Supreme Court of India
ASSISTANT GENERAL MANAGER STATE BANK OF INDIA & ANR.versusTANYA ENERGY ENTERPRISES THROUGH ITS MANAGING PARTNER SHRI ALLURI LAKSHMI NARASIMHA VARMA
- Citation
- 2025 INSC 1119
- Decided
- 15 September 2025
- Disposal
- Appeal(s) allowed
- Bench
- DIPANKAR DATTA
Holding
The High Court was not justified in interfering with the rejection, as the borrower’s application was incomplete for failing to deposit the required up‑front payment, and the court may uphold the rejection on this alternative ground after giving notice.
Summary
The State Bank of India (SBI) had secured credit facilities from Tanya Energy Enterprises, which defaulted and faced recovery proceedings under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act. SBI introduced a One Time Settlement (OTS) 2020 Scheme requiring a 5% up‑front payment for any application, but the borrower failed to make this payment. SBI rejected the borrower’s OTS application, citing the borrower’s prior non‑compliance and failure to deposit the required amount, a ground not expressly mentioned in the rejection letter. The High Court intervened, directing a reconsideration of the rejection, and the Single Judge allowed the borrower’s writ petition. On appeal, the Supreme Court held that the High Court erred, emphasizing that the borrower’s non‑payment of the mandatory up‑front amount rendered the application incomplete and that courts may consider alternative grounds not stated in the original order if the parties are given notice. Consequently, the civil appeal was allowed, setting aside both the Division Bench and Single Judge orders, while permitting the borrower to submit a fresh proposal outside the OTS 2020 Scheme.
Issues considered
- Whether the High Court erred in interfering with the order rejecting the borrower’s OTS 2020 Scheme application and directing its reconsideration.
- Whether a court can uphold a rejection order based on a ground not mentioned in the order when the stated grounds are untenable.
- Whether the borrower’s failure to make the mandatory 5% up‑front payment under the OTS 2020 Scheme disqualifies the application.
Legislation cited
- Recovery of Debts and Bankruptcy Act, 1993s. 19
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002s. 13(2), s. 13(4), s. 17, s. 2(f), s. 2(zd)
Headnote
Issue for Consideration (i) Whether the High Court erred in its interference with the order of rejection of the respondent’s application under the One Time Settlement 2020 Scheme and (ii) 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. Headnotes†
Subjects
Credit facilitiesSecured creditorBorrowerMortgageOTS 2020 SchemeExpress terms of schemeBenefit of the OTS 2020Failure to deposit amountAdministrative orderReviewing of administrative orderFactual narrative in orderAlternative ground traceable from administrative orderAlternative ground subject
Judgment
[2025] 9 S.C.R. 963 : 2025 INSC 1119
Assistant General Manager State Bank of India & Anr.
v.
Tanya Energy Enterprises Through Its Managing Partner
Shri Alluri Lakshmi Narasimha Varma
(Civil Appeal No. 11134 of 2025)
15 September 2025
[Dipankar Datta* and Augustine George Masih, JJ.]
Issue for Consideration
(i) Whether the High Court erred in its interference with the order
of rejection of the respondent’s application under the One Time
Settlement 2020 Scheme and directing reconsideration thereof;
(ii) 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.
Headnotes†
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – Respondent
availed credit facilities from the SBI by mortgaging 7 immovable
properties – Respondent defaulted – While proceedings were
pending before the DRT, SBI introduced One Time Settlement
Scheme (OTS 2020 Scheme) – Respondent filed application
for OTS – 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 – Writ Petition – The Single
Judge of the High Court held that respondent was entitled
to the benefit of the OTS 2020 Scheme – The appeal against
the same was dismissed by the Division Bench of the High
Court – Correctness:
Held: The High Court was not justified in its interference with
the order of rejection – OTS 2020 Scheme was launched by the
* Author
964 [2025] 9 S.C.R.
Supreme Court Reports
SBI to augment efforts towards recovery of outstanding dues –
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 – While applying
for the benefit of the OTS 2020 Scheme, respondent did not
deposit a single paisa towards up-front payment – 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 – 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 – The High Court missed this aspect
altogether – 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 – This ground is not mentioned as a
ground for rejection of the respondent’s application – However,
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 – Thus, 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 of the High Court. [Paras 24, 25, 27-29, 39, 40, 44]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – Respondent
filed application for One Time Settlement 2020 Scheme –
Application rejected – 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:
Held: 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, this Court is 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
[2025] 9 S.C.R. 965
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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 and justice over technicalities, does
not run contrary to or inconsistent with the law laid down in the
precedents. [Para 38]
Case Law Cited
Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal [2021] 9
SCR 416 : (2023) 2 SCC 805; State Bank of India v. Arvindra
Electronics Private Limited [2022] 13 SCR 1073 : (2023) 1 SCC
540; Biswajit Das v. Central Bureau of Investigation [2025] 2 SCR
110 : 2025 SCC OnLine SC 124; Mohinder Singh Gill v. Chief
Election Commissioner [1978] 2 SCR 272 : (1978) 1 SCC 405;
Commissioner of Police v. Gordhandas Bhanji [1952] 1 SCR 135 :
AIR 1952 SC 16; Opto Circuits (India) Ltd. v. Axis Bank [2021] 2
SCR 81 : (2021) 6 SCC 707; All India Railway Recruitment Board v.
K. Shyam Kumar [2010] 6 SCR 291 : (2010) 6 SCC 614; PRP
Exports v. State of Tamilnadu [2013] 16 SCR 1107 : (2014) 13
SCC 692; 63 Moons Technologies Ltd. v. Union of India [2019] 8
SCR 26 : (2019) 18 SCC 401 – referred to.
List of Acts
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002; Recovery of Debts
and Bankruptcy Act, 1993.
List of Keywords
Credit facilities; Secured creditor; Borrower; Mortgage; OTS 2020
Scheme; Express terms of scheme; Benefit of the OTS 2020;
Failure to deposit amount; Administrative order; Reviewing of
administrative order; Factual narrative in order; Alternative ground
traceable from administrative order; Alternative ground subject.
966 [2025] 9 S.C.R.
Supreme Court Reports
Case Arising From
C I V I L A P P E L L AT E J U R I S D I C T I O N : C i v i l A p p e a l N o .
11134 of 2025
From the Judgment and Order dated 21.12.2022 of the High Court
of Andhra Pradesh at Amravati in WA No. 918 of 2022
Appearances for Parties
Advs. for the Appellants:
N Venkataraman, A.S.G., Sanjay Kapur, Surya Prakash,
Ms. Shubhra Kapur, Ms. Mahima Kapur, Ms. Mansi Kapur.
Advs. for the Respondent:
Dama Seshadri Naidu, Sr. Adv., Mullapudi Rambabu, Praveen
Kumar Sharma, Ms. Mahima Pandey, Ms. K.m.s. Sivani,
Ms. D.Poornima, M/S. M. Rambabu And Co.
Judgment / Order of the Supreme Court
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 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
1 High Court
2 Writ Appeal No. 918 of 2022
3 the appellants
4 SBI
5 Writ Petition No. 22706 of 2020
[2025] 9 S.C.R. 967
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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 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
6 SARFAESI Act
7 RDB Act
8 OA No. 4013 of 2017
9 DRT
968 [2025] 9 S.C.R.
Supreme Court Reports
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.”
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 13th
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,
10 S.A. No. 399 of 2019
[2025] 9 S.C.R. 969
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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
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 15th 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 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.
11 I A No 637 of 2020
12 OTS
13 THE OTS 2020 Scheme
970 [2025] 9 S.C.R.
Supreme Court Reports
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 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
[2025] 9 S.C.R. 971
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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.
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
14 S.A. 238 of 2022
972 [2025] 9 S.C.R.
Supreme Court Reports
SARFAESI Act have been initiated and auction of the property
is underway; hence, the respondent could not have been held
not eligible under 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),
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.
[2025] 9 S.C.R. 973
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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,
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
15 (2023) 2 SCC 805
974 [2025] 9 S.C.R.
Supreme Court Reports
and by an order 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.
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
[2025] 9 S.C.R. 975
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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 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
16 (2023) 1 SCC 540
17 2025 SCC OnLine SC 124
976 [2025] 9 S.C.R.
Supreme Court Reports
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:
“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
[2025] 9 S.C.R. 977
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
amount as required under the OTS 2020 Scheme at the time of
submission of its application.
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.
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
18 (1978) 1 SCC 405
978 [2025] 9 S.C.R.
Supreme Court Reports
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 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)
19 AIR 1952 SC 16
20 (2021) 6 SCC 707
21 (2010) 6 SCC 614
22 (2014) 13 SCC 692
23 (2019) 18 SCC 401
[2025] 9 S.C.R. 979
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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.
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 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
980 [2025] 9 S.C.R.
Supreme Court Reports
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.
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 still be open to the appellants to fall back
[2025] 9 S.C.R. 981
Assistant General Manager State Bank of India & Anr. v. Tanya Energy Enterprises
Through Its Managing Partner Shri Alluri Lakshmi Narasimha Varma
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.
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.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Ankit Gyan
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