Safiya Malik

The High Court of Calcutta, Single Bench of Justice Aniruddha Roy has rejected a commercial suit filed by Senbo Engineering Limited against the Bank of Maharashtra, declining to enforce an asserted “concluded” one-time settlement of the company’s loan liabilities and directing that the plaint be removed from the file. The Court held that, in the absence of any binding statutory or regulator-framed scheme, a proposed one-time settlement remains a matter of the bank’s commercial discretion, and a borrower cannot compel the bank to accept such terms or seek specific performance of the proposal. The Bench therefore found that the reliefs claimed against the Bank of Maharashtra were not legally sustainable and did not justify proceeding to a civil trial.

The matter concerned an application filed by the defendant-bank seeking rejection of the plaint in a commercial suit instituted by the borrower-plaintiff. The plaintiff had availed various financial facilities from the bank, subsequently defaulted, and its account was classified as a Non-Performing Asset. The bank issued notices under Section 13(2) and Section 13(4) of the SARFAESI Act. The bank also initiated proceedings under Section 19 of the Debts Recovery Act before the DRT and later filed proceedings under Section 7 of the Insolvency and Bankruptcy Code.

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During these proceedings, the plaintiff submitted a first one-time settlement proposal, which was not accepted. A second proposal was submitted on December 27, 2024, which the bank rejected on January 21, 2025 and again on February 13, 2025. The plaintiff asserted that payments made during negotiations were accepted by the bank and that these interactions created a concluded contract for settlement. The plaintiff sought declarations, specific performance directing acceptance of the balance settlement amount, injunctions restraining coercive steps, and cancellation of specific correspondence exchanged between the parties.

The bank opposed the suit, contending that a borrower cannot claim OTS as a matter of right and that such arrangements lack statutory force. It argued that the reliefs sought were barred under Section 34 of the SARFAESI Act, Section 63 of the IBC, and Section 17 of the DRT Act, and invoked judicial precedents governing enforceability of OTS proposals. The plaintiff relied on the Supreme Court decision in Bank of Rajasthan Ltd. to argue maintainability of an independent civil suit.

The Court recorded that its task under Order VII Rule 11 CPC is confined to examining the plaint as it stands, stating that “it is the only duty caste upon the Court to read the plaint as it is, by taking the statements made therein as true, correct and sacrosanct including the reliefs claimed therein.” It further observed that “if on a meaningful and plain reading of the plaint, the Court finds… that the plaint is barred by law… the Court is empowered to reject the plaint summarily.”

The Court noted that the plaintiff was “admittedly a defaulter” and that the OTS scheme relied upon had no statutory basis, recording that “in absence of any RBI scheme and/or any other statutory scheme, the OTS is an arrangement between the bank and its defaulter borrower without any statutory flavour.” It stated that “no right has been created in favour of the plaintiff to enforce the said OTS by way of specific performance or otherwise.”

Referring to the plaintiff’s claim of a concluded contract through negotiations and payments, the Court observed that two OTS proposals had been rejected, noting that “the rejection clearly shows a conscious decision of the bank while rejecting the OTS.” The Court reiterated that such decisions lie in the bank’s commercial domain, observing that “it is ultimately for the bank to take a conscious decision in its own interest and to secure/recover the outstanding debt.”

Quoting from the Supreme Court’s judgment in Bijnor Urban Co-operative Bank Ltd., the Court reproduced the principle that “no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme.” It included further extracts such as “no bank can be compelled to accept a lesser amount under the OTS Scheme” and “such a decision should be left to the commercial wisdom of the bank whose amount is involved.”

The Court contrasted the reliefs in the Bank of Rajasthan Ltd. case with those in the present plaint, recording that “the reliefs claimed in the instant plaint are clearly barred by law, as the plaintiff cannot enforce an OTS.” It held that even if jurisdiction is not expressly barred, “if on a plain and meaningful reading of the plaint, it appears… that the plaint… is otherwise barred by law, the same should be and liable to be rejected.”

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The Court directed that “the plaint filed in the instant commercial suit being CS-COM/63/2025 stands rejected and is directed to be taken off the file.” It further ordered that “the suit register shall be rectified accordingly by the department. The instant application being IA NO. GA-COM/2/2025 stands disposed of without any order as to cost.”

Advocates Representing the Parties

For the Plaintiff:Mr. Dhruba Ghosh, Senior Advocate; Mr. Nilay Sengupta, Advocate; Mr. Altamash Alim, Advocate; Mr. Sujit Banerjee, Advocate; Ms. Sunanda Samanta, Advocate

For the Defendant/Bank:
Mr. Sourav Kr. Mukherjee, Advocate; Mr. Nirmalya Dasgupta, Advocate; Ms. Falguni Jana, Advocate; Ms. Sohana Pal, Advocate; Mr. Souhardya Mitra, Advocate

Case Title: Senbo Engineering Limited vs Bank of Maharashtra
Case Number: IA No. GA-COM/2/2025 in CS-COM/63/2025
Bench: Justice Aniruddha Roy