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Judgment
Sanjay Kishan Kaul, C.J.—This is a classic case where the respondent-Financial Corporation, which waives away crores of rupees in settlements, is quibbling over a few thousand rupees qua a registered mortgage created in the year 1969. Possibly, more amount would have been spent in litigation than the dispute involves. It is not in dispute that the petitioners sought a loan from the respondent-Corporation. It is the case of the respondent-Corporation that the loan was not repaid and an application was filed u/s 31 of the State Financial Corporation Act, 1951 (hereinafter referred to as "the said Act") for recovery of Rs. 77,746.85 with future interest from 13.8.1975 and other expenses. This application was rejected on 24.1.1980. One of the issues framed in these proceedings was:
Whether the respondents have committed breach of the agreement and so the amount of Rs. 38000/- was not released to them on account of that breach? OPA
The findings on the said issue are contained in para-8, which read as under:-
The above is the resume of the evidence led by the parties. On a scrutiny of the same I have reached the conclusion that the respondents had not committed such default so as to entitle the corporation to recall the loan. Certainly the respondents had not committed any default in payment of any instalment till the notice u/s 30 of the Act was issued by the corporation. Rather it required the respondents to pay the amount of Rs. 29044.53 vide its notice dated 5.9.75 which is Ex. R-3 but instead of waiting for the payment or the expiry of the time stipulated in the notice, it filed the instant application on 10.9.75. It is not understood as to why this notice was issued by the corporation if it had already recalled the loan. The only inference that can be drawn from this notice is that it had waived the notice issued u/s 30 of the Act earlier. Perhaps it did so because there was no such default committed by the respondents so as to entitle the corporation to recall the loan.
In the operative portion, it was stated as under:-
In the result the application is liable to be dismissed and the same is hereby dismissed. However in the circumstances of the case I leave the parties to bear their own costs. I may add that the respondents shall be liable to pay back the balance amount of the loan as per terms of the mortgage deed. The applicant may also, if so advised, release the balance amount of Rs. 38000/- to the respondents or adjust that amount in payment of any other instalment due from the respondents.
The undisputed fact is that the balance amount of Rs. 38,000/-, which the respondent-Corporation ought to have released to the petitioners, was never so released. Thus, this is a case where there is a categorical finding that the respondent-Corporation was at fault in not releasing the loan instalments as coupled with the finding that the petitioners were not in default. It is also not in dispute that this order has become final.
It appears that the petitioners were still willing to settle the claim of the respondent-Corporation and, in a sense, suo moto addressed a letter-Annexure P/5 requesting that the account should be closed and, to put an end to the litigation, proposed to make an outright payment of Rs. 50,000/- and the remaining payment by six monthly instalments and the balance payable, if any, by 15.3.1991. It is again not in dispute that this proposal was accepted by the respondent-Corporation and the payments were accordingly made. On 28.11.1990, petitioners sent a cheque for Rs. 24,550/- towards the balance amount, but, apparently, a dispute was raised by the respondent-Corporation over this vide their letter dated 18.12.1990 stating that still a sum of Rs. 21,598.77 with future interest from 15.9.1990 is outstanding against the petitioners.
There was, apparently, a silence over this post exchange of a few letters in 1991 and 1992 for almost 17 years when, on 19.3.2009, the respondent-Corporation addressed a letter to the petitioners on account of One Time Settlement Scheme (OTS Scheme) of the Government of Punjab notified on 2.3.2009, calling upon the petitioners to settle under the Scheme, if they so wished. The petitioners sought for the statement of account. The respondent informed the petitioners vide letter at Annexure P-11 that under the OTS Scheme, the outstanding from the petitioners amounted to Rs. 0.45 lacs plus expenses, if any, as on 15.3.2009. There was some further correspondence, but the fact remains that no amount under this OTS proposal was paid as, according to petitioners, nothing was owing from them to the respondent-Corporation. In fact, vide a letter dated 6.4.2010, the petitioners informed that on having scrutinized the account by the respondent-Corporation, the total amount till 3.12.1990 came to Rs. 2,19,049.60 against which a sum of Rs. 2,18,950/- stood paid and, thus, effectively, nothing was payable.
It is vide letter dated 12.9.2011 that the respondent-Corporation held out a threat to the petitioners that unless a sum of Rs. 1,60,561/- was paid with future interest from 15.3.2011, action would be initiated u/s 29 of the said Act as per the mortgage deed, since the mortgage had still not been redeemed.
This letter was replied to by the petitioners vide a communication dated 26.9.2011. One of the main issues raised in this letter is qua rate of interest as, according to petitioners, interest was chargeable at 9% per annum while the respondent-Corporation had charged it at 9.5% per annum.
Interest over 9% per annum was chargeable only in case the petitioners were at default. The petitioners relied upon the observations made in the order dated 24.1.1980 where it is the respondent-Corporation which was found at fault for not releasing the amount. The petitioners have, thus, filed the present writ petition seeking quashing of the Notice dated 12.9.2011 (Annexure P-25) and dated 16.11.2011 (Annexure P-27) for initiating action u/s 29 of the said Act.
We have heard learned counsel for the parties.
Learned counsel for the respondent-Corporation states that matter can still be resolved if the petitioners visit the office of the respondent-Corporation. However, the fundamental issue remains over the rate of interest. This is so as the respondent-Corporation themselves in written statement raised this issue. It is, however, not disputed by the learned counsel for the respondent-Corporation that no litigation charges and penal interest are payable. Thus, to the aforesaid extent of rate of interest, adjudication is necessary so that the matter can be put to rest.
In our view, there cannot be a second view on this issue taking into consideration the fact that the mortgage deed itself provided for interest at the rate of 9% per annum and, thus, the question of charging any interest over and above that rate on account of default, does not arise, as the legal proceedings initiated by the respondent-Corporation itself resulted in a judicial finding vide order dated 24.1.1980 which has become final, i.e., it is the respondent-Corporation which defaulted in release of instalments of loan and took steps for recovery against the petitioners, even though the petitioners were not at fault. Thus, the rate of interest payable can only be at 9% per annum.
We, thus, direct the respondent-Corporation to work out amount, if any, payable on the basis of the aforesaid rate of interest without penal interest and litigation charges and intimate the same to the petitioners with a complete statement of account within a maximum period of one month from today. If some amount is found due on the basis aforesaid, learned counsel for the petitioners fairly states that the same would be paid within a month of such intimation. We hope that the parties shall put an end to this unnecessary and meaningless litigation. Writ petition accordingly stands disposed of leaving the parties to bear their own costs.