'OTS' Cannot Be Claimed as a Matter of Right by the Borrower From the Bank

4 Pages Posted: 25 Apr 2020

See all articles by Pallavi Gupta

Pallavi Gupta

O.P. Jindal Global Law School

Shivam Goel


Date Written: March 31, 2020


The article analyses the law related to One Time Settlement "OTS." The article discusses the law that OTS cannot be claimed as a matter of right from the bank. A court of law cannot direct OTS because that would mean the court is directing rescheduling of a loan. Where a creditor is enforcing its liability upon the debtor, the debtor has no legal right to claim that the claim be settled on favourable terms proposed by debtor whereby the claim of the creditor is reduced. This rule is discussed and analysed in light of cases: D.K. Gupta & Anr V/s Oriental Bank of Commerce, 127 (2006) DLT 488; M.M. Accessories V/s U.P. Financial Corporation, 2002 (46) ALR 261; Haryana Steel & Alloys Ltd. V/s IFCI Ltd. & Anr, LPA No. 1947/ 2006.

The article clarifies the difference between OTS, which is governed by directions/ circulars issued by the RBI and out of court settlement which is governed by Section 89 of the Code of Civil Procedure, 1908.

Suggested Citation

Gupta, Pallavi and Goel, Shivam, 'OTS' Cannot Be Claimed as a Matter of Right by the Borrower From the Bank (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3565323 or http://dx.doi.org/10.2139/ssrn.3565323

Pallavi Gupta (Contact Author)

O.P. Jindal Global Law School ( email )

University Sonipat-Narela Road
Near Jagdishpur Vill
Sonipat, Haryana 131001

Shivam Goel

Independent ( email )

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