Overseas Agro Products (P.) Ltd. vs U.P. Financial Corporation and Another

Rakesh Tiwari, J.—Heard the learned counsel for the parties and perused the records.

The petitioner is a registered company under the Companies Act, 1956. It purchased M/s. Vimla Soft Drinks (P.) Limited from the U. P. Financial Corporation in auction sale for a sale consideration of Rs. 11,50,000. The company paid a sum of Rs. 5,75,000 to the U. P. Financial Corporation on 27.6.1996 and it was agreed that the balance amount of Rs. 5,75,000 would be paid in two six monthly instalments, i.e., first instalment of Rs. 2,87,500 be paid in September, 1996 and the remaining Instalment be paid in March, 1997.

It is alleged that the petitioner paid Rs. 2,95,000 on 1.10.1996 and made enquiry about remaining balance. It was informed by the U. P. Financial Corporation that Rs. 2,02,200 towards principal and Rs. 56,777.92 False towards interest remained due. The total amount of Rs. 2,58,977.92 Paise was paid by petitioner company by cheque dated 31.3.1997 in round figure of Rs. 2,59,000. In the account of U. P. Financial Corporation, the credit balance of Rs. 22.08 Paise was shown in favour of petitioner company towards interest. This fact is also apparent from Annexure-2 to the writ petition. The petitioner contends that after this final payment, no amount remained due.

The company thereafter started production and also approached the Bank of India for financial assistance which required the petitioner to submit no dues certificate in order to facilitate financial assistance. The petitioner approached respondent No. 2 for no dues certificate in respect of the sale deed/agreement and then was informed that still a balance of Rs. 55,600 towards principal amount and Rs. 1,05,205.19 Paise towards interest, totalling Rs. 1,60,805.19 Paise is due. A recovery letter dated 10.8.2000 was issued by the U. P. Financial Corporation for recovery of the aforesaid amount against the petitioner.

The petitioner showing his bona fide informed respondent No. 2 that if there was any calculation mistake on the part of U. P. Financial Corporation in the calculation of principal amount, then it is prepared to pay the shortfall of principal amount, but is not responsible for paying any interest thereon, it cannot be made to suffer for mistake of U. P. Financial Corporation. In order to establish its bona fide, the petitioner company deposited Rs. 20,000 through cheque dated 8.5.2000 and Rs. 35,000 through cheque dated 20.5.2000, total amounting to Rs. 55,600.

It is contended that instead of issuing no due certificate, the respondents are demanding interest as well as penal interest on the shortfall amount of Rs. 55,600 which the petitioner was not liable to pay as it was due to mistake on the part of U. P. Financial Corporation and the petitioner had never shirked from payment of sale consideration. It is contended that in any case, the petitioner had already paid the full sale consideration as well as he had also made good the shortfall in the principal amount.

It is not in dispute that the petitioner had made an application stating therein that he had made the entire payment on 31.3.1997 as per the statement of account furnished by the U. P. Financial Corporation and if any mistake has crept in the statement of accounts of U. P. Financial Corporation, the petitioner cannot be held liable for payment of any amount of interest much less penal interest thereon. If such interest and penal interest is permitted to be charged by U. P. Financial Corporation, it will be against the sound principles of law and encourage the financial organizations to make windfall gain/ benefit from their own wrong. The petitioner has paid full amount and shortfall even in principal amount of Rs. 55,600 as per the statement of accounts furnished by the U. P. Financial Corporation which could not be paid earlier due to alleged calculation mistake in their account. The petitioner has not defaulted in payment.

The maxim nullus commodum capere potest be injuria sua propria.'' No man can take advantage of his own wrong, is based on elementary principles and is fully recognized in courts of law.

The reasonableness of the rule is manifest that a party should not be allowed to take advantage of his own wrong. A wrongdoer ought not to be permitted to any interest much less penal interest.

In view of the reasons stated above, we are of the opinion that the U.P. Financial Corporation cannot be permitted to charge interest or penal interest and be made to gain by the wrong/mistake committed by them,

The writ petition is allowed and the impugned recovery letter dated 10.8.2000 is quashed. No order as to costs.