Assistant General Manager, State Bank of India vs. Tanya Energy Enterprises 2025 INSC 1119 - Judicial Review - Administrative Orders
Constitution of India - Article 226 - Judicial Review of Administrative Orders - While the courts, in course of reviewing administrative orders, may not permit additional grounds not found within the four corners of the said order to be raised in an affidavit or in oral arguments, the factual narrative in such order and the documents referred to therein can certainly be considered together with the case set up in the writ petition, but in appropriate cases- Such cases could include a case where the mentioned grounds are found to be untenable and, thus, unsustainable, but an alternative ground (appearing from the factual narrative in the order itself and/or from the records relevant thereto) is traceable which could have validly been mentioned as a ground to support the impugned rejection had there been a proper application of mind by the administrative authority. In all such cases, it would be open to the court to uphold it on such alternative ground subject, of course, to the affected party being put on notice and an opportunity to respond. (Para 38)
Constitution of India - Article 226 - No court can, by issuing a writ of mandamus, direct a secured creditor to positively grant benefit of OTS to a defaulting borrower; such grant is always subject to the eligibility criteria being satisfied. - But this principle of law, as aforesaid, may not have any direct application when it is merely a re-consideration that the High Court has directed and there is no positive direction for granting an OTS. (Para 20-21)
Constitution of India - Article 136 - Even if limited notice was issued on a special leave petition, Supreme Court can expand the scope of the lis. (Para 22)
OTS 2020 Scheme - Crossing the hurdle of eligibility per se would not entitle a defaulting borrower to claim consideration of his/its application unless the application itself satisfies the other stipulated conditions. (Para 4)
Case Info
Case Name and Neutral Citation
- Case Name: Assistant General Manager, State Bank of India & Anr. vs. Tanya Energy Enterprises through its Managing Partner Shri Alluri Lakshmi Narasimha Varma
- Neutral Citation: 2025 INSC 1119
Coram
- Justice Dipankar Datta
- Justice Augustine George Masih
Judgment Date
- September 15, 2025
Caselaws and Citations Referred
- Bijnor Urban Coop. Bank Ltd. v. Meenal Agarwal(2023) 2 SCC 805
- State Bank of India v. Arvindra Electronics Private Limited(2023) 1 SCC 540
- Biswajit Das v. Central Bureau of Investigation2025 SCC OnLine SC 124
- Mohinder Singh Gill v. Chief Election Commissioner(1978) 1 SCC 405
- Commissioner of Police v. Gordhandas BhanjiAIR 1952 SC 16
- Opto Circuits (India) Ltd. v. Axis Bank(2021) 6 SCC 707
- All India Railway Recruitment Board v. K. Shyam Kumar(2010) 6 SCC 614
- PRP Exports v. State of Tamilnadu(2014) 13 SCC 692
- 63 Moons Technologies Ltd. v. Union of India(2019) 18 SCC 401
Statutes/Laws Referred
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)
- Section 2(zd), Section 2(f), Section 13(2), Section 13(4), Section 17
- Recovery of Debts and Bankruptcy Act, 1993 (RDB Act)
- Section 19
- Constitution of India
- Article 226
Q&A
1. What was the central dispute in the case between State Bank of India and Tanya Energy Enterprises?
The core of the dispute revolved around Tanya Energy Enterprises' (the borrower) repeated defaults on credit facilities from the State Bank of India (SBI), a "secured creditor." After initial attempts at recovery and a failed compromise settlement, SBI introduced a One Time Settlement (OTS) Scheme in 2020. Tanya Energy Enterprises applied under this scheme, but their application was rejected by SBI. This rejection led to legal challenges, with the High Court initially ruling in favor of the borrower, directing SBI to reconsider the OTS application, which SBI then appealed to the Supreme Court.
2. What were the key reasons cited by SBI for rejecting Tanya Energy Enterprises' initial OTS application?
SBI rejected Tanya Energy Enterprises' OTS application primarily based on the borrower's "previous conduct" and "suppression of facts." Specifically, SBI highlighted the respondent's failure to comply with the terms of an earlier compromise sanction letter from 2018 and their non-adherence to a Debts Recovery Tribunal (DRT) order regarding payment, which led to the vacation of an interim stay and subsequent property auction proceedings.
3. How did the High Court rule on Tanya Energy Enterprises' writ petition, and what was the rationale?
Both the Single Judge and the Division Bench of the High Court ruled in favor of Tanya Energy Enterprises. They held that the respondent was entitled to the benefit of the OTS 2020 Scheme, considering it to be non-discretionary and non-discriminatory. The Division Bench specifically referred to clause 2.1 of the OTS 2020 Scheme, which listed "cases not eligible," and concluded that there was no bar for considering cases where SARFAESI Act proceedings and property auctions were underway. Therefore, they directed SBI to process the respondent's application in accordance with the scheme.
4. What critical procedural requirement of the OTS 2020 Scheme did Tanya Energy Enterprises fail to meet, as highlighted by the Supreme Court?
The Supreme Court highlighted a fundamental failure by Tanya Energy Enterprises: the non-payment of the mandatory upfront deposit. Clause 4(i) of the OTS 2020 Scheme explicitly required borrowers to deposit 5% (or 15% for willful defaulters) of the OTS amount at the time of submitting their application, stating that "failing which the application will not be processed." The Supreme Court found that Tanya Energy Enterprises did not deposit "a single paisa" towards this upfront payment, rendering their application incomplete and not eligible for processing.
5. What legal principle did the Supreme Court invoke regarding challenging administrative orders based on grounds not initially cited in the rejection letter?
The Supreme Court delved into the legal principle established in cases like Mohinder Singh Gill v. Chief Election Commissioner and Commissioner of Police v. Gordhandas Bhanji, which generally hold that the validity of an administrative order must be tested on the grounds mentioned in the order itself, and additional grounds cannot be raised later. However, the Court clarified that in "appropriate cases," where mentioned grounds are untenable, it is permissible for the court to uphold an order on an alternative ground appearing from the factual narrative in the order or relevant records, provided the affected party is given notice and an opportunity to respond. This approach prioritizes fairness and justice over technicalities.
6. Why did the Supreme Court ultimately set aside the High Court's judgments and rule in favor of the State Bank of India?
The Supreme Court set aside the High Court's judgments because the fundamental issue of the borrower's non-compliance with the upfront payment requirement (Clause 4(i) of the OTS 2020 Scheme) was overlooked by the High Court and not initially cited by SBI as a ground for rejection. The Supreme Court found this omission to be "fundamental to the case" and "strikes at the heart of the matter," rendering Tanya Energy Enterprises' application disentitled to be processed. Even if the High Court's order for reconsideration stood, SBI could still reject the application on this valid, albeit uncited, ground.
7. What does the Supreme Court's ruling imply about the nature of One Time Settlement schemes and a borrower's right to claim their benefit?
The ruling reaffirms that while OTS schemes are intended for recovery, their benefits are not an absolute right for defaulting borrowers. Eligibility criteria, including procedural requirements like upfront payments, must be strictly adhered to. Simply not being explicitly excluded by "not eligible" clauses (like clause 2.1 in this case) does not automatically guarantee consideration or approval. Borrowers must satisfy all stipulated conditions of the scheme. The Court also reiterated that no court can direct a secured creditor to positively grant an OTS, only to reconsider an application based on eligibility.
8. What opportunity did the Supreme Court grant Tanya Energy Enterprises despite allowing SBI's appeal?
Despite ruling in favor of SBI and allowing them to proceed with the enforcement of security interest, the Supreme Court granted Tanya Energy Enterprises an opportunity to submit a fresh proposal for an OTS, explicitly stating it should not be under the OTS 2020 Scheme. This allows the bank to consider a new settlement offer from the borrower if the proposed terms are found to be reasonable, workable, and acceptable.
#SupremeCourt on scope of judicial review in administrative matters. The issue is whether a Court is bound to confine itself to the grounds mentioned in the administrative order under challenge? https://t.co/dHmNhqLM0L pic.twitter.com/rJ9eIa5f76
— CiteCase 🇮🇳 (@CiteCase) September 16, 2025