Shri Mohan Lal Patidar vs. Bank Of Maharastra

Held

The Court held that the Bank of Maharashtra could not unilaterally enhance the One Time Settlement (OTS) amount after it was quantified and a substantial portion was deposited by the petitioner. The Court found that the Bank's communication dated March 9, 2021, quantified the OTS amount as Rs. 36,50,000/-, and the petitioner deposited Rs. 35,00,000/-. The subsequent enhancement to Rs. 50.50 lakhs was deemed arbitrary, contrary to the principles of natural justice, and violative of the doctrine of legitimate expectation. The Court reasoned that the Bank, as a public sector entity, is bound by fairness in its dealings. The automatic lapsation clause in the OTS scheme could not be invoked when the petitioner promptly challenged the Bank's illegal enhancement. The Court distinguished the cited judgment of The Bijnor Urban Cooperative Bank vs. Meenal Agrawal, noting its different factual backdrop. The Court set aside the impugned letters dated August 25, 2021, and September 22, 2021, and directed the Bank to issue 'sanction letters' to the petitioners, accepting the OTS proposals and providing consequential benefits. The Court found the petitioner to be eligible and to have fulfilled the requirements of the OTS scheme.

Facts

The petitioners, Shri Mohanlal Patidar and Shri Brijesh Patidar, sought to settle their loan dues with the Bank of Maharashtra under a One Time Settlement (OTS) scheme. The Bank, by a letter dated March 9, 2021, quantified the OTS amount as Rs. 36,50,000/-. The petitioner, Shri Mohanlal Patidar, deposited Rs. 35,00,000/- towards this settlement. Subsequently, the Bank issued communications dated August 25, 2021, and September 22, 2021, unilaterally enhancing the settlement amount to Rs. 50.50 lakhs. The petitioners challenged these communications, arguing that the Bank acted contrary to the OTS scheme and principles of natural justice. The Bank contended that the OTS was subject to eligibility and that the petitioner had not expressly accepted the revised proposal.

Key Issues

1. Whether the Bank of Maharashtra could unilaterally enhance the One Time Settlement (OTS) amount after it was quantified and a substantial part of the amount was deposited by the petitioner, contrary to the terms of the OTS scheme and the principles of natural justice? (Relates to the implementation of the OTS scheme and principles of natural justice). 2. Whether the doctrine of legitimate expectation applies in this case, given the Bank's initial quantification of the OTS amount and the petitioner's subsequent actions based on that quantification? (Relates to administrative decisions and fairness). Petitioner's Arguments: - The Bank's letter dated March 9, 2021, quantified the OTS amount, and the petitioner deposited over 95% of it within the stipulated time. - The Bank's unilateral enhancement of the amount to Rs. 50.50 lakhs is contrary to the OTS scheme and the principles of natural justice. - The OTS scheme, as interpreted in Sardar Associates & Ors. vs. Punjab and Sind Bank & Ors., is binding on the Bank. - The Bank cannot unilaterally enhance the amount or treat the accepted offer as lapsed, especially when the petitioner promptly challenged the enhancement. - Reliance was placed on Laxmi Grih Udyog and Another vs. State of Madhya Pradesh and Another for the proposition that a bank cannot take a different stand after an OTS amount is quantified and deposited. Revenue/State (Bank of Maharashtra) Arguments: - No assurance was given that the OTS of Rs. 36.50 lakhs would be accepted. - It was clarified that the OTS would be processed subject to the petitioner's eligibility.