THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO Writ Petition No. 6895 OF 2010 ORDER: This writ petition is instituted seeking a writ of mandamus declaring the action of the respondent – bank in issuing proceedings dated 23.2.2010 as wholly illegal, arbitrary and contrary to the provisions contained in the revised guidelines on One Time Settlement (OTS) dated 29.1.2003 on the subject. The writ petitioner is a guarantor for a loan availed by his father from the 1st respondent – Bank at Mangalagiri. Since the principal borrower has committed default in repayment of the loan, the bank has filed OA No. 766 of 2002 before the Debt Recovery Tribunal at Visakhapatnam for recovery of an amount of Rs.23,33,912/- Ultimately, the said OA was allowed by the Debt Recovery Tribunal on 16.7.2009. During the currency of the litigation, the respondent – bank has initiated steps for liquidating the liability under the One Time Settlement scheme. A notice in that regard was issued on 30.9.2003. In response thereto, while submitting a representation, agreeing to pay the outstanding amount, a sum of Rs.6,25,000/- was deposited on 20.12.2003 towards 25% upfront amount. Ultimately, an amount of Rs.27 Lakhs was demanded by the respondent – bank for completely liquidating the liability on 2.12.2006. Though the petitioner has asserted that he has deposited an amount of Rs.26 lakhs, the respondent – bank has disputed the said fact stating that the deposit receipts offered by the petitioner were not properly discharged in favour of the respondent – bank, for it to encash the same. The case of the petitioner is that a further sum of Rs.3 lakhs was deposited on 6.10.2007 which was not taken into account and consideration by the respondent – bank, therefore, essentially complaining of lack of fairness on the part of the respondent – bank, the present writ petition is filed. However, the fact remains that the respondent – bank, through its communication dated 23.2.2010 has pointed out that as per the OTS Scheme, the petitioner was liable to pay a sum of RS.21,64,276/- out of which Rs.6,25,000/- was paid along with OTS application. Therefore, it is pointed out that the balance amount liable to be paid was Rs.15,39,276/-. However, simple interest at PLR 11.5% on the aforesaid sum was calculated from 20.12.2003 up to 23.12.2010 which has worked out to Rs.10,91,603/-. Thus, a total amount payable towards balance OTS amount together with interest at 11.5% has worked out to Rs.26,30,879/-. Apart from this amount, a further sum of Rs.4,34,635/- was also demanded by the respondent – bank towards legal charges, enforcement agent charges and security guard charges. This is where the entire matter got embroiled. Learned Senior Counsel appearing on behalf of the petitioner Sri P.Venu Gopal has drawn my attention that the amount of Rs.3.00 lakhs which has been deposited pursuant to the orders of the Debt Recovery Tribunal should have been given credit to and in such an event, the liability would have come down further. In those set of circumstances, a direction was issued to the petitioner to deposit a sum of Rs.23,31,210/- by order dated 12.10.2011. The petitioner has accordingly paid the sum duly giving credit to the amount of Rs.3 lakhs deposited by the petitioner pursuant to the orders passed by the Debt Recovery Tribunal. However, it is now brought to my notice that the respondent – bank has incurred substantial expenses in safeguarding the asset by engaging private security guards by paying a sum of Rs.6000/- per month, from the time the respondent – bank has taken possession of the asset on 20.9.2007. Therefore, for the past over four years period, a sum of RS.2.5 lakhs has been incurred towards the security guard charges itself. Further, legal expenses and enforcement agent charges were also incurred additionally. Thus, additional sums were demanded. After giving a wholesome consideration to the entire controversy, in my opinion, the matter should not be left unresolved concerning such a small area of dispute. It is true that the respondent – bank may have legitimately incurred certain amount towards enforcement agent commission, legal expenses and also security charges. My attention has been drawn by the learned counsel appearing on either side to the judgment rendered by a Division Bench of this court in Badugu Vijayalakshmi v. Authorised Officer and Chief Manager, State Bank of India, Chirala Branch and another[1], to which incidentally I am a party. In paragraph (15) of the said judgment, it is pointed out that grant of exorbitant amount of commission to the recovery agents and enforcement agents at a minimum rate of 10% is too excessive and disproportionate to the nature of work liable to be performed by such agents. It is further noted therein that the payment of commission/fee to the agents at exhorbitant rates of percentages, amounts to exploitation of the weak or helpless situation of the borrower. It was also further noted therein that exploitation, in any form, is incompatible to fairness in action. It was further noted that could not have been the intent of the Legislature while framing the Securitisation and Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2002 (SERFASI Act). Having regard to these principles, it was ultimately held in the said judgment that a bank or a financial institution cannot draw comfort from the umbrella provided by sub-section (7) of Section 13 to pass on the expenditure incurred liberally on to the borrower. A borrower cannot be subjected to an unduly harsh expenditure and hence the expression `properly incurred expense’ used in sub-section (7) of Section 13 has got to be understood in that context. In view of the principle enunciated by the Division Bench of this Court in Badugu Vijayalakshmi’s case (supra 1), I consider that the ends of justice would be completely met with, if the petitioner is directed to pay a sum of Rs.2 lakhs towards full and final settlement of all pending disputes between the parties. As soon as the petitioner pays this amount, the respondent – bank will treat the entire liability to have been liquidated. Further, the petitioner will be given `NO DUE CERTIFICATE’ apart from releasing all such title deeds/documents held by the bank as a security. The writ petition is accordingly disposed of. No costs. ------------------------------------ Nooty Ramamohana Rao, J knk 16th December 2011 [1] 2010(2) ALT 164 (DB)