Chaudhary Hans Raj and Others vs The State of Punjab

T.H.B. Chalapathi, J.—This writ petition is filed to issue a writ of certiorari to quash the order dated 5.2.1980 (Ann. P.6), passed by the Director of Industries, Punjab.

The petitioner Chaudhary Hans Raj took a loan of Rs. 20,000/- from the Director of Industries, Punjab for setting up an oil mill at Khanna, District Ludhiana and mortgaged his property, agreed to pay interest at the rate of 3% per annum and if he was in default according to the terms of the mortgage deed, he agreed to pay interest @ 10% per annum. The petitioner Chaudhary Hans Raj committed default in payment of the instalment on 1.1.1966, therefore, the respondents claimed the penal interest @ 10 per cent. Against the demand of penal interest, the petitioner filed a writ petition in C.W.P. No. 2491 of 1972 which was decided on 2.4.1973 holding that the rate of 10% interest was a contractual rate in the alternative on default and not a penalty and accordingly dismissed the writ petition. According to the petitioners, he paid an amount of Rs. 14,000/- during the pendency of the writ petition and a sum of Rs. 2,000/- on 30.3.1979. Thereafter, the petitioner asked the respondent to furnish the statement of account and the respondent failed to furnish the same. The respondent further directed the petitioner to pay a sum of Rs. 13,491.72 paise as due upto 11.4.1980. Thus demand includes the original 3% interest plus 10% interest as penalty and is in total disregard of the judgment of this Court in C.W.P. No. 2491 of 1972. Challenging the said demand vide Annexure P.6, the petitioner filed this writ petition.

During the pendency of the writ petition, Chaudhary Hans Raj died on 1.6.1991 and an application was moved by his wife, sons and daughters to bring them on record as legal representatives of her husband namely herself, her sons and daughters. By a separate order in Civil Misc. No. 4155 of 1992, the said application has been allowed by me. The only point that is to be decided in this writ petition is whether the petitioner is liable to pay the penal interest at the rate of 10% in addition to the original interest of 3%.

There is no dispute that Chaudhary Hans Raj obtained a loan of Rs. 20,000/ from the Government and mortgaged his property.

In the written statement, it is clearly stated that interest is being charged @ 10% per annum and not 10% in addition to 3% original rate of interest. It is also contended that in the year 1972, petitioner paid the entire principal amount and that interest of Rs. 13,491.72 accrued upto 11.4.1980 in accordance with the terms of the mortgage-deed.

According to the petitioners, the respondent has not furnished the statement of account as demanded in Annexures P.4 and P.5. The only dispute is whether the amount which has been demanded namely Rs. 13,491.72 was calculated at the rate of 10% or at the rate of 13% per annum. According to the petitioners it was calculated @ 13% whereas according to the respondents it was calculated at the rate of 10% . The statement of account has not been filed by the respondent, However, amount of Rs. 13,491.72 was demanded. In fact, an order has been passed in CM. No. 1710 of 1980, decided on 13.10.1980 by his Lordship Surinder Singh, J. In the said order it is said as follows :-

"After hearing the learned counsel for the parties, I find that the main dispute between the parties is as to whether simple interest or compound interest is to be paid on the loan amount. The matter is pending in Civil Writ Petition No. 828 of 1980. For the time being, the learned counsel for the parties agree that the petitioner shall pay the balance of the amount due from him, i.e. Rs. 13,492.72 minus Rs. 2052.03, which he has already deposited and as regards the future interest accruing after April 11, 1980, the petitioner gives an undertaking that he shall pay the amount, subject to result of the writ petition. On the part of the respondent, Mr. B.S. Wasu, learned counsel appearing for the Advocate General, states that subject to the result of the Civil Writ Petition, if any amount is found over- paid by the petitioners on account of interest etc., the same shall be refunded to him. On the deposit of the amount as mentioned above by the petitioner, the respondent shall allow the redemption of the property and release the documents in their possession."

In the circumstances of the case, I am of the view that it is in the interest of justice to direct the respondents to furnish the statement of account as to how the amount of Rs. 13,491.72 was calculated and if any payments are made, the same may be directed to be adjusted and if any amount is due from the petitioners it may be recovered by calculating the interest at the rate of 10% per annum. It is also made clear that admittedly as the principal amount was paid, there cannot be any interest on interest. The respondents are hereby directed to calculate the amount due after giving credit to all the payments made by the petitioners and send the statement of account to the widow of the petitioner namely Mrs. Ved Kumari Chaudhary and if any amount is due the same shall be paid within one month thereafter. If any excess amount has been paid by the petitioner, the same may be refunded within one month. No costs.

With the above directions, the writ petition is disposed of.