Defaulters can't claim settlement without fulfilling bk conditions, says SC
This story was originally published at 18:34 IST on 17 September 2025
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NEW DELHI – The Supreme Court has observed that defaulting borrowers cannot claim the benefit of one-time settlement schemes without fulfilling banks' conditions, such as making upfront payments. The apex court set aside an order by the Andhra Pradesh High Court that directed the petitioner State Bank of India to reconsider a proposal by Tanya Energy Enterprises for a one-time settlement.
The apex court said clause 2.1 of SBI's One-Time Settlement Scheme, 2020, has laid down cases which are "not eligible" for applying for the scheme. 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 scheme, the court said. "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," the apex court said.
In the current case, Tanya Energy had not fulfilled the criteria of making an upfront payment of 5% of the outstanding dues as a condition for availing the scheme, the court said. It granted Tanya Energy an opportunity to submit a fresh proposal for a one-time settlement, but not under the 2020 scheme. If the terms and conditions put forth by the respondent are found reasonable, workable and acceptable, SBI may take such a decision on it as deemed fit and proper in the circumstances, the court said.
The case has its genesis in Tanya Energy taking credit facilities from SBI by mortgaging seven immovable properties. Thereafter, the company failed to adhere to the payment schedule and defaulted on its obligation to repay. However, in 2020, the bank introduced the one-time settlement scheme, to which Tanya Energy applied.
On Wednesday, shares of State Bank of India ended 3.1% higher at INR 857.15 on the National Stock Exchange. End
Reported by Surya Tripathi
Edited by Saji George Titus
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