Manipur High Court Sets Aside E-Auction, Says Bank Can't Offer OTS And Deny Redemption On Same Day
LiveLaw Network
7 April 2026 2:55 PM IST
The Manipur High Court has declared an e-auction illegal after finding that the bank offered a One Time Settlement (OTS) valid till March 31, 2018 and, on the very same day, denied the borrower's right of redemption without establishing that any revised deadline was communicated.
A Division Bench of Chief Justice M. Sundar and Justice A. Guneshwar Sharma held that such conduct violated principles of natural justice and procedural fairness and that a bank cannot take inconsistent positions to the detriment of a borrower.
The court observed, “a Nationalized Bank after having offered a OTS to a borrower and holding that the OTS offer is valid till 31.03.2018 cannot on the same day write to the borrower that his right of redemption has been lost and subsequently contend that the cut-off date was advanced to 10.02.2018 that too without being able to demonstrate communication dated 29.01.2018 in this regard was served on writ petitioner.”
Background:
The borrower, proprietor M.S. & Sons, had availed a cash credit facility of approximately Rs 45 lakhs from the Central Bank of India. However, later, the account became an NPA.
In January 2018, the bank extended a special OTS offer allowing settlement of dues for Rs 41.25 lakhs, which was valid till March 31, 2018. The dispute arose when the bank claimed to have changed the deadline to 10 February 2018 and then proceeded with possession and auction of the secured property.
The borrower filed a writ petition before the high court contending that no communication regarding the deadline was ever served and that the auction was conducted prematurely.
Rejecting the appellant's contention that the borrower suppressed material facts by not disclosing an earlier writ petition, the court stated that this is not suppression of facts, as the subsequent OTS created a fresh legal arrangement.
Further, the court noted that the borrower had even tried to approach the DRT but was unable to obtain relief due to jurisdictional issues. It further reiterated that the rule of alternative remedy is not absolute and that writ jurisdiction can be exercised in exceptional circumstances, particularly where there is a violation of principles of natural justice.
Thus, the court upheld that the e-auction held by the bank authorities was illegal, as it failed to establish proper communication regarding the revised date.
For Appellants (W.A. No. 52 of 2018): Advocate Md. Abdul Baqee Khan, led by Senior Advocate N. Jotendro
For Respondents (W.A. No. 52 of 2018): Advocate Anjan Prasad Sahu, Advocate Nakato Khwairakpam (for respondent No. 1); Advocate Mukesh Sharma (for respondent Nos. 2 & 3)
For Appellants (W.A. No. 61 of 2018): Advocate Mukesh Sharma
For Respondents (W.A. No. 61 of 2018): Advocate Anjan Prasad Sahu, Advocate Nakato Khwairakpam (for respondent No. 1); Advocate Md. Abdul Baqee Khan (for respondent Nos. 2 & 3), led by Senior Advocate N. Jotendro
For Applicant (MC [W.P. (C)] No. 362 of 2018): Advocate Anjan Prasad Sahu, Advocate Nakato Khwairakpam
For Respondents (MC [W.P. (C)] No. 362 of 2018): Advocate Mukesh Sharma (for respondent Nos. 1 & 2); Advocate Md. Abdul Baqee Khan (for respondent Nos. 3 & 4), led by Senior Advocate N. Jotendro