Principle Of Promissory Estoppel Applies After Customer Acts On Basis Of Bank’s One Time Settlement Scheme
Case: Ms Harekrushna Infra Projects Pvt Ltd & 1 Other(S) Vs State Bank Of India
Coram: Honourable Mr. Justice Biren Vaishnav
Case No.: C/SCA/9069/2021
Court Observation: “It is clear that the principle of promissory estoppel applies. The bank by its conduct of offering an OTS settlement intended to create egal relations which the petitioners had acted upon in light of the promise made and paid the amount on or before 30th of December 2017. This action was apparently accepted in principle by the bank as not only for the title clearance certificate but valuation reports letters were written by by the bank to the advocates and the valuers. The amounts were paid and accepted by the bank and once the petitioners had acted upon on the promise set out by the bank, the bank cannot be allowed to go back on its proposal on the basis of a letter dated 28th August 2018 stating that the scheme of OTS was not applicable as the cases of the petitioners was reported as fraud.”
“The act on behalf of the bank therefore in not releasing the title documents, not issuing of a no due certificate and not withdrawing the pending legal actions against the petitioners is arbitrary and violates the constitutional guarantee enshrined under Article 14 of the Constitution of India as held by the Hon’ble Supreme Court in the case of Central Bank of India versus Devi Ispat (2010) 11 SCC 186.”
“When the entire amount was paid pursuant to the OTS settlement, the bank could not have cancelled the settlement vide its letter dated 28.08.2018 stating that as the case of the petitioners was reported as fraud, the petitioners were not entitled to the benefits of ATS. In light of the decision in the case of Lotus Hotel (Supra), it is clear that the principle of promissory estoppel applies.”
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