,000/-, in addition to the already paid amount of Rs.

1.5 crore, “towards new compromise to pay and settle” the “total

dues”.

m) Close on the heels of the said letter dated 19th October 2020, the

respondent addressed a letter dated 10th November, 2020 to the

appellants. The said letter dated 10th November requested the

addressees to consider the contents of the respondent’s letter

dated 19th October, 2020 as an integral part of the current letter

too. While placing on record its request for availing the OTS 2020

Scheme, the respondent conveyed, inter alia, as follows:

“ 2. It is on record that from May, 2018, I have paid an amount of Rs 1.50 crores to the bank and this amount is needed to be given credit in the principal portion of the loan account while determining the outstanding amount payable by me in accordance with guidelines of fresh OTS floated during October, 2020.

3. Subject to your consent in writing about grant of OTS to my account by precisely working out outstanding liability in accordance with fresh scheme and as per the guidelines of Reserve Bank of India, I am willing to deposit upfront amount -

within the stipulated time and I am also willing to withdraw S A

6 399/2019 pending on the file of Honourable Debts Recovery Tribunal, Visakhapatanam.” (emphasis ours)

n) Seeking objective consideration of the aforesaid points together

with other points, as mentioned, the respondent sought for

settlement.

o) This was followed by a letter of the first appellant dated 17th

November, 2020 containing the order of rejection of the

respondent’s application for OTS of the dues under the OTS 2020

Scheme. The first appellant referred to the previous conduct of

the respondent of having failed to comply with the order passed

by the DRT, seeking extension of time to make deposit which was

declined resulting in vacation of the interim order of stay, sale by

auction of one mortgaged property as well as suppression of facts.

These constituted the grounds for rejection of the application for

OTS.

p) Crestfallen, the respondent invoked the writ jurisdiction of the

High Court seeking quashing of the letter containing the order of

rejection and for a direction on the appellants - respondents in

the writ petition - to consider the application under the OTS 2020

Scheme. Exception was taken to the order of rejection on the

ground that sale by auction of one mortgaged property did not

disentitle the respondent to have his application under the OTS

2020 Scheme considered favourably.

7

q) While the writ petition was pending, the respondent’s application

under Section 17 of the SARFAESI Act before the DRT succeeded.

Measures taken by the appellants under Section 13(4) thereof

including the sale notice and the sale certificate were set aside.

r) A fresh sale notice was issued on 6th April, 2022. In pursuance

thereof, another auction was held on 27th April, 2022. Challenging

such auction, the respondent once again approached the DRT by

filing a fresh application14 under Section 17 of the SARFAESI Act,

which is reportedly pending.

s) The writ petition of the respondent, in due course, came up for

consideration before the Single Judge. Respondent was held

entitled to the benefit of the OTS 2020 Scheme, which was non-

discretionary and non-discriminatory, and the appellants were

directed to process the respondent’s prayer contained in its letters

dated 19th October, 2020 and 10th November, 2020 in accordance

with such scheme.

t) The judgment and order of the Single Judge having been carried

in appeal, the Division Bench referred to clause 2.1 of the OTS

2020 Scheme dealing with “Cases not eligible to be covered under

the scheme”. The Bench was of the opinion that there was no bar

for considering cases where proceedings under the SARFAESI Act

have been initiated and auction of the property is underway;

hence, the respondent could not have been held not eligible under

14 S.A. 238 of 2022

8 the OTS 2020 Scheme. The Division Bench also held that since

the list of cases/borrowers who are not eligible had been provided

under clause 2.1, other cases falling outside the coverage of the

“not eligible” criteria should be treated as eligible. Consequently,

the appeal was dismissed by the Division Bench as having no

substance.

ARGUMENTS OF THE PARTIES

3. Mr. Venkatraman, learned Additional Solicitor General appearing for

the appellants, contended that not only the Single Judge fell in error

in allowing the writ petition of the respondent, the Division Bench

equally erred in the exercise of its jurisdiction in dismissing the writ

appeal of the appellants.

4. Mr. Venkatraman contended that the OTS 2020 Scheme cannot be

enforced under Article 226 of the Constitution unless all terms and

conditions are satisfied. According to him, a public duty must be shown

to exist before a mandamus could issue directing a public authority to

discharge such duty. Here, there was no such public duty which the

appellants failed to discharge having noted the conduct of the

respondent in failing to clear his debt despite having been granted

sufficient opportunities.

5. Referring to the letter dated 23rd November, 2018 being the prior OTS

offer of the appellants, Mr. Venkatraman asserted that except for

payment of the up-front amount of Rs. 0.50 crore (i.e., Rs.50 lakh),

9 the respondent did not pay a penny. He also referred to the order dated

21st November, 2019 of the DRT to drive home his point that failure

and/or neglect of the respondent to pay the balance sum of Rs.50 lakh

resulted in vacation of the interim order of stay.

6. Stressing that the conduct of the party invoking the writ jurisdiction of

a high court under Article 226 is relevant, Mr. Venkatraman submitted

that here is a litigant who not only does not honour his commitments

but also has scant respect for orders passed by the DRT.

7. Drawing our attention to the rejection order, Mr. Venkatraman

submitted that there is no infirmity therein. All factors were objectively

considered and the application of the respondent for OTS was rightly

rejected.

8. Mr. Venkatraman, thus, prayed that the judgment and order (both of

the Division Bench and the Single Judge) be set aside and the

appellants permitted to proceed for putting up the remaining 6 (six)

properties for sale by public auction.

9. Per contra, learned senior counsel Mr. D.S. Naidu representing the

respondent contended with vehemence that there is no infirmity in the

impugned judgment and order warranting interference.

10. While acknowledging that the benefit of the OTS cannot be claimed as

an absolute right and that no mandamus can be issued compelling an

authority to exercise discretion in a particular manner, as reiterated by

this Court in Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal15,

15 (2023) 2 SCC 805

10 Mr. Naidu contended that the decision to accept or reject an OTS

proposal must be reasoned, based on scheme eligibility, and in

compliance with the principles of natural justice.

11. Mr. Naidu urged that in the present case, neither the writ court nor the

appellate court directed a positive grant of OTS; what the court

required was a consideration of the respondent’s application under the

OTS 2020 Scheme. Rejection of the respondent’s application without

due consideration or opportunity of hearing is wholly arbitrary, given

the fact that the respondent had already deposited about Rs.1.5 crore

(inclusive of Rs. 0.50 crore pursuant to an earlier failed compromise)

in good faith.

12. Drawing attention to this Court’s order dated 18 th September 2023

whereby notice was issued, Mr. Naidu argued that the plea of

ineligibility under clause 2.1(iii) of the OTS 2020 Scheme had already

been negated, and that the failure of the earlier compromise

settlement of 2018 could not justify rejection of the subsequent

application. Hence, it was contended that the appellants should not

now be permitted to argue beyond the question framed by this Court

for adjudication.

13. Turning to the auction process, Mr. Naidu asserted that the authorised

officer of the SBI had issued a sale notice on 12th February 2020,

followed by an auction on 18th March 2020 and confirmation of sale on

15th April 2020. Before completion of the process, the respondent

challenged it under Section 17 of the SARFAESI Act and by an order

11 dated 1st September 2021, the DRT set aside the notice, the auction,

and any sale certificate. This fact, it was urged, has been suppressed

in the present proceedings. Moreover, 25% advance deposited by the

auction purchaser was never credited to the respondent’s account and

was refunded on 8th September 2021 by the authorized officer himself.

Hence, no third-party rights accrued. Reference was also made to the

respondent’s letter dated 10th November 2020 offering to indemnify

the SBI against any vexatious claims by the purchaser.

14. With regard to the second auction of 26th April 2022, Mr. Naidu

submitted that the sale remains under challenge before the DRT, and

the auction purchaser’s deposit too has been refunded, leaving no

subsisting sale consideration with the SBI.

15. On the question of bona fides, it was contended that the respondent is

not a wilful defaulter. Respondent, an operational creditor of ICOMM

Tele Limited, has unpaid claims of Rs. 5 crore, in respect of which it

only received a sum of Rs. 9,63,123/- in the insolvency proceedings.

Such circumstances directly impaired the repayment capacity of the

respondent and contributed to default.

16. Resting on these foundations, Mr. Naidu sought to contend that the

respondent’s application under the OTS 2020 Scheme deserved fair

consideration, and that its rejection stands vitiated by arbitrariness

which was rightly interdicted by the Single Judge and affirmed by the

Division Bench.

12 THE NOTICE ISSUING ORDER

17. Notice on the special leave petition, giving rise to this appeal, was

issued on 18th September, 2023. In such order, the coordinate Bench

recorded as follows:

*** The first contention of the petitioners – the Assistant General Manager and Deputy General Manager of State Bank of India, Siripuram, Vishakhapatnam branch, that there was an earlier compromise settlement/sanction dated 23.11.2018, would not be a good ground and a relevant consideration to reject the OTS proposal under the scheme dated 12.10.2020. The compromise settlement had failed since amounts were not received by SBI within the stipulated time.

18. Since this Court had issued notice noting that “*** the question which

will arise is whether borrower could have applied under the OTS

Scheme dated 12.10.2020 with respect to the arrears after excluding

the amount receivable under the first auction ***”, it has also been

vehemently contended by Mr. Naidu that it is no longer open to the

appellant to argue beyond the question posed by this Court for an

answer.

ANALYSIS AND REASONS

19. We have heard Mr. Venkatraman and Mr. Naidu and perused the order

rejecting the respondent’s application under the OTS 2020 Scheme.

We have also perused the impugned judgment and order of the

Division Bench dismissing the writ appeal of the appellants as well as

that of the Single Judge, allowing the respondent’s writ petition.

20. Meenal Agarwal (supra), cited by Mr. Naidu, is an authority for the

proposition that no court can, by issuing a writ of mandamus, direct a

13 secured creditor to positively grant benefit of OTS to a defaulting

borrower; such grant is always subject to the eligibility criteria being

satisfied. The law declared therein has been affirmed in State Bank

of India v. Arvindra Electronics Private Limited16.

21. The principle of law, as aforesaid, may not have any direct application

here, since it is merely a re-consideration that the High Court has

directed and there is no positive direction for granting an OTS.

22. Notwithstanding limited notice having been issued on a special leave

petition, that this Court can expand the scope of the lis is no longer

res integra. One may profitably refer to the decision of this Court in

Biswajit Das v. Central Bureau of Investigation17.

23. The only question that we are tasked to decide is, whether the High

Court erred in its interference with the said order of rejection of the

respondent’s application under the OTS 2020 Scheme and directing re-

consideration thereof.

24. For the discussions and reasons that follow, we are of the opinion that

the High Court was not justified in its interference with the order of

rejection.

25. OTS 2020 Scheme was launched by the SBI to augment efforts

towards recovery of outstanding dues. Apart from clause 2.1 of the

OTS 2020 Scheme providing “cases not eligible to be covered”, heavily

relied on by the Division Bench, clause 4(i) thereof provided as follows:

16

(2023) 1 SCC 540 17 2025 SCC OnLine SC 124

14 “The borrower has to deposit 5% or 15%(for wilful defaulters) of the OTS Amount (As per the settlement formula point v) at the time of submission of application (in the form of letter addressed to branch head) to indicate his willingness for OTS, failing which the application will not be processed. In the event the application for OTS is rejected by the Bank, such payment, which shall be held in a separate account, will be refunded without interest within three months.”

26. It is, therefore, clear that every borrower in default, to have his

application under the OTS 2020 Scheme considered, was required to

apply together with an up-front payment of 5% of the OTS amount.

The manner of calculation of the OTS amount was provided in clause

3A (v) of the OTS 2020 Scheme. For wilful defaulters, payment of 15%

was required. It has not been argued before us that the respondent

falls in the category of a ‘wilful defaulter’; however, it is certainly a

defaulter.

27. We did not find the respondent, while applying for the benefit of the

OTS 2020 Scheme, to have deposited a single paisa towards up-front

payment. In terms of clause 4(i) of the OTS 2020 Scheme, any

application received without up-front payment is not required to be

processed even. Thus, in the first place, the respondent’s application

was incomplete and it did not have any right in law to claim that such

application should be processed.

28. Significantly, the first appellant did not reject the application of the

respondent on the ground of its failure to deposit 5% of the OTS

amount as required under the OTS 2020 Scheme at the time of

submission of its application.

15

29. The High Court too – both the Division Bench and the Single Judge –

missed this aspect altogether because neither omission to make up-

front payment assigned as a ground for rejection of the respondent’s

application by the first appellant nor clause 4(i) of the OTS 2020

Scheme was brought to the notice of the relevant courts.

30. Mr. Venkatraman appeared clueless as to why rejection of the

respondent’s application based on clause 4(i), despite being available

to the first appellant, was not mentioned as a ground in the letter dated

17th November, 2020.

31. In course of hearing, Mr. Naidu’s attention was invited by us to clause

4(i). We had called upon him to explain the basis for claiming eligibility

under the OTS 2020 Scheme without making the requisite up-front

payment of 5%. Accepting Mr. Naidu’s prayer, we had given him time

to respond.

32. Mr. Naidu returned on the next day of hearing and submitted that

clause 4 read with clause 6 of the OTS 2020 Scheme makes it clear

that all branches of the SBI were obligated to identify eligible

borrowers, send intimation specifying dues, payment modalities, and

last date for application under the scheme. However, despite the

appellants not following the OTS 2020 Scheme by sending intimation

with quantification of the respondent’s dues and the payment

modalities, the respondent, in filing the application accompanied by

the upfront amount, fully complied with the scheme requirements.

16 Therefore, it cannot be argued that the respondent was ineligible on

grounds of non-compliance of the terms.

33. In light of his arguments, Mr. Naidu prayed for dismissal of the appeal

and for an order on the appellants to proceed in terms of the directions

in the impugned judgment and order.

34. A question would obviously arise for our answer, having regard to the

Constitution Bench decision in Mohinder Singh Gill v. Chief Election

Commissioner18 and the larger Bench decisions of this Court in

Commissioner of Police v. Gordhandas Bhanji19 and Opto

Circuits (India) Ltd. v. Axis Bank20, as to whether, a court can

uphold an order rejecting an applicant’s claim based on a ground

appearing from the records of the case which could have been but has

not been mentioned, if the grounds mentioned in such order of

rejection are not found to be tenable?

35. To refresh our memory, the aforesaid decisions are authorities for the

proposition that validity of an order, which is under challenge in the

proceedings, must be tested on the basis of the ground(s) mentioned

in it in support thereof; and any additional ground, to support the order

under challenge, cannot be allowed to be raised in the reply affidavit

or in course of arguments. The underlying principle is that an order

which is bad in the beginning may, by the time it comes to court on

account of a challenge, get validated by additional grounds later

18 (1978) 1 SCC 405 19 AIR 1952 SC 16 20 (2021) 6 SCC 707

17 brought out. As Hon’ble Vivian Bose, J. famously remarked in

Commissioner of Police (supra), orders are not like old wine

becoming better as they grow older. What was later held in Mohinder

Singh Gill (supra) drew inspiration from the principle of law laid down

in Commissioner of Police (supra).

36. Mohinder Singh Gill (supra) has been considered by this Court in All

India Railway Recruitment Board v. K. Shyam Kumar21. It has

been held there that the principle laid down in Mohinder Singh Gill

(supra) is not applicable where larger public interest is involved and in

such a situation, additional grounds can be looked into, to examine the

validity of an order. To the same effect is the decision in PRP Exports

v. State of Tamilnadu22. However, K. Shyam Kumar (supra) and

PRP Exports (supra) have been considered in 63 Moons

Technologies Ltd. v. Union of India23 where it has been held in

paragraph 102 by a coordinate Bench that there is no broad

proposition that the law laid down in Mohinder Singh Gill (supra) will

not apply where larger public interest is involved. The decisions in K.

Shyam Kumar (supra) and P.R.P. Exports (supra) were

distinguished on the ground that the coordinate Benches there had

proceeded to consider subsequent materials that emerged for the

purpose of validating the order under challenge.

37. The need, thus, arises to reconcile the decisions noticed above.

21 (2010) 6 SCC 614 22 (2014) 13 SCC 692 23 (2019) 18 SCC 401

18

38. The respective Benches in Commissioner of Police (supra),

Mohinder Singh Gill (supra), Opto Circuits (India) Ltd. (supra)

and 63 Moons Technologies Ltd. (supra), in our reading, while

mandating what has been noticed above was not required to and, as

such, rightly did not go that far in establishing the principle that, in all

cases coming before it, the court is necessarily bound to confine itself

to the grounds mentioned in the administrative order under challenge

and cannot look beyond such grounds at all. While the courts, in course

of reviewing administrative orders, may not permit additional grounds

not found within the four corners of the said order to be raised in an

affidavit or in oral arguments, we are inclined to the view that the

factual narrative in such order and the documents referred to therein

can certainly be considered together with the case set up in the writ

petition, but in appropriate cases. Such cases could include a case, as

the present, where the mentioned grounds are found to be untenable

and, thus, unsustainable, but an alternative ground (appearing from

the factual narrative in the order itself and/or from the records relevant

thereto) is traceable which could have validly been mentioned as a

ground to support the impugned rejection had there been a proper

application of mind by the administrative authority. In all such cases,

it would be open to the court to uphold it on such alternative ground

subject, of course, to the affected party being put on notice and an

opportunity to respond. This approach, which would prioritize fairness

19 and justice over technicalities, does not run contrary to or inconsistent

with the law laid down in the afore referred precedents.

39. Much as Mr. Naidu would like us to accept that the respondent had

complied with the requirements of the OTS 2020 Scheme, the

respondent’s letter dated 10th November, 2020 is evidence of up-front

payment not having been made. It is clear as a sunny day that an

application for availing the benefit thereunder would be processed if

such application were accompanied by an up-front payment of 5% of

the outstanding dues. Indubitably, the respondent faltered in not

adhering to the express terms of such scheme by not depositing 5%

of the outstanding dues as up-front payment, thereby rendering its

application disentitled to be processed even, far less deserving a

favourable consideration.

40. True it is, this ground flowing from clause 4(i) is not mentioned in the

letter dated 17th November, 2020 as a ground for rejection of the

respondent’s application. However, in view of what we have held

above, this ground is fundamental to the case, strikes at the heart of

the matter and fully justifies the conclusion in the impugned order of

rejection that the respondent, by its own conduct, did not and does

not deserve to be extended the benefit of the OTS under the OTS 2020

Scheme. SBI would be well advised to ascertain and fix responsibility

as to how the respondent’s application could be processed when it did

not comply with the terms of the OTS 2020 Scheme.

20

41. No doubt, clause 2.1 of the OTS 2020 Scheme laying down cases which

are “not eligible” had no application qua the respondent but

overcoming the “not eligible” criteria did not amount to satisfying the

other eligibility criteria. Not being covered by clause 2.1 does not

necessarily lead to the conclusion that a defaulting borrower is

automatically entitled to have the loan account settled on the basis of

the OTS 2020 Scheme. Crossing the hurdle of eligibility per se would

not entitle a defaulting borrower to claim consideration of his/its

application unless the application itself satisfies the other stipulated

conditions.

42. Assuming arguendo that a ground not mentioned in the administrative

order under challenge cannot be permitted to be raised in an affidavit

or in course of arguments, we bear in mind that the High Court – both

the Single Judge and the Division Bench – did not issue any positive

direction to the appellants to grant the proposal of the respondent for

an OTS. What the High Court required was a re-consideration of the

respondent’s application for OTS, treating it to be eligible under clause

2 of the OTS 2020 Scheme. However, clause 2 was not the only clause

relating to eligibility. There were other clauses too, viz. the various

sub-clauses of clause 1 apart from clause 4. Having regard to the fact

that applicability of clause 4(i) of the OTS 2020 Scheme as a potential

ground for rejection had been brought to the notice of the parties and

responses elicited, as noted above, even if the impugned judgment

and order were not disturbed and the appeal dismissed by us, it would

21 still be open to the appellants to fall back on the omission of the

respondent to comply with clause 4(i) of the OTS 2020 Scheme to

reject its application for OTS. Would, in such circumstances, the cause

of justice be advanced by not interfering with the impugned judgment

and order? We think not.

43. From whichever angle one looks at the issue, the conclusion is

irresistible that the respondent’s conduct disabled itself to have a fair

and objection consideration of its application for OTS.

CONCLUSION

44. For the reasons aforesaid, this civil appeal deserves to succeed.

Dismissal of the intra-court appeal of the appellants by the impugned

judgment and order of the Division Bench is set aside together with

the judgment and order of the Single Judge allowing the respondent’s

writ petition because a relevant factor was kept out of its

consideration, which has the effect of significantly impacting the

outcome of the respondent’s application for OTS.

45. The appellants are free to proceed in accordance with law for

enforcement of the security interest. At the same time, we also grant

the respondent an opportunity to submit a fresh proposal for OTS but

not under the OTS 2020 Scheme. If the terms and conditions put forth

by the respondent are found reasonable, workable and acceptable, the

appellants may take such decision on it as deemed fit and proper in

the circumstances.

22

46. The civil appeal, thus, stands allowed. Connected applications, if any,

will stand closed.

47. Except to the extent decided, this judgment of ours shall, however, not

have any effect on the proceedings pending before the DRT.

………………………………….……J. (DIPANKAR DATTA)

…………………….…………………J. (AUGUSTINE GEORGE MASIH) NEW DELHI;

SEPTEMBER 15, 2025.

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