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Judgment
Sanjay Kishan Kaul, C.J.—Since the factual matrix and the questions of law involved in aforesaid two writ petitions are common and they assail common judgments/orders of DRT and DRAT, these are being disposed of by this single judgment. For facility of reference, the facts are noticed from CWP-14090-2011. A loan was sought by respondent No. 3 from the petitioner/HUDCO of Rs. 120.00 lacs on 18.5.1995 for construction of 28 dwelling units under Vista Valley Project at Shimla. The loan was sanctioned with the remaining private respondents standing guarantee executed on 5.5.1996 and a loan agreement was executed on 5.8.1996 (Annexure P-4). The loan is stated to have been enhanced to Rs. 140.00 lacs after release of initial instalments and the name of respondent No. 3 was also changed from its original name. It is the case of the petitioner that despite disbursement of three instalments, the private respondents failed to clear the dues and the loan was recalled by the notice dated 23.8.1999 and the recovery proceedings were filed before the DRT for a sum of Rs. 1,38,02,317.00 along with interest at 20.5% per annum and penal interest of 2.5% per annum.
The private respondents contested the claim and, in fact, filed a counter-claim of Rs. 682.12 lacs. The principal grievance made was that despite the agreement inter se the parties, the petitioner failed to release the sanctioned loan amount in time leading to grave loss to the project. Even the three instalments released were stated to have been inordinately delayed which stalled the work.
The DRT vide the judgment dated 14.7.2009 arrived at a finding that the first and second instalments were to be released on 1.7.1996 and 1.10.1996, respectively, which were actually released on 1.1.1997 and 12.12.1997 and there was, thus, an undisputed delay of 6 months and 14 months, respectively, in disbursement of the first two instalments. These delays have been found to be unacceptable by the DRT even assuming there was some remaining formalities to be completed by borrower as they could not be categorised as any major defaults specially as the loan amount itself was enhanced from Rs. 120.00 to Rs. 140.00 lacs. Despite this, the DRT simultaneously also held that to the extent the loan was advanced it had to be repaid back and, thus, the actual disbursed loan amount of Rs. 90.44 lacs was adjudged as the principal sum due. On this amount, the rate of interest charged by the petitioner, its compounding, penal interest, etc. have been held to be non applicable on account of the delay in disbursement of the loan and, thus, the interest rate has been fixed at 8% on the decretal amount. The counter-claim was, however, dismissed.
Both the parties filed their cross appeals before the DRAT and these appeals have been decided by a common judgment dated 28.10.2010. The DRAT took note of the delays in making the payment of first two instalments and thereafter the revision of the loan where the instalments were re-scheduled as per the actual date of disbursement of the first two instalments. The one crucial element referred to by both the counsel for the parties was the letter of offer dated 5.12.1995 which contained the following clauses:
Disbursement
Loan of Rs. 120.00 Lacs will be disbursed in phases or in lumpsum depending upon the process of construction as decided by HUDCO. Request for disbursement should be supported by a technical report about the progress of construction utilization of HUDCO loan disbursed till date and Auditors'' Certificate about your share of investment of funds. Loan will be disbursed only after the receipt of satisfactory technical, financial and legal report.
LOAN REPAYMENT
Loan is repayable within 9 months in three equal quarterly installments of Rs. 40.00 Lacs each. If the project is completed ahead of schedule, the instalment terms and repayment of loan shall be preponed accordingly.
The loan agreement dated 5.8.1996, more specifically, clause 2.6 was relied on by the learned counsel for the petitioner, which reads as under:-
Details of disbursement
The loan shall be disbursed in one lumpsum or in suitable instalments to be decided by the lender with reference to the need or progress of construction of the project (which decision shall be final and binding on the Borrower)
The emphasis of the learned counsel for the petitioner in the context of the aforesaid Clause 2.6 was on the schedule of disbursement which reads as under:-
It is the aforesaid expression "on or after" qua the date which was contended to give the leeway to the petitioner for disbursement of the loan. The non-release of third and fourth instalment was alleged to be on account of failure to pay interest by the private respondents.
The Appellate Tribunal, however, found that the petitioner had failed to produce any evidence as to the conditions which the borrower did not satisfy and in the absence of such verifiable evidence, the plea of the petitioner was rejected. Both the appeals were dismissed by the common order.
The petitioner, however, filed a Miscellaneous Application in his appeal arising from the findings of the appellate Tribunal that no evidence had been produced of any obligation which the borrower could not perform. In this context, the further enhancement of the loan on 29.1.1999 was stated to be crucial as that would lead to a presumption that the borrower had no complaint against the petitioner. However, this plea was rejected by the appellate Tribunal vide an order dated 8.12.2010 as no communication whatsoever had been produced addressed by the petitioner to the borrower complaining about non-compliance of obligations.
The petitioner has, thus, filed the present writ petition under Article 226 of the Constitution of India seeking to assail the orders of the DRT and the DRAT aggrieved by the reduction of the amount for which the application for recovery had been filed as also the reduction of interest below the contractual level. The borrower has also filed a petition more as a counterblast.
We are given to understand by both the learned counsel for the parties that insofar as the decree now stands, as affirmed by the DRAT, the amount already stands deposited by the private respondents. The question, thus, arises as to whether any further liability is due by the private respondents to the petitioner on the aforesaid two accounts i.e. the allegedly wrongful deduction of the principal amount (actually consisting of the amount advanced and the interest due till the filing of the application) and the rate of future interest.
The argument before us has proceeded more or less on the same basis as has been discussed by the forums below. We have also to keep in mind that we are exercising jurisdiction under Article 226 of the Constitution of India and are not hearing a regular second appeal. Two judicial forums have scrutinized a claim and counter-claim to arrive at the amount due and the interest payable thereon. There has to be, thus, gross perversity in the findings of the forums below for this Court to exercise its extra-ordinary jurisdiction.
The agreement inter se the parties is not disputed. The loan of Rs. 120.00 lacs was sought which was, in principal, sanctioned on 5.12.1995 by the petitioner. Learned counsel for the petitioner has, thus, placed reliance on the loan agreement dated 5.8.1996 which contains Clause 2.6 setting out the details of disbursement- i.e. in one lumpsum or in suitable instalments to be decided by the lender with reference to the need or progress of the construction of the project. This Clause is sought to be read with Clause 4.2 which puts an obligation on the borrower to produce evidence for utilisation of disbursement to the satisfaction of the lender. The first instalment was thus, released of Rs. 18.11 lacs on 1.1.1997 and the second instalment of Rs. 27.33 lacs on 12.12.1997. The third instalment, it was submitted, was not released on account of failure of the borrower to furnish the requisite documents as per Clause 4.2(d). This is stated to have resulted in a revised loan agreement on 29.1.1999 which would show that there was no delay at all in the release of the first and second instalments. The third instalment of loan was released of Rs. 45 lacs on 4.3.1999 which had been agreed to be released on 1.12.1998 as once again the borrower had not shown compliance with the conditions of release earlier. It has, thus, been urged that there was only a technical delay in release of the third instalment by 3 months, if at all there was any delay, and the intent of the parties was obvious from the column under date of the loan agreement dated 5.8.1996 qua the instalment which used the expression "on or after". The loan was recalled on 23.8.1999. Reliance has been placed on the judgment of the Supreme Court in Central Bank of India Vs. Ravindra and Others, for the proposition that the principal sum adjudged could not be reduced by the Tribunal and, thus, a serious error has been committed.
On the other hand, learned counsel for the private respondents urged that the communication dated 24.7.1996 by the petitioner to the private respondents itself includes the loan drawl and loan repayment schedule as annexure and that could not be ignored. The disbursal had to take place as under:-
The aforesaid schedule was to be incorporated in a loan agreement but inadvertently was not so incorporated and, thus, on the advice of the petitioner, a revised application was made incorporating the agreed dates for disbursement of loan and its repayment on 16.10.1996 as under:-
It has been thus urged that there was undisputed delay of 6 months in the release of the first instalment on 1.1.1997 instead of 1.7.1996 and of 14 months in the second instalment on 12.12.1997 instead of 1.10.1996. The re-negotiation, enhancement of loan and supplementary loan agreement took place on 29.1.1999 wherein the actual dates of disbursement of the first two instalments were given because those dates had already passed which did not amount to the delay being ignored for those instalments and even the third instalment was released on 4.3.1999 instead of 1.12.1998. The loan was recalled soon thereafter on 23.8.1999.
A reference has been made to the notice of recall dated 23.8.1999 when amount of Rs. 5,60,170/- was shown as outstanding. This was despite the fact that a sum of Rs. 2 lacs had already been deposited on 23.8.1999, the date on which the notice was typed. Not only that, the remaining alleged defaulted amount was paid in three instalments on 30.8.1999, 2.9.1999 and 8.10.1999. There was, thus, stated to be no default and the entire interest for the quarter ending June-1999 was paid by October-1999 which was the reason that the account was never classified as NPA.
As far as meeting the decreed obligations are concerned, it has been stated that payments were being made even prior to the issuance of recovery certificate and the entire dues were deposited by February-2012. On approaching the bank for release of title deed, the petitioner again claimed another sum of Rs. 1,27,208/- and the sum of Rs. 1,28,508/- was deposited. Thus, the recovery certificate stands satisfied.
The judgment in Central Bank of India vs. Ravindra (supra) is sought to be distinguished on the ground that firstly if there was no cause to institute the proceedings, then merely because the interest is included as part of the component of the claim in an application does not mean that the same cannot be reduced. Secondly, the judgment is stated to be in terms of the provisions of Section 34 of the Code of Civil Procedure, 1908 while the DRT has much wider powers u/s 19(20) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, which is reproduced as under:-
(20) The tribunal may, after giving the applicant and the defendant an opportunity of being heard, passed such interim order final orders, including the order for payment of interest from the date on or before which payment of the amount is found due upto the date of realisation of actual payment, on the application as it thinks fit to meet the ends of justice.
On appreciating the rival submissions of learned counsel for the parties, we see no reason to exercise jurisdiction under Article 226 of the Constitution of India. Both the forums below have considered all the relevant material to come to a conclusion that there was something left to be desired in the manner in which the petitioner had conducted itself in disbursement of the loan. The petitioner could not be permitted to take advantage of the fact that the term "on or after" has been used. The dates of disbursement and repayment had already been set out in the letter dated 24.7.1996 which ultimately culminated in the agreement dated 5.8.1996. The failure to incorporate this schedule in the agreement resulted in the revised application being filed. Since there were delays in the initial disbursements, the actual dates of disbursements were taken in the revised agreement. This itself could not wash away the fact that there was delay in the disbursement of the initial first and second instalments. As far as the third instalment is concerned, it has been undisputedly delayed.
The petitioner keeps on emphasising on the aspect of certain requirements to be completed by the private respondents which they failed to do and which in turn had resulted in non-disbursement of the instalments at the earliest, but they failed to produce any evidence whatsoever in this behalf. The mere fact that there was a subsequent loan agreement on 29.1.1999 enhancing the loan amount does not mean that the private respondents were in default in complying with any obligation. In fact, the categorical finding of both the forums below is the failure to produce any evidence in this behalf by the petitioner. It may also be noticed that after the undisputed delay in disbursement of the third instalment, the loan had been recalled soon thereafter in an abrupt manner. Learned counsel for the private respondents has explained that even part of the outstanding had been cleared prior to the despatch of the notice of recall and the remaining soon thereafter. The question, thus, arises whether the forums below have proceeded to act perversely while coming to a finding that on account of delays in loan disbursement, the rate of interest and penal interest levied by the petitioner was not permissible, though the amount being public fund, the actual loan advanced would remain due. Thus, the principal amount has been reduced only to the actual amount disbursed by the petitioner to the private respondents and on that amount too interest has been calculated, albeit at a reduced rate in view of the conduct of the petitioner rather than at the commercial/contract rate.
We find no such perversity in this exercise carried out by the forums below especially taking into consideration the wide powers available with the DRT within the parameters of Sub-section 20 of Section 19 of the said Act. We do not think it is, thus, a fit case for us to exercise jurisdiction under Article 226 of the Constitution of India.
Both the petitions are dismissed in the aforesaid terms. Parties are left to bear their own costs.