Borrowers cautioned against rushing to courts in repossession cases

The Madras High Court has warned borrowers of approaching the court with the perception that it has the authority to overwrite a contract between the parties and unilaterally extend the time for making payment under a one-time settlement (OTS) offer.

While disposing a plea in this regard, the first bench comprising Chief Justice Sanjib Banerjee and Justice PD Audikesavalu said, “It is elementary that courts do not rewrite contracts on behalf of the parties. Ordinarily, entities like asset reconstruction companies offer similar terms to several borrowers. In such a scenario, merely because one of the borrowers is before this court does not imply that the court will extend the time for making payment under the OTS in favour of the litigant before it.”

Holding that the petitioner should have approached Reliance Asset Reconstruction Company Limited (RSRCL) with a request to extend the time for making payment, the court held that the bank would have had no authority to modify the terms offered by RSRCL after the debt had been transferred by the bank to that company.

The petitioner, a textile company in Dharmapuri, had obtained credit facilities from Indian Bank, which assigned the debt due to it from the petitioner to RSRCL. Following this, the firm sought the court to direct the bank to consider its representation to enforce a onetime settlement on the basis of the offer made by RSRCL on August 13, 2020.

Slamming the prayer as ridiculous, the bench held, “A borrower obtained credit facilities from a bank and the bank has transferred the debt due to an asset reconstruction company, whereupon the asset reconstruction company offered a one-time settlement to the borrower. But, instead of approaching the asset reconstruction company (RSRCL), the borrower has approached the original creditor (Indian Bank) to modify the terms of settlement.”