Chattisgarh High Court
Mr. Ravi Patel vs Bank Of Baroda on 13 May, 2026
1
2026:CGHC:22503
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 4081 of 2021
Reserved on 01/04/2026
Pronounced on 13/05/2026
1 - Mr. Ravi Patel Age 35 Years, Occupation Business, R/o New Timber
Market, Fafadih, Raipur Chhattisgarh
2 - Mrs. Alka Patel, Aged 32 Years, Occupation Household, R/o New
Timber Market, Fafadih, Raipur, Chhattisgarh
3 - Sunmarg Ispat Pvt. Ltd. Through Director, Mr. Dilip Kumar Patel
having registered office at Ring Road No. 2, Nehar Road Gondwara,
Urla Industrial Area, Raipur CT 493221 IN
4 - Manav Warehousing Pvt Ltd. Formely Known as Summarg Steels
Pvt Ltd Through Director, Mr Naresh Patel, Hitesh Patel And Chinmay
Bhatt having Registered Office at Ring Road No. 2, Nehar Road
Gondwara, Urla Industrial Area, Raipur CT 493221 IN
... Petitioner(s)
versus
Digitally
signed by
SHYNA
SHYNA AJAY
1 - Bank Of Baroda Through Authorised Officer Head Office Baroda
AJAY Date:
Bhavan, R C Dutt Road, Alkapuri, Baroda (Gujrat)- 390007
2026.05.15
16:55:33
+0530
2
2 - Bank Of Baroda Through Authorised Officer Pandri Branch, B-28 4
Devendra Nagar, Raipur, Raipur Branch, Chhattisgarh 492004
... Respondent(s)
(Cause Title downloaded from CIS Periphery) For Petitioner(s) : Mr. Sharad Mishra, Advocate For Respondent(s) : Mr. Vinod Deshmukh, Advocate SB: Hon'ble Mr. Justice Amitendra Kishore Prasad C A V Order
1. The Petitioners are aggrieved by the action of the Respondent- Bank in failing to adjust the loan amount disbursed to Petitioners 3 & 4 (the Companies) as per the terms of a One-Time Settlement (OTS) offer. Further, the Respondents have failed to refund the sum of Rs.100 Lakhs (Rs.1 Crore) deposited by Petitioners 1 & 2 towards the said OTS in lieu of the loan availed by the Petitioner- Companies from the Respondent-Bank . The said deposit was made for the limited and specific purpose of the settlement, attracting 'No Lien'.
2. The grievance of the Petitioners is that the Respondent-Bank proposed Petitioners 1 & 2 to deposit a sum of Rs 1 Crore as a guarantee, on the assurance that the said amount would be refunded upon realization of the loan amounts from Petitioners 3 & 4. Since Petitioners 1 & 2 are not the borrowers, the Respondents cannot adjust their personal funds against the liabilities of Petitioners 3 & 4. Furthermore, Petitioners 3 & 4 3 submitted an OTS offer as security, the proceeds of which were maintained in a No Lien account. The Respondent-Bank sanctioned the OTS subject to new terms and conditions that were not accepted by Petitioners 3 & 4. Petitioners 1 & 2 do not have any valid contractual relationship with either Petitioners 3 & 4 or the Respondent-Bank regarding the loan liability. However, the Bank has illegally without authority adjusted the amount of Rs.100 lakhs (1 Crore), which was deposited under a 'No Lien' status. The aforesaid action of the Respondents is illegal, arbitrary and with malafide intentions. Hence, the Petitioners have filed this petition for redressal of their grievance.
3. The petitioners seeks the following reliefs in the petition :
(i) Issue suitable writ and direct respondent no. 2 to refund the amount of Rs. 50.00 lacs to petitioner no. 1 and Rs. 50.00 lacs to petitioner no. 2's account along with interest from the date of adjustment of amount i.e. 02.02.2019 till the entire amount is paid.
(ii) Grant any other relief the Hon'ble court deems fit, in the interest of justice.
4. The narrative of the Petitioners' grievance, as projected herein, is delineated as follows:
Petitioners 3 & 4-Companies in order to conduct their business were operating Two Cash Credit/Loan Accounts sanctioned by Respondent No.2 (Bank) vide Account No. 4 17380500000093 and Account No.17380500000095 ( both active since 28.09.2011). On 29.12.2014 and 31.12.2014, Respondent No. 2 declared Petitioners 3 & 4 as Non-Performing Assets (NPA), respectively. Pursuant to this declaration, Respondent No.2 initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (henceforth "SARFAESI Act"). Petitioners 3 & 4 are not willful defaulters, rather their inability to service the subject loan accounts occasioned due to extraordinary circumstances beyond their control. Petitioner No.4 was previously known as Sunmarg Steels Pvt Ltd., but, after a change in ownership, now known as Manav Warehousing Pvt Ltd. Petitioner No.1 is the cousin of the Director of Petitioner No.3-Company and is a businessman. Petitioner No.2 is the wife of Petitioner No.1. Petitioners 3 & 4 are Companies registered under the Companies Act, 1956, and were engaged in the business of supplying steel and steel products. In an effort to settle dues, Petitioners 3 & 4 submitted a OTS offer dated 16.7.2018 to Respondent No.1, providing a payment plan. To meet the bank's mandatory requirement of "upfront money" as a show of bona fides, Petitioners 3 & 4 approached Petitioners 1 & 2 for financial assistance. Petitioners 1 & 2 arranged a sum of Rs.100 lakhs to be deposited in their capacity as third parties. Petitioner No.1 issued Cheque Nos. 264298 and 264299 and Petitioner No.2 issued cheque Nos. 256653 and 256655, each for Rs.25,00,000/-, to be held by Respondent No.2 in a "No Lien"
account. On 26.9.2018, Respondent No.2 informed the borrowers 5 that the offer of Rs.1110 lakhs was insufficient and requested an improved offer. Ultimately, on 28.12.2018, Petitioners 3 & 4 submitted a revised OTS offer of Rs.1125 lakhs, reiterating clause 7(iii) that the "No Lien" status of Rs.100 lakhs deposited by Petitioners 1 & 2 shall continue. On 11.1.2019, respondent No.2 issued a sanction letter approving the OTS. However, the Bank inserted a condition stating that if the borrower/guarantor have not accepted the compromise sanction within 15 days from the date of sanction or not deposited amount as per schedule, the sanction will be terminated automatically. Respondent No. 2, while acting in opposition to the offer and payment plan submitted in the OTS offer dated 28.12.2018, proceeded to completely change the terms and conditions of the settlement without the prior notification to and acceptance by Petitioners 3 & 4. After receipt of the letter dated 11.1.2019 from Respondent No.2, the OTS could not be finalized between Petitioners 3 & 4 and Respondent No.2. As the terms and conditions set forth by Respondent No.2 in the said sanction letter were unacceptable, no settlement was reached. On account of this disagreement regarding the settlement amount and terms, Petitioners 1 & 2 vide letter dated 11.3.2019 requested Respondent No.2 to refund the sum of Rs.100 Lakhs previously deposited. Subsequently, on 13.3.2019, Petitioners 3 & 4 also communicated to the Respondent-Bank that since the OTS sanction deviated from their original offer and was unacceptable, the amount of Rs.100 Lakhs held in a 'No Lien" Account be refunded to them. By letter dated 18.3.2019, Respondent No.2 6 informed Petitioners 3 & 4 that since the OTS offer was sanctioned by the competent authority, the amount in the 'No Lien' account was adjusted against Petitioner No.3's cash credit account. As this adjustment was mentioned in the sanction letter dated 11.1.2019, the request for refund was denied. The Petitioners submitted multiple representations protesting this illegal appropriation. In response to a representation/letter dated
5.4.2019, Respondent No.2 replied vide letter dated 11.4.2019 that as per the sanction letter, the amount was supposed to be appropriated immediately and as Petitioners 3 & 4 did not abide by the other terms of the sanction letter, the Bank has rightly appropriated the amount of Rs.100 Lakhs. Aggrieved by this arbitrary act, Petitioners 1 & 2 approached the Banking Ombudsman. However, on 10.5.2019, the Ombudsman rejected the complaint, stating it fell outside the purview of the Banking Ombudsman Scheme, 2006. An appeal preferred against the said order, was also dismissed by the Appellate Authority. After exhausting all the remedies, Petitioners 3 & 4 issued a legal notice through their counsel on 1.6.2020. However, till date, Respondent No.2 has not refunded the amount of Rs.100 Lakhs. Hence, this Petition.
5. Mr. Sharad Mishra, learned counsel for the petitioners submits that the Bank is having no authority under the law to adjust the funds deposited by the Petitioners on 'No Lien' basis. Though the Bank had assured the petitioners that the subject amount would be refunded after conclusion of the OTS, but it acted contrary to 7 that assurance by adjusting the amount against the Loan Account of Petitioner's 3 & 4. In this manner, the Bank has misled and defrauded the Petitioners, which is not in accordance with law. He further submits that once the Bank has proceeded with a One Time Settlement and funds have been deposited under an assurance of a subsequent refund, it is precluded from adjusting such funds, particularly those held in a "No Lien" Account. Hence, learned counsel for the Petitioner prays for a direction to the Bank to refund the amount of Rs.50 lakhs each to Petitioners 1 & 2, along with interest.
6. Per contra, Mr. Vinod Deshmukh, learned counsel for the Respondent-Bank submits that the request for refund of the deposited amount was already rejected. The Petitioners did not challenge that order before any appropriate forum at the relevant time. After a lapse of more than two years, the claim is barred by delay and latches, rending the petition liable to be dismissed. He further submits that the Petitioners-Companies had applied for credit facility. The Respondent-Bank accepted the application of the Petitioners for credit facility and sanctioned the loan as detailed below :
To M/s. Sunmarg Ispat Pvt. Ltd. : Rs.8.50 crores (Cash Credit) and Rs.50 lakhs (Term Loan), totaling Rs.9.00 crores To M/s. Sunmarg Steel Pvt. Ltd : Rs.6 Crores (Cash Credit) Learned counsel for the Respondents submits that in order to secure the aforementioned credit facilities, a mortgage was created/extended over properties bearing Khasra Nos. 6/1, 6/2, 8 6/3, 7/1, 7/4, 7/5, 11 7/6, 9 10/1, 10/2, 10/3, 10/4, 10/5, 12/6, P.H. No. 108, total plot area 378499 Square feet standing in the name of M/s Sunmarg Steel Private Lmt., Yatilal ward no. 4 District Raipur. He submits that after declaration of the loan accounts as Non-Performing Assets (NPA), the respondents initiated proceedings under the SARFAESI Act. Notices were issued under Section 13(2) and subsequently, symbolic possession of the secured assets was taken on 22.7.2015. The possession notice was published in the newspaper on 24.7.2015. Thereafter, an application for physical possession was moved before the District Magistrate on 21.9.2015. He further submits that the borrowers vide application dated 22.12.2018 requested a compromise settlement. The Management Committee of the Bank in its meeting held on 10.1.2019 at Mumbai (Agenda No.-D-6) acceded to the request. A compromise offer was accepted for Rs.11.25 crores against book dues of Rs.13.23 Crores and notional dues of Rs.20.71 Crores , involving a sacrifice of Rs.9.46 Crores by the Bank. Additionally, legal charges of Rs.0.18 Crs plus interest w.e.f. 1.2.2019 are to be recovered from the borrowers in addition to the aforesaid compromise amount. This settlement was communicated to the borrowers vide letter dated 11.1.2019, which was duly received by them. In pursuance of the sanction terms, an amount of Rs.1 Crore, which was held in a "No Lien" account, was appropriated on 2.2.2019. This was communicated to the borrowers by a letter issued on the same day. . However, vide letter dated 7.2.2019, the borrower reneged on their committed 9 and proposed a fresh One-Time Settlement of only Rs.7 Crore. He submits that thereafter on 13.3.2019, they requested a refund of the adjusted Rs.1 Crore. The Bank suitably replied clarifying that the amount was adjusted towards the Cash Credit Account as per the terms of the sanction letter dated 11.1.2019. Consequently, as the debt remained unresolved, the Fund-Based exposure of the NPA accounts was sold to M/s. Rare Asset Reconstruction Ltd vide the assignment route for Rs.9 Crores, after an e-auction held on 26.12.2019. The Assignment Agreement between Bank of Baroda (Assignor) and Rare Asset Reconstruction Ltd. was duly executed on 31.12.2019. Hence, learned counsel for the Respondents submits that the Petitioners are not entitled for any relief and the petition deserves to be dismissed.
7. I have heard learned counsel for the parties and have also perused the documents annexed with the petition carefully.
8. Admittedly, the cash credit facility was extended to Petitioners 3 & 4 at their request. However, on default in repayment, the account was classified as a Non-Performing Asset (NPA). It further appears that in order to realise the amount, the Bank initiated proceedings under the SARFAESI Act. During the pendency of the said proceedings, it transpires from the record that the parties entered into a One Time Settlement Scheme. To facilitate this settlement, Petitioners 1 & 2 deposited Rs.50 lakhs each into a "No Lien" account, based on the assurance that upon successful completion of the OTS, the sum would be refunded to them. The total outstanding loan amount along with interest stands at 10 Rs.13.23 crores. Petitioners 1 & 2 are the family members, who conducted their business in the names of Petitioners 2 & 3. Under the OTS Scheme, they reached a compromise with the Bank to pay a sum of Rs.11.25 crores along with other charges including notional dues and the sacrificed amount. The terms of the said settlement were duly communicated to the borrowers by the Respondent-Bank. However, since the concerned Petitioners failed to deposit the full settlement amount as per the agreed terms, the Bank proceeded with recovery actions. While doing so, the Respondent-Bank appropriated Rs. 1 Crore previously deposited by the Petitioners into the 'No Lien Account', citing the Petitioners' failure to honour the OTS terms arrived at between the parties as justification for the adjustment.
9. The present case does not involve a claim for credit against regular loan repayments or installments. Rather, the Petitioners' grievance is with regard to specific deposit of a 'No Lien' amount. According to them, the action of the Respondent-Bank in refusing to refund Rs.1 Crore to Petitioners 1 & 2 is illegal and without any basis, as these funds were never intended for debt adjustment.
10.Indisputably, the Petitioners are indebted for a substantial outstanding loan amount, against which, a very meagre amount has been paid by them. While the Petitioners argue that 'No Lien' nature of this particular deposit impedes the Bank from appropriation, the Bank contends that no scheme permit return of such funds while the debt remains unpaid. The Petitioners are under a subsisting legal obligation to repay the entire amount of 11 loan sanctioned to them. Furthermore, the Respondent-Bank's contention is that the adjustment of Rs.1 Crore was attributable to the Petitioners' failure to fulfill the terms and conditions of the OTS. In my view, the Respondent- Bank acted within its rights to adjust the deposited amount towards the recovery of the outstanding loan on account of the Petitioners' default in complying with the agreed-upon payment schedule. This action cannot be faulted in light of the contractual breach by the Petitioners.
11. Considering the facts and circumstances of the case, in the opinion of this Court, the relief sought by the Petitioners cannot be granted. The Petitioners are legally liable to discharge the full extent of the loan amount disbursed to them; consequently, no direction for refund can be issued. Furthermore, having voluntarily entered into the One Time Settlement (OTS) and accepted its terms, the Petitioners are now bound by those conditions. Thus, the Petitioners cannot now seek to invoke the "No Lien" protection that was contingent upon the successful completion of the settlement. Consequently, the Petitioners are estopped from challenging the Bank's appropriation, as the adjustment was a result of their own default.
12. Resultantly, the Writ Petition, being devoid of merits, is liable to be and is hereby dismissed. Sd/-
(Amitendra Kishore Prasad) Judge Shyna Ajay