Missed an OTS Payment Deadline: What Happens Next?
An OTS sanction is valuable only if its conditions can be performed. When a payment deadline is approaching and funds are not ready, waiting silently can make both negotiation and legal protection harder.
Image: Supreme Court of India front view 09 by Pinakpani; CC BY-SA 4.0. Unmodified, illustrative photograph.
The contract and the judgment
In SBI v. Arvindra Electronics Pvt. Ltd. (4 November 2022), the sanctioned OTS required payment by 21 May 2018 and specified failure consequences. The Supreme Court set aside a later High Court extension: rewriting the payment bargain under Article 226 was impermissible on those facts. It recognised that the parties could mutually agree an extension under Contract Act section 62.
Read the actual sanction
Identify whether default makes the concession lapse, revives the original dues, triggers additional interest or permits recovery to continue. Check instalment dates as well as the final deadline. A substantial part-payment does not by itself establish that all remaining conditions have been waived.
Seek a written decision from the authorised bank authority. An informal conversation or a request acknowledged by a branch should not be treated as an approved amendment.
Prepare a revised funding plan
Explain the reason for the shortfall precisely. If a property sale is delayed, provide the agreement, remaining conditions, buyer’s funding position and a realistic completion date. If the buyer has withdrawn, say so and replace the assumption.
State what can be paid immediately and the source of the balance. Ask how earlier payments will be appropriated if the OTS lapses. Avoid promising a date that depends on an unapproved fresh loan.
Enforcement may need a separate response
Whether SARFAESI or other recovery can continue depends on the documents and procedural position. Counsel should review notices, possession measures and any subsisting order. Negotiation does not suspend a statutory or court deadline by itself.
Prevent the problem at sanction stage
Before accepting an OTS, map the funding sequence backwards from each due date. Keep a contingency for registration, remittance or release delays. Confirm the written treatment of guarantors and security after full performance.
The lesson is to secure an executable payment timetable, not merely an attractive settlement amount. Judicial outcomes remain dependent on facts, the contract and the relief sought.
Connect with Monei Matters
Contact Monei Matters to review settlement funding readiness and a realistic revised payment proposal.
Monei Matters
B-9, Near City Centre Market, Ramprastha, Ghaziabad, Uttar Pradesh 201011
Phone: +91 93138 03227 / +91 93110 03227
Website: www.moneimatters.com
Services include business finance, working capital, commercial mortgage/LAP, lease rental discounting, debt syndication, restructuring, settlements, FDI advisory and equity syndication.
Disclaimer
General information based on sources reviewed for the position as at 10 September 2026; not transaction-specific legal, tax or investment advice. Illustrations are hypothetical. Applicable law, documents and lender or investor terms govern each case; funding and settlement outcomes are not guaranteed.
Comments
Post a Comment