Using its special powers under Article 142 of the Constitution to do “complete justice”, the Supreme Court has given relief to a widow who lost her husband during the second wave of Covid-19.

The Court allowed her to settle a bank loan on easier terms and directed the Central Bank of India to return the title deeds of her house after she pays a reduced amount.

A Bench of Chief Justice of India Surya Kant and Justice Joymalya Bagchi allowed the petitions filed by Sumaiya Parveen. She had challenged the Madras High Court’s decision refusing to revive a one-time settlement (OTS) offer related to a loan taken by her late husband.

The Supreme Court noted the “unusual and unfortunate circumstances” of the case and said the relief was being granted purely on humanitarian and equitable grounds by exercising its powers under Article 142.

In its decision, the Supreme Court noted that the petitioner’s husband, who ran a business under the name FILSA Leathers, had taken a loan of ₹50 lakh from the Central Bank of India by mortgaging their residential house in Vellore district as security. He passed away in May 2021 during the second wave of the Covid-19 pandemic, and until his death, the loan account had remained regular.

"The death of the appellant's husband brought further miseries as the subject account was classified as NPA and proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 were initiated," the bench noted.

The bank had offered a one-time settlement (OTS) of ₹34.69 lakh against outstanding dues of around ₹71 lakh as of January 2024. The deceased borrower’s wife paid the upfront 10 per cent amount of ₹3.46 lakh but was unable to deposit the remaining amount within the prescribed time.

After this, the bank demanded a higher sum and issued a possession notice under the SARFAESI Act. This led her to approach the Madras High Court, which dismissed her plea.

While noting that the bank’s demand was legally valid, the Supreme Court observed that insisting on strict compliance in the facts of the case would cause “extreme hardship” to the petitioner.

"Though the demand raised by the Bank is legally sustainable, we find that compliance thereof would lead to extreme hardship for the appellant," the CJI-led Bench said.

Balancing the equities, the Supreme Court said that justice would be served if the petitioner deposits an additional ₹33 lakh, over and above the amount she has already paid upfront.

"The appellant is granted eight weeks' time to deposit the amount of Rs.33,00,000 upon which further interest shall remain frozen. In case the appellant deposits the amount of Rs.33,00,000 within eight weeks from today, the Bank is directed to issue a no-dues certificate and release the original title deeds in favour of the appellant," the order said.

However, the Supreme Court made it clear that if the amount is not deposited within the stipulated time, “the law will take its own course”.

The Court also clarified that the relief was granted in the specific facts of the case and that the order should not be treated as a precedent against the respondent bank,