Orissa High Court declares that there is no judicial interference in the loan recovery process | Bhubaneswar News

Cuttack: High Court of Orissa has ruled that courts must refrain from interfering in the process recovery of the loan undertaken by financial institutions in accordance with the law. The court further stated that “delays and disruptions in debt collection not only undermine the financial stability of credit institutions but also adversely affect the overall credit ecosystem, ultimately discouraging the availability of credit to genuine borrowers.”
“Moreover, courts should support the process of loan recovery by avoiding unwarranted interference in cases where the lender has acted within the limits of the law,” single-judge SK Panigrahi opined on Tuesday while dismissing a petition seeking intervention against reject the cancellation. of recovery of loans under the sanctioned One-Time Scheme (OTS). “In the present case, where petitioner has failed to comply with the terms of the OTS scheme, this court is of the view that judicial intervention would set an undesirable precedent, discourage budgetary discipline and hinder effective debt recovery mechanisms. Consequently, there is no interference. in this case,” Judge Panigrahi noted.
The petitioner availed a cash loan and a car loan from the Udala branch of State Bank of India in Mayurbhanj district in 2013 and 2019 respectively. Both loans were operational with installments but later became non-performing assets (NPA) due to delayed repayments due to business losses and the financial impact of the Covid-19 pandemic. Moreover, in 2016, the petitioner’s son availed a student loan, for which he guaranteed. That account was later declared as an NPA.
As per the OTS, the petitioner had to pay Rs 60 lakh in three equal installments of Rs 20 lakh each before July 26, 2023. The bank canceled the sanctioned settlement under OTS on December 1, 2023, after the petitioner failed to pay the entire Rs. 60 lakh on the stipulated date after payment of two installments of Rs 20 lakh each.
Taking into account the facts and circumstances of the case, Justice Panigrahi said: “It is abundantly clear that the petitioner has no legal right to seek an extension of time for settlement under the already sanctioned OTS, especially when the bank has already made significant concessions to to settle the NPA account.”
Justice Panigrahi further stated, “Petitioner’s reliance on an outdated RBI circular, which has ceased to be in force after March 2006, is misplaced and does not advance the petitioner’s case. In the absence of any other legal provision or precedent to support petitioner’s contention, this The court sees no reason to intervene in the matter.”
“The sanctity of contracts and the terms of settlement agreements cannot be undermined by requests for unilateral changes or extensions that conflict with the agreed terms,” the judge added.