Dalbir Singh Sihag vs Ministry of Rural Development and Others

M.M. Kumar, J.—This petition filed under Article 226 of the Constitution prays for issuance of direction to the respondents to release the sanctioned loan to the petitioner under the Credit-cum-Subsidy Policy of Gramin Awaas Yojna, Ministry of Rural Development Government of India.

Facts in brief are that the Government of India, Ministry of Rural Development floated a scheme known as Credit-cum-Subsidy Scheme (for brevity the scheme) for rural housing in the year 1999 (Annexure P1). This scheme is a part-credit and part-subsidy based and is in alternative to the Indira Awaas Yojna redefining the role of Government from that of a ''provider'' to a ''facilitator'' as envisaged in the National Housing and Habitat Policy, 1998. The scheme targets to envelop that group of rural households which has annual income of upto Rs. 32,000/- only. The rural households below poverty line has been given preference. The respective States have been given the prerogative to identify beneficiaries under the scheme and the modus operandi to adopt such beneficiaries. The implementation agency could either be the State Housing Boards/Corporations or any other specified commercial organisation etc. A ceiling of subsidy has been fixed at Rs. 10,000/- per household and the upper limit of loan for the purpose of construction has been fixed at Rs. 40,000/- per household. The State Government has been given free hand to identify the agency from whom the loan is to be procured and disbursed. The overall monitoring of the scheme has been given in the hand of Ministry of Rural Development, Government of India. Accordingly, the Punjab National Bank, respondents 3 to 6 (for brevity, ''the PNB'') has been selected as the agency for procuring disbursing and monitoring the ''scheme''.

The petitioner, who claims to be a poor, uneducated and sole earning member of his family, has applied for a loan of Rs. 40,000/- for construction of a house on a small plot which he had inherited from the ancestral property after the death of his father. He claimed that he fulfilled all the requirements of the scheme. The application was made to the PNB which was the agency identified by the State Government. The credentials of the petitioner were accordingly investigaged and a subsidy of Rs. 10.000/- was released. After the grant of subsidy of Rs. 10,000/- respondent No. 5, the then Manager of the Punjab National Bank, Bathinda Branch, District Hisar asked the petitioner to submit certain more documents such as relevant jamabandi and an affidavit stating the he was owner of the plot where the house was proposed to be constructed along with the report of the Halqa Patwari counter signed by the Tehsildar accompanied by a site plan, estimate and a copy of the ration card. All the aforementioned documents were furnished to the bank on 25.6.2002. Respondent No. 5 sought verification from the Manager, Oriental Bank of Commerce, Tohana. The Manager, Oriental Bank of Commerce. Tohana certified that the petitioner has a running crop loan account with the bank and that was running satisfactorily. The petitioner was then asked by the respondent No. 5 to mortgage his plot in favour of the bank. Accordingly, the petitioner executed a mortgage deed on 26.6.2002. On 1.7.2002 bank respondent No. 3 sanctioned the loan in favour of the petitioner and issued a certificate (Annexure P4) by entering and confirming the mutation in its favour. However, the petitioner was not disbursed the loan and a letter dated 27.7.2002 to that effect was addressed by the bank respondent No. 3. It was alleged in the letter that the petitioner owned a residential house and that he had obtained some loan from Cooperative Society Gajuwala which had not been repaid. He was also asked to submit a no due certificate of the society. On the basis of the aforementioned lacunas respondent bank cancelled the sanctioned loan.

It is appropriate to mention that the petitioner addressed a letter to respondents 1 and 2 alleging that in fact respondent No. 5 the bank Manager had asked for illegal gratification of Rs. 3000/- after the sanction of the loan amount on 1.7.2002.

Respondents 3 to 5 have filed their reply and a separate reply has been filed by respondent No. 1. Respondents 3 to 5 have asserted in para 2 of the preliminary submissions that the petitioner has made misrepresentation and in fact he was not eligible for the grant of loan for various reasons viz. (i) petitioner owns a pucca house as is evident from the certificate dated 16.7.2002 (Annexure R1); (ii) the annual income of the petitioner exceeded Rs. 32,000/- as he is owner of 22 Kanals 6 Marlas i.e. over three acres of land as is evident from the jamabandi Annexure P7; (iii) the petitioner has failed to complete necessary documents for taking loan despite reminders; (iv) he has misrepresented to the respondents that he has never raised a loan from any other source whereas letter dated 12.7.2002 (Annexure R4) shows that he had obtained loan from the Cooperative Society Gajuwala. It is further claimed that a financial institution is not obliged to disburse a loan even if the scheme was sanctioned. The allegation of malafide levelled against respondent have been categorically denied by respondent No. 5.

In the replication, the plea of income exceeding Rs. 32,000/- has been controverted by stating that the jamabandi of the year 2001-02 has been misconstrued by respondent 3 to 5. It has been reasserted that the petitioner owns only 1 kanal 9 marlas of land and not 25 kanals 6 marlas. It is further asserted that all the necessary documents and requirements have been completed including the letter dated 27.6.2002 (Annexure R3). As a consequence of completion of the formalities the plot of the petitioner was mortgaged on 1.7.2002 and the loan was sanctioned. The further inquiry initiated is after the sanction as is evident from the letter dated 12.7.2002 (Annexure R4 and R5).

Ms. Navender P.K. Singh, learned Counsel for the petitioner has vehemently argued that the Punjab National Bank being the executing agency is under a legal obligation to scrutinise the application of the petitioner which in fact was scrutinised and was found to be in order. After completion of the formalities the loan was sanctioned and even subsidy of Rs. 10,000/- was disbursed. It was thereafter that on 1.7.2002 the petitioner mortgaged his plot. Learned Counsel has placed reliance on a Division Bench judgment of this Court rendered in C.W.P. No. 7141 of 1998 decided on 9.12.1998, Durga Gram Udyog v. Punjab Village and Khadi Board, Learned Counsel has also argued that once the petitioner has taken the step of mortgaging his plot by incurring Rs. 2,500/- in favour of respondents 3 to 5, then the plea in the nature of promissory estoppel would arise binding the respondents to disburse the loan amount. For the aforementioned proposition reliance has been placed on a judgment of the Supreme Court titled Gujarat State Financial Corporation Vs. Lotus Hotels Pvt. Ltd., .

Mr. G.S. Anand. learned Counsel for the respondents has submitted that the petitioner has failed to fulfill the necessary qualification of becoming eligible for disbursement of the loan because he is a defaulter of the Gajuwala Cooperative Society and more so he has already a pucca house in his own name. Learned Counsel has further argued that even if it is presumed for the sake of arguments, logically there is no restraint on a financial institution to withdraw disbursement of loan if it is found that such a loan was sanctioned on misrepresentation or misinterpretation. Therefore, learned Counsel has submitted that the bank cannot take the risk of disbursing loan to a person whose financial credentials are suspicious and who already owns a pucca house.

After hearing learned Counsel for the parties and a perusal of record, I am of the considered view that this petition deserves to succeed. It is admitted position that the petitioner applied for the benefits under the scheme within the time specified. Accordingly, loan of Rs. 40,000/- for the purpose of construction and a subsidy of Rs. 10.000/- were sanctioned on 01.07.2002 (P-4). The subsidy amount of Rs. 10.000/- had already been released by DRDA and was lying deposited with PNB since 30.03.2002. The petitioner had mortgaged his plot of land in favour of the PNB vide registered deed dated 01.07.2002. The petitioner had incurred expenses for mortgage and has changed his position to his detriment. It is in these circumstances that the principles of promissory estoppel were applied by the Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh and Others, . The following observations of the Supreme Court in that case would fully apply to the facts of the present case and the same reads as under:-

The true principle of promissory estoppel, therefore, seems to be that where one party has by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not.

The aforementioned view was followed and applied by the Supreme Court in the case of M/s Lotus Hotels Pvt. Ltd. (supra) and the views of their Lordships read as under:-

...Acting on the solemn undertaking, the respondent proceeded to undertake and execute the project of setting up a 4-star hotel at Baroda. The agreement to advance the loan was entered into in performance of the statutory duty cast on the Corporation by the Statute under which it was created and set up. On its solemn promise evidenced by the aforementioned two documents, the respondent incurred expenses, suffered liabilities to set up a hotel. Presumably, if the loan was not forthcoming, the respondent may not have undertaken such a huge project. Acting on the promise of the appellant evidenced by documents, the respondent proceeded to suffer further liabilities to implement and execute the project. In the back drop of this incontrovertible fact situation, the principle of promissory estoppel would come into play....

The arguments of the PNB have failed to impress me. Firstly it was alleged that the petitioner had a pucca house. A bare perusal of the certificate (R-1) clearly shows that it does not in terms states that the petitioner has a pucca house. The certificate has been issued after 01.07.2002 much after grant of sanction of loan to the petitioner, which speaks volumes of rejection on extraneous consideration. Despite express mentioning of the aforementioned fact in the Court, no effort or prayer was made to supply better particulars of the so called house of the petitioner. Therefore, the reason for rejection is un-sustainable and the same is rejected.

The second ground of rejection is that the petitioner has annual income exceeding Rs. 32,000/- because petitioner is stated to be owner of land measuring 3 acres 1 kanal and 6 marlas. The rates of crop (R-2) has been made the basis of calculations to total up the income showing that it exceeded Rs. 32,000/- per annum. The averments have been made in sub-para (ii) of para 2, which reads as under: -

(ii) That according to Annexure P-l (Colly.) with the Petition, all rural families whose annual income does not exceed Rs. 32,000/- can avail the relief under the credit-cum-subsidy Scheme of Rural Development. The annual income of the Petitioner exceeds Rs. 32,000/-. The petitioner is the owner of 25 kanals and 6 marlas i.e. 3 acres, 1 kanal and 6 marlas of land vide copy of Jamabandi, Annexure P-7 with the Petition. It is evident from Annexure P-7 that the petitioner and his brother, Shri Dharambir Singh own 1012 shares out of 4725 shares, which are in fact, as many Marlas. Thus, the share of the petitioner, being half of 1012 share, conies to 506 share i.e. 506 Marlas = 25 kanals and 6 marlas = 3 acres 1 kanal and 6marlas. According to the yardstick vide the norms of yield per acre (approved by the District Administration), quantified in money, the petitioner who cultivates Kharif crops, traditionally Paddy and Cotton, earns about Rs. 15,500/- per acre for Paddy and Rs. 12,000/- per acre for Cotton. Further, the petitioner also cultivates wheat in Rabi season and earns Rs. 14,000/- per acre. Taking the average income per acre regarding Kharif crops at Rs. 13,750/- x 3 acres = Rs. 41,250/- and that for Rabi (wheat) crop at Rs. 14,000/- per acre x 3 acres = Rs. 42,000/-, the income of the petitioner is much more than the laid down criterion of eligible annual income vide Annexure P-l with the petition. A true copy of the relevant extract of the said norms is attached herewith as Annexure R-2. Thus, the petitioner is ineligible for the housing loan on this count as well;

The aforementioned factual position has been controverted by filing a replication to the written statement. In this regard reliance has been placed on the jamabandi (revenue record) Annexure P-7 in respect of the year 2001-2002. It clearly shows that the petitioner is owner of land measuring 1 kanal 9 marlas and 0K-3M has been mortgaged with PNB Bithmada for Rs. 40,000/-. The note in the aforementioned document reads as under:-

Note As per entry No. 344 dated 2/7/02 Gair Mumkin Plots No. 300-301-302-303, 6/58 shares measuring 0K-3M of total area 1K-9M belonging to Dalbir Singh son of Shingara stands mortgaged with P.N.B, Bithmada for fts. 40,000/-.

(Emphasis added).

Again there appears to be some extraneous considerations prevailing with respondents. The note clearly shows that the petitioner owns only 1K-9M of land. Art entry in the jamabandi attracts a presumption of truth as per Section 44 of the Land Revenue Act, 1887. There is nothing on record to replace that presumption except imaginary calculations of respondents. The plea raised is false. Therefore, there is no substance even in the second objection raised by the respondents and the same is hereby rejected.

Another frivolous objection has been raised, namely, the petitioner was asked to complete the necessary documents for taking loan on 27.6.2002. In response to that letter the petitioner had executed mortgage deed on 01.07.2002. vide annexure P-4 (Colly.) and lien of the respondent PNB was created on the land of the petitioner. The other formalities were already complete. Therefore, it further strengthens the impression that the application of the petitioner was rejected on some extraneous considerations.

The fourth ground of misrepresentation is also without any substance. There is nothing in the scheme to disqualify a person for the benefits of the scheme on the ground that he has been in arrears of re-payment of loan of a Co-operative Society. Nothing has been placed on record to substantiate that allegation. Moreover, the letter R-4 has been written on 12.07.2002 and it was replied the same day. This correspondence is also much later. On 01.07.2002. the petitioner had changed his position to his detriment by executing a mortgage deed. This ground is also based on extraneous considerations and the same is hereby rejected. 17. For the reasons stated above, this petition succeeds. The respondents are directed to release the petitioner the loan amount of Rs. 40,000/- expeditiously but not later than one month from the date of receipt of certified copy of this order. The petitioner is entitled to his cost, which I quantified to be Rs. 10,000/-. The cost shall be paid by respondent No. 3. PNB.