Rajasthan High Court: DRT cannot extend a bank's one-time settlement without its consent

A division bench of the Rajasthan High Court at Jaipur has held that the Debts Recovery Tribunal (DRT), Jaipur, had no power to give a borrower 12 more months to pay under a one-time settlement (OTS) with Bank of Baroda when the bank had not agreed. In a judgment pronounced on 2 November 2026, the court dismissed an appeal by a suspended director of the borrower, U.N. Automobiles Private Limited, and affirmed a single-judge ruling of 29 August 2025.

What Happened

According to the judgment, Bank of Baroda took over the company's loans, and its last sanction covered facilities of about Rs 47.46 crore. The account was declared a non-performing asset on 29 August 2012, and the bank began recovery proceedings before the DRT. Under an OTS sanctioned on 24 December 2015, the company was to pay about Rs 44.83 crore against total dues of about Rs 65.79 crore. The DRT recorded the settlement in a consent order, and the deadline of 31 March 2018 was later extended to 30 June 2018.

When payment was not made in time, the bank wrote in September 2018 that the OTS stood frustrated. The borrower told the DRT that the bank had created obstacles to the sale of mortgaged properties, which the bank disputed. On 23 May 2023, the DRT held the bank responsible for the delay and allowed 12 more months to pay. The single judge set that order aside, holding that the DRT lacked jurisdiction to modify the settlement.

The division bench found no "demonstrable error or perversity" in that ruling. It noted that the single judge had concluded the DRT exceeded its jurisdiction by granting the extra time despite the absence of the bank's consent. The judgment also records that the National Company Law Tribunal, Jaipur, admitted the company into insolvency on 28 August 2024 on the bank's petition.

What It Means

For borrowers who settle a loan with a bank, the ruling underlines that the deadline in a one-time settlement recorded by the DRT binds them. Once it passes, the tribunal cannot extend it without the lender's consent, according to this judgment. In this case the earlier extension, to 30 June 2018, had come from the bank itself.

Source: High Court judgment