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Relief under Article 226 can be exercised when litigant approaches the Court with clean hands: Karnataka High Court

Discretionary relief under Article 226 of the Constitution of India shall not be granted if the conduct of the litigant is not with clean hands. A single judge bench comprising of Justice P.S. Dinesh Kumar while adjudicating the matter in Mr Balakrishna Boob v. Bank of Maharashtra; [WRIT PETITION No. 1267 OF 2021 (GM-RES)], dealt with the issue of One Time Settlement under various schemes of the government.

M/s. Bhagwan Cotton Ginners Pvt. Ltd., has borrowed money from Bank of Maharashtra during 2014. Bank has initiated recovery proceedings. Property mortgaged to the Bank has been brought to auction. The owner of the mortgaged property has presented this writ petition with a prayer inter alia to direct respondent – Bank to consider petitioner’s OTS (One time settlement) offer made in his representation in terms of ‘Maha Rahat Yojana 2020-21’ and ‘Maha Samadhan Yojna 2020-21’. Shri. Dhyan Chinnappa submitted that petitioner has submitted his representation with an offer to pay ₹4.4 Crores under the OTS Scheme. Since Bank has not considered the OTS proposal, petitioner has presented this writ petition. He submitted that the new OTS Scheme is non-discriminatory and non-discretionary in nature. As per the scheme, borrower’s NPA account falls under the category ‘Doubtful’ which requires payment of 70% of the secured portion and 35% of the unsecured portion of the loan. Bank is duty bound to consider the OTS proposal.

The counsel appearing for the petitioner contended that the OTS scheme is non-discriminatory and nondiscretionary. Once the Scheme is in place, a borrower or guarantor is entitled to the benefit of the Scheme. Bank has rejected the OTS offers made by both Company and petitioner without proper application of mind. The counsel appearing for the respondent contended that under the OTS Scheme, petitioner is liable to pay 70% on the secured portion and 35% on the unsecured portion. It is not understandable as to why a borrower is permitted to pay only 70% on the secured portion and the remaining 30% is waived. This means even when a security can realize more money, borrowers are absolved by paying only 70% value. Though this is a policy matter and not under challenge, it is appropriate for those concerned in the Ministry of Finance and RBI to have a re-look into the Scheme.

The Court upon considering the aforesaid facts dismissed the petition and stated that “Petitioner has been actively involved with the borrower. Company, as the borrower has filed writ petition in Kalaburagi Bench and petitioner as the Ex-Director and guarantor has filed this writ petition. Further, petitioner has suppressed material facts with regard to proceedings in Kalaburagi Bench. It is settled that relief under Article 226 is discretionary in nature and can be exercised only when a litigant approaches the Court with clean hands. In view of the conduct of borrower – Company and the petitioner, the petitioner shall not be entitled for the equitable and discretionary relief under Article 226 of the Constitution of India. Though Bank has declared the account as NPA in 2016, the borrower and the guarantor have successfully stalled recovery of public money till date. Therefore, this petition is liable to be dismissed with costs.”

Click here to read the judgment.

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