Husband's death in Covid leaves widow unable to repay loan; SC invokes Article 142 to cut dues

On January 16, 2026, the Supreme Court of India exercised its Article 142 powers to lower the repayment amount for a loan in a situation where a wife couldn’t pay it after husband passed away during the Covid-19 pandemic.

To give you some context, her husband owned a sole proprietorship and had taken out a loan of Rs 50 lakh from a bank, securing it with their 3240 sq ft house in Vellore. However, on May 25, 2021 during the second wave of Covid-19 he died. Up until his passing, he had been making regular loan payments, and his loan account was classified as regular.

After his death, things took a turn for the worse as the loan account was classified as NPA, leading to actions under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The bank, did offer a one-time settlement (OTS) for Rs 34.69 lakh against the outstanding dues of Rs 71 lakh as on January 2024.


She made a genuine effort to accept the OTS offer and deposited 10% of the amount (Rs 3.46 lakh) but the balance amount had to be paid within six months. She couldn’t manage that and there were some other issues as well. So, she again applied for OTS benefit from the bank, but the bank demanded an additional Rs 9 lakh.

As she could not pay that amount, a possession notice under Section 13(4) was issued. This prompted her to approach the Madras High Court but her writ petition was dismissed by the Madras High Court. Consequently, she filed an appeal in the Supreme Court as the Madras High Court rejected her offer for repayment of the loan as per the expired OTS offer and an order to release the title deeds of the property owned by her deceased husband.

The Chief Justice of India Surya Kant and Justice Joymalya Bagchi of the Supreme Court passed an order in her favour considering the unusual and unfortunate circumstances unique to her. The court also clarified that this judgement shall not be treated as precedent.

Supreme Court analysis and discussion

The Supreme Court said that though the demand raised by the Bank is legally sustainable, they find that compliance thereof would lead to extreme hardship for the appellant (wife).

The Supreme Court said that while keeping in view the fact that the balance amount of Rs 31,22,000 as per the first OTS was to be paid by the appellant (wife) by 30.06.2024, it seems to them that justice would be adequately served if the appellant (wife) deposits a sum of Rs 33,00,000, over and above the upfront amount of Rs 3,46,900 already deposited by her.

Judgement: The appellant (wife) 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.
• However, if despite enough time granted hereinabove, the appellant fails to do so, the law will take its own course.
• As stated at the outset, this order has been passed in the peculiar facts and circumstances of this case, and it shall not be construed as a precedent to be relied upon against the respondentBank
• The appeals stand disposed of, in the above terms.