A Bench of Justices Dipankar Datta and A G Masih set aside an Andhra Pradesh High Court order that had directed the State Bank of India (SBI) to reconsider a borrower's OTS application despite the latter's failure to make the required advance deposit."Crossing the hurdle of eligibility per se would not entitle a defaulting borrower to claim consideration of his application unless the application itself satisfies the other stipulated conditions," the top court observed, clarifying that eligibility alone does not confer a vested right.Writing for the Bench, Justice Datta noted: "It is clear as a sunny day that an application for availing OTS would be processed only if it was accompanied by an upfront payment of 5 per cent of the outstanding dues. The respondent failed to deposit even a single paisa, rendering the application incomplete and undeserving of consideration."The apex court reiterated that the OTS mechanism is a concession, not an enforceable right.The Bench said SBI was justified in rejecting the proposal since the very precondition for processing, which is deposit of 5 per cent of the outstanding dues, had not been met.The dispute arose after Tanya Energy, the borrower, defaulted on loans secured against seven mortgaged properties.Following the account's classification as a nonperforming asset (NPA), SBI initiated recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, and attempted auctions of the mortgaged assets.Parallelly, the borrower applied under SBI's OTS scheme of 2020. However, the application was rejected by the bank on grounds of noncompliance, past defaults, suppression of facts, and pending proceedings before the debt recovery tribunal (DRT).

Bank OTS scheme not a right withour upfront payment: SC

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