The Kerala High Court has ruled that borrowers cannot force banks to grant benefits under a One Time Settlement scheme. The court said OTS schemes remain discretionary and cannot be claimed as a legal right through writ petitions.
A division bench of Justice Anil K. Narendran and Justice Muralee Krishna S dismissed an appeal filed by defaulting borrowers. The appeal challenged recovery proceedings initiated by a co-operative bank. The court upheld an earlier single judge order that refused to interfere.
The borrowers had taken three loans from Vazhoor Farmers Service Co-operative Bank by mortgaging their property. After repayment defaults, arbitration proceedings followed under the Kerala Co-operative Societies Act. While one loan account was settled under OTS, disputes continued over remaining dues.
The bench noted that borrowers repeatedly approached courts and failed to fully use settlement opportunities already granted. Relying on Supreme Court and earlier High Court rulings, the judges said courts cannot rewrite loan contracts. Directing banks to offer fresh concessions under writ jurisdiction was held impermissible. The writ appeal was dismissed.
