Full Judgment Text
REPORTABLE
2025 INSC 1119
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
J U D G M E N T
DIPANKAR DATTA, J.
HE PPEAL
T A
1. In this appeal, by special leave, a challenge has been mounted to the
st
judgment and order dated 21 December, 2022 passed by a Division
1
Bench of the High Court of Judicature of Andhra Pradesh at Amravati .
2
An intra-court writ appeal of the Assistant General Manager and the
3 4
Deputy General Manager of the State Bank of India 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
nd
and order dated 22 September, 2022 of a Single Judge, who allowed
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the respondent’s writ petition .
T HE F ACTS
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
6
Enforcement of Security Interest Act, 2002 .
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
st
asset”, triggering a demand notice dated 31 May, 2017 under
Section 13(2) of the SARFAESI Act. A sum of Rs. 7 crore
(approximately) was demanded from the respondent, with further
st
interest from 1 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
7 nd
Bankruptcy Act, 1993 were initiated by the SBI on 22
8
December, 2017 by filing an original application before the Debts
9
Recovery Tribunal, Vishakhapatnam . A decree was sought in a
sum of Rs. 8 crore approximately, with future interest at 13.65%
till date of realisation.
th
e) On 14 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
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sanction letter” on 23 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
nd
sequel whereto the sanction letter was cancelled on 22 February,
2019.
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g) Thereafter, while making a request to the appellants on 13
August, 2019 not to take possession of the secured assets, the
respondent made a further payment of Rs.50 lakh.
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h) On 16 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.
th
i) Respondent challenged the sale notice before the DRT on 25
October, 2019 by filing an application under Section 17 of the
10 st
SARFAESI Act . DRT, vide order dated 21 November, 2019,
rd
granted interim stay of the sale till 23 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
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issued on 12 February, 2020. Respondent again challenged this
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S.A. No. 399 of 2019
4
11
notice by filing an interim application 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
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properties was sold in an auction on 18 March, 2020 and sale
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confirmation letter was issued to the auction purchaser on 15
April, 2020.
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k) While things stood thus, on 12 October, 2020, SBI introduced a
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scheme for One Time Settlement of outstanding dues in excess
st 13
of Rs. 20 lakh and up to Rs. 50 crore, as on 31 March, 2020 . A
week later, a clarificatory circular under the OTS 2020 Scheme
th
was issued publishing an internal legal opinion dated 29 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.
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l) By his letter dated 19 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
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had with the Chief Manager of SBI on 15 October, 2020, wherein
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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.
st
6,76,59,000/-, as on 31 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”.
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m) Close on the heels of the said letter dated 19 October 2020, the
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respondent addressed a letter dated 10 November, 2020 to the
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appellants. The said letter dated 10 November requested the
addressees to consider the contents of the respondent’s letter
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dated 19 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.
th
o) This was followed by a letter of the first appellant dated 17
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.
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r) A fresh sale notice was issued on 6 April, 2022. In pursuance
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thereof, another auction was held on 27 April, 2022. Challenging
such auction, the respondent once again approached the DRT by
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filing a fresh application 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
th th
dated 19 October, 2020 and 10 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
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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.
A RGUMENTS OF THE P ARTIES
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.
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5. Referring to the letter dated 23 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
st
21 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
15
this Court in Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal ,
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.
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12. Drawing attention to this Court’s order dated 18 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
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officer of the SBI had issued a sale notice on 12 February 2020,
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followed by an auction on 18 March 2020 and confirmation of sale on
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15 April 2020. Before completion of the process, the respondent
challenged it under Section 17 of the SARFAESI Act and by an order
11
st
dated 1 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
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was refunded on 8 September 2021 by the authorized officer himself.
Hence, no third-party rights accrued. Reference was also made to the
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respondent’s letter dated 10 November 2020 offering to indemnify
the SBI against any vexatious claims by the purchaser.
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14. With regard to the second auction of 26 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
HE OTICE SSUING RDER
T N I O
17. Notice on the special leave petition, giving rise to this appeal, was
th
issued on 18 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.
A NALYSIS AND R EASONS
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
16
of India v. Arvindra Electronics Private Limited .
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
17
Biswajit Das v. Central Bureau of Investigation .
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
th
17 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
18
Commissioner and the larger Bench decisions of this Court in
19
Commissioner of Police v. Gordhandas Bhanji and Opto
20
Circuits (India) Ltd. v. Axis Bank , 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
21
India Railway Recruitment Board v. K. Shyam Kumar . 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
22
v. State of Tamilnadu . However, K. Shyam Kumar (supra) and
PRP Exports (supra) have been considered in 63 Moons
23
Technologies Ltd. v. Union of India 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
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respondent’s letter dated 10 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
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letter dated 17 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.
C ONCLUSION
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.
23
2025 INSC 1119
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
J U D G M E N T
DIPANKAR DATTA, J.
HE PPEAL
T A
1. In this appeal, by special leave, a challenge has been mounted to the
st
judgment and order dated 21 December, 2022 passed by a Division
1
Bench of the High Court of Judicature of Andhra Pradesh at Amravati .
2
An intra-court writ appeal of the Assistant General Manager and the
3 4
Deputy General Manager of the State Bank of India 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
nd
and order dated 22 September, 2022 of a Single Judge, who allowed
5
the respondent’s writ petition .
T HE F ACTS
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
6
Enforcement of Security Interest Act, 2002 .
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
st
asset”, triggering a demand notice dated 31 May, 2017 under
Section 13(2) of the SARFAESI Act. A sum of Rs. 7 crore
(approximately) was demanded from the respondent, with further
st
interest from 1 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
7 nd
Bankruptcy Act, 1993 were initiated by the SBI on 22
8
December, 2017 by filing an original application before the Debts
9
Recovery Tribunal, Vishakhapatnam . A decree was sought in a
sum of Rs. 8 crore approximately, with future interest at 13.65%
till date of realisation.
th
e) On 14 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
rd
sanction letter” on 23 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
nd
sequel whereto the sanction letter was cancelled on 22 February,
2019.
th
g) Thereafter, while making a request to the appellants on 13
August, 2019 not to take possession of the secured assets, the
respondent made a further payment of Rs.50 lakh.
th
h) On 16 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.
th
i) Respondent challenged the sale notice before the DRT on 25
October, 2019 by filing an application under Section 17 of the
10 st
SARFAESI Act . DRT, vide order dated 21 November, 2019,
rd
granted interim stay of the sale till 23 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
th
issued on 12 February, 2020. Respondent again challenged this
10
S.A. No. 399 of 2019
4
11
notice by filing an interim application 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
th
properties was sold in an auction on 18 March, 2020 and sale
th
confirmation letter was issued to the auction purchaser on 15
April, 2020.
th
k) While things stood thus, on 12 October, 2020, SBI introduced a
12
scheme for One Time Settlement of outstanding dues in excess
st 13
of Rs. 20 lakh and up to Rs. 50 crore, as on 31 March, 2020 . A
week later, a clarificatory circular under the OTS 2020 Scheme
th
was issued publishing an internal legal opinion dated 29 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.
th
l) By his letter dated 19 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
th
had with the Chief Manager of SBI on 15 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.
st
6,76,59,000/-, as on 31 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”.
th
m) Close on the heels of the said letter dated 19 October 2020, the
th
respondent addressed a letter dated 10 November, 2020 to the
th
appellants. The said letter dated 10 November requested the
addressees to consider the contents of the respondent’s letter
th
dated 19 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.
th
o) This was followed by a letter of the first appellant dated 17
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.
th
r) A fresh sale notice was issued on 6 April, 2022. In pursuance
th
thereof, another auction was held on 27 April, 2022. Challenging
such auction, the respondent once again approached the DRT by
14
filing a fresh application 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
th th
dated 19 October, 2020 and 10 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.
A RGUMENTS OF THE P ARTIES
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.
rd
5. Referring to the letter dated 23 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
st
21 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
15
this Court in Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal ,
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.
th
12. Drawing attention to this Court’s order dated 18 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
th
officer of the SBI had issued a sale notice on 12 February 2020,
th
followed by an auction on 18 March 2020 and confirmation of sale on
th
15 April 2020. Before completion of the process, the respondent
challenged it under Section 17 of the SARFAESI Act and by an order
11
st
dated 1 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
th
was refunded on 8 September 2021 by the authorized officer himself.
Hence, no third-party rights accrued. Reference was also made to the
th
respondent’s letter dated 10 November 2020 offering to indemnify
the SBI against any vexatious claims by the purchaser.
th
14. With regard to the second auction of 26 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
HE OTICE SSUING RDER
T N I O
17. Notice on the special leave petition, giving rise to this appeal, was
th
issued on 18 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.
A NALYSIS AND R EASONS
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
16
of India v. Arvindra Electronics Private Limited .
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
17
Biswajit Das v. Central Bureau of Investigation .
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
th
17 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
18
Commissioner and the larger Bench decisions of this Court in
19
Commissioner of Police v. Gordhandas Bhanji and Opto
20
Circuits (India) Ltd. v. Axis Bank , 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
21
India Railway Recruitment Board v. K. Shyam Kumar . 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
22
v. State of Tamilnadu . However, K. Shyam Kumar (supra) and
PRP Exports (supra) have been considered in 63 Moons
23
Technologies Ltd. v. Union of India 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
th
respondent’s letter dated 10 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
th
letter dated 17 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
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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.
C ONCLUSION
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.
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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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