Ashoka Tin Works vs Punjab Financial Corporation and Others

G.C. Garg, J.—Ashoka Tin Works, Mansa Road, Bathinda (for short the ''Company''), the petitioner herein was initially sanctioned loan of Rs. 1,11,000/- in the year 1975 when its property was mortgaged in order to secure the repayment of the loan amount. The Company was also sanctioned additional loan of Rs. 14.85 lacs by the Board of Directors of the Punjab Financial Corporation (for short ''the Corporation'') in April 1983. Again the properties of the Company were mortgaged vide mortgage deed dated 13.9.1983 for securing repayment of the loan. The Company was disbursed a loan of Rs. 98,100/- against the sanctioned loan of Rs. 1,11,000/-. However, the entire additional loan amount was disbursed. As per the covenants in the mortgage deed, the Company was required to repay the amount in 17 half yearly instalments along with interest. The petitioner-company, however, committed certain defaults.

The Corporation in exercise of its power u/s 29 of the States Corporation Act tried to take possession of the unit of the Company and this led to the filing of the present writ petition.

It is not necessary to notice the facts in detail as virtually the entire dispute raised in the writ petition has been settled between the parties by interim orders massed by this Court from time to time.

During the pendency of the writ petition, certain proposals were made and on the request of the petitioner-company, the Board of Directors of the Corporation in its meeting held on 30.4.1990 decided that in case the entire amount of loan is paid by the petitioner-company with simple interest at the rate of 11% per annum by 15.5.1990, the same shall be accepted by it. However, the amount was not paid and consequently the concession stood withdrawn by the Board of Directors in its meeting held on 31.5.1990. The petitioner-company thereafter moved a Civil Misc. application praying that the Corporation may be directed to settle its claim by calculating the amount on the basis of simple interest at the rate of 11% per annum. Division Beach of this Court by order dated 26.11.1990 directed the Corporation to reconsider the matter. However, the Board of Directors by its decision dated 7.2.1991 confirmed its decision taken in the meeting held on 31.5.1990.

The matter was thereafter taken up on 16.5.1991 when a Division Bench passed the following order :-

"The controversy as to how much amount would be due on the basis of 11 per cent simple interest has" been clinched by filing of affidavits by both sides today. According to the Punjab Financial Corporation, the amount as on 15.5.1990 at the rate of 11 per cent will come to Rs. 17,53,407.89 which according to the petitioner also come to the same figure but he has highlighted two facts; one that on 25.5.1985 a sum of Rs. 14,853/- was paid and that has not been accounted for in the statement of accounts furnished by the Punjab Financial Corporation and two that in the statement of Accounts, the Punjab Financial Corporation has added expenses of Rs. 17,886.33. On such a huge amount, the Punjab Financial Corporation is expected to incur such expenses and as such this amount is to be paid by the petitioner. As regards the other amount, the counsel for the Punjab Financial Corporation is directed to verify whether the amount of Rs. 14,853/- was paid by the petitioner or not and if paid, the same be also adjusted.

Mr. Kaushal fairly states that his client is prepared to pay the entire amount on the basis of 11 per cent simple interest if some time is provided for selling the business premises. The petitioner may sell the premises in dispute subject to the claim of the Punjab Financial Corporation within a period of three months from today. It is made clear that whether the property is sold or not, the petitioner has to pay the entire amount within three months alongwith interest at 11 per cent from the date it fell due.

The hearing of the case is adjourned to 27.8.1991 for determination of other points. Civil Misc. 746 of 1991 is ordered to be listed for hearing on 17.5.1991.

It is also made clear that sale proceeds should not be less than the claim of the Punjab Financial Corporation and in case the petitioner is to have interest-free loan from the State of Punjab, that claim of the petitioner be also taken note of by the Punjab Financial Corporation."

The amount as per the order dated 16.5.1991was not paid and this prompted the petitioner-company to move Civil Misc. 5464 of 1991 which was again in considered by the Division Bench on 7.9.1991 when the following order was passed

"After hearing the learned counsel for the parties, Civil Misc. is allowed subject to the following:-

Whatever amount by calculation is found due on May 16, 1991 when the order of the Court was made in this case, calculating simple interest at the rate of 11, the petitioner would pay interest thereon @ 14% (penal interest) up to December 15, 1991 as the date fixed is November 30, 1991 in the agreement entered between the petitioner and the buyers who had agreed to purchase the machinery of the petitioner. If the aforesaid order is not complied with, concession given to the petitioner in this order or by the earlier order, shall stand rescinded automatically. Main case be put up on 20.12.1991."

It seems that the matter was not taken up on 20.12.1991 as ordered by the Division Bench on 7.9.1991. Thereafter, it is not much in dispute that the petitioner made payment, though not of the entire amount, but of the substantial amount within the time allowed by order dated 7.9.1991 and the petitioner having paid the amount moved a Civil Miscellaneous application praying that a ''No Due Certificate'' be issued and mortgaged documents passed:-

"An affidavit of Mr. Ashok Beri, Senior Manager (Legal), Punjab Financial Corporation, Chandigarh has been filed mentioning therein that as on December 15,1991, sum of Rs. 89,000/ was still due from M/s. Ashoka Tin Works, the present petitioner. Counsel for the petitioner states that full statement of account has not been furnished in this affidavit and that he should be allowed to inspect the records to verify the figure mentioned in the affidavit. Case is adjourned to July 6, 1992. The representative of the petitioner will approach Senior Manager (Legal) of the Punjab Financial Corporation, Chandigarh during this period for inspection of the statement of account. The petitioner may pay the amount to the Corporation during this period, keeping in view the discrepancy, if any."

A reading of the above orders goes to show that even as per the Corporation itself, all, the amounts ranging between seventeen to eighteen lacs stood paid within the time allowed by order dated 7.9.1991 except an amount of about Rs. 89,000/-. According to the petitioner-company, the said amount if remained due, could not be paid as statement of account had not been furnished at any point of time before, 20.12.1991 despite request. The matter was adjourned to 6.7.1992 so as to enable the petitioner to approach the Senior Manager (Legal) of the Corporation for inspection of statement of accounts and the petitioner-company was permitted to pay the amount to the Corporation during the said period keeping in view the discrepancy, if any.

The matter thereafter came up for hearing before the Division Bench on 6.7.1992 when the following order was passed :-

"Counsel for the petitioner states that after 13.5.1992, a sum of Rs. 74,000/- and a bank draft of Rs. 14852.84 were paid to the Corporation and this settles the total amount due.

Counsel for the corporation may verify. Reply in the Misc. application filed. For arguments to come up on 3.8.1992."

It is not disputed that these amounts were paid by way of bank draft in the sum of Rs. 74,000/- and Rs. 15,000/- though in fact these amounts were paid on 30.6.1992 and 2.11.1992 respectively. The above amounts were perhaps paid earlier but were adjusted by the Corporation on 30.6.1992 and 2.11.1992 respectively. Thus having regard to the interim orders passed by this Court as noticed above, there is no escape from the conclusion that the entire amount as agreed to between the parties and reflected in the order dated 16.5.1991 stands paid though as per the affidavit dated 17.4.1996 of Ashok Beri, Senior Assistant Manager (Legal) of the Corporation, an amount of Rs. 22,410.77 is still due from the petitioner to the Corporation with further interest thereon from 16.8.1992. However, again there is no dispute that another sum of Rs. 15,000/- was paid and according to the Corporation the same was paid on 2.11.1992 but according to the petitioner it was paid somewhere in May or June 1992. It seems that the amount of Rs. 15,000/- paid in Court by the petitioner-company in August, 1992 was given credit to by the Corporation in its account on 2.11.1992. Thus there remained a sum of about Rs. 7,000/- due to the Corporation as on 2.11.1992 with further interest at the rate of 14% per annum from that date till payment. This balance amount if worked out at the above rate of interest as on today will at the most come to about Rs. 14,000/- or so.

After hearing learned counsel for the parties, I am of the opinion that as a matter of fact the entire dispute raised herein stands already settled between the parties by interim orders and nothing remains to be gone into or settled in this case except that the petitioner is still liable to pay an amount of Rs. 14,000/- so as to enable the Corporation to give it the ''No due Certificate'' and release the documents under the mortgage deed.

In all fairness to learned counsel for the parties, I deem it appropriate to notice the contentions raised by them. Learned counsel appearing on behalf of the Corporation submits that the interim orders passed in this writ petition from time to time are not final and these orders were subject to the final decision of the writ petition. He further submits that the Corporation is entitled to charge interest at the rate mentioned in the mortgage deed executed between the parties and not at the rate as directed by this Court by way of interim orders.

On a consideration of the matter and in the peculiar facts and circumstances of this case, the contention raised by Mr. Nehra has no merit. The interim orders, by virtue of which almost the entire dispute between the parties has been set at rest, have attained finality as none of these orders was challenged by the Corporation or the petitioner company. By order dated 16.5.1991, the Division Bench directed that the petitioner would pay the entire amount along with interest at the rate of 11% per annum from the date it fell due and the petitioner was permitted to sell the property subject to mortgage charge. By order dated 7.9.1991, it was ordered that whatever amount was found due on 16.5.1991 after calculating simple interest at the rate of 11%, the petitioner would pay interest thereon @ 14% (penal interest) upto 15.12.1991 and that if the said order was not complied with, the concession given to the petitioner by means of that order or the order, passed on 16.5.1991, shall stand rescinded automatically. Undisputedly, the petitioner was liable to pay an amount of about Rs. 19 lacs or even more in terms of the directions of this Court, before 15.12.1991. According to the petitioner the entire amount was paid. However, as per the Corporation, the petitioner-company failed to pay a sum of about Rs. 89,000/-and therefore according to the Corporation the orders having not been complied with, the petitioner is not entitled to the benefits of the interim orders which at one point of time, in my opinion, were acceptable to the parties. Be that as it may, Mr. Nehra has not been able to refer to any material on the record to show that the amounts were settled and intimated to the petitioner at any point of time or that the petitioner was informed by the Corporation about the exact amounts, the former was liable to pay to the Corporation in terms of the interim orders. In fact it is much after the deposit/payment of almost the entire amount by the petitioner-company that the Corporation came out with an affidavit dated 13.5.1992 that a sum of Rs. 89,000/- was still due to it from the petitioner which, as already noticed above, was paid by the petitioner in the year 1992 itself. Thus the contention of Mr. Nehra that the interim order stood rescinded automatically for non-compliance of the order dated 7.9.1991 of the Division Bench, cannot be accepted.

Learned counsel appearing on behalf of the Corporation next contended that the Corporation is entitled to the rate of interest as mentioned in the mortgage deed and not the rates of 11% or 14% as directed by this Court. This contention though at the face is attractive put in the peculiar facts and circumstances of this case, has no merit. The Corporation itself considered the case of the petitioner in the meeting of its Board of Directors held on 30.4.1990 and decided to grant to the petitioner a concession to pay the amount at the simple interest at the rate of 11% per annum by 15.5.1990, though, this concession was withdrawn in the meeting of the Board of Directors held on 31.5.1990 as the amount was not paid within the time granted by the Board in its meeting held on 30.4.1990. When the Corporation itself had taken a decision to waive off the interest as contained in the mortgage deed, I do not think that the Court has committed any error while passing the interim orders directing the petitioner to pay the entire amount with interest at the rate as decided by the Corporation itself in its meeting held on 30.4.1990. It cannot be expected of the petitioner-company to pay a huge amount of about twenty lacs within a period of less than 1 months for availing the concession so granted to it. As per the facts as noticed above, the entire amount except a sum of Rs. 89,000/- as is stated by the Corporation to be still due, already stands paid in the year 1992 and the period of making payment, in my opinion, as fixed by order dated 7.9.1991 stood extended by order dated 13.5.1992. In that view of the matter, this contention also has no merit and is rejected.

In all fairness the contention of learned counsel for the petitioner-company also deserves to be noticed. According to the learned counsel an amount of Rs. 2.28 lacs was payable to the petitioner in October, 1991 from the Director of Industries on account of interest-free loan and if the Corporation had taken steps by complying with little formalities required to be done by the Director of Industries, then the amount would have been available with the Corporation for adjustment in the loan amount of the petitioner and since the Corporation was remiss in the discharge of its duties, the petitioner suffered Financial loss in the shape of interest on this amount and, therefore, in the peculiar facts of this case, no loss was caused to the Corporation and in fact, it is the petitioner-company which is entitled to be compensated in that behalf. On a consideration of the matter, I am of the view that it is not necessary to go into this contention and I leave it open to the petitioner to rake up this issue in an appropriate forum, if so advised.

In view of the above discussion, the next conclusion is that the Corporation is entitled to receive an amount of Rs. 14,000/- from the petitioner company as on today. In this view of the matter, I dispose of this writ petition with a direction to the respondent-Corporation to accept the amount of Rs. 14,000/- if paid by the petitioner, within four weeks from today and once that amount is paid and received by the Corporation, it shall issue a ''No Due Certificate'' and release all the documents under the mortgage to the petitioner according to law, as the entire claim of the Corporation stands satisfied.

There will be no order as to costs.