Punjab Khadi and Village Industries Board and Another vs Jagdev Singh and Others

Vinod K. Sharma, J.—This order shall dispose of R.S.A. No. 965 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Jagdev Singh and Ors., R.S.A. No. 966 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Sardool Singh and Ors., R.S.A. No. 967 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Avtar Singh and Ors., R.S.A. No. 968 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Barjinder Singh and Ors., R.S.A. No. 969 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Harpal Singh and Ors., R.S.A. No. 1257 of 2008 titled The Khadi and Village Industries Commission, VILE PAREL (West), Mumbai, and Anr. v. Avtar Singh and Ors., R.S.A. No. 1258 of 2008 titled The Khadi and Village Industries Commission, VILE PAREL (West), Mumbai, and Anr. v. Sardool Singh and Ors., R.S.A. No. 1259 of 2008 titled The Khadi and Village Industries Commission, VILE PAREL (West), Mumbai, and Anr. v. Barjinder Singh and Ors., R.S.A. No. 1260 of 2008 titled The Khadi and Village Industries Commission, VILE PAREL (West), Mumbai, and Anr. v. Harpal Singh and Ors., R.S.A. No. 1261 of 2008 titled The Khadi and Village Industries Commission, VILE PAREL (West), Mumbai, and Anr. v. Jagdev Singh and Ors., as common questions of law and fact are involved.

For brevity sake facts are being taken from R.S.A. No. 965 of 2008 titled Punjab Khadi and Village Industries Board, Chandigarh, and Anr. v. Jagdev Singh and Ors..

This regular second appeal is directed against the judgment and decree dated 6.12.2007 passed by the learned Courts below vide which the suit filed by the plaintiff/respondent for permanent injunction restraining the defendants from recalling the margin money deposited with the bank under the Margin Money Scheme for purchase of harvester combine, stands decreed.

The plaintiff/respondent No. 1 brought a suit on the plea that the defendants started Margin Money Scheme for giving loan for the purpose of purchase of harvester combine. The plaintiff/respondent under the said Scheme applied for sanction of loan for purchase of harvester combine, as per the scheme, and the defendants after satisfying about the eligibility of the plaintiff, recommended his case to the bank for grant of loan.

The State Bank of Patiala, Branch Banbhaura, accepted the proposal and agreed to disburse a loan of Rs. 9,90,000/- for purchase of harvester combine. As per the Scheme, the defendant/appellant sent a cheque for a sum of Rs. 2,47,500/- to the State Bank of Patiala, Branch Banbhaura, as margin money, thereafter the plaintiff deposited the loan instalments regularly.

The case set up by the plaintiff is that after the loan amount was paid, a letter was sent to the Bank by the defendants, for recalling the margin money, on the plea, that purchase of harvester combine, was not covered under the Scheme, approved by the Khadi and Village Industries Commission. The plaintiff alleged that the letter was illegal, null and void, and sought injunction against its implemention.

On notice, the defendants contested the suit, wherein besides taking preliminary objections, it was contended, that the margin money, has been recalled, as per advice of the Agriculture Department, as the harvesting combine is an agricultural machine, which did not fall within the zone of consideration for the purpose of loan of Punjab Khadi and Village Industries Board.

It is also the case set up by the defendants that one of the terms of the loan was that in case, the subsidy was not approved by the Commission, then the same was liable to be recalled.

On the pleadings of the parties, the learned trial Court was pleased to frame the following issues:

Whether the plaintiff is entitled for the relief of permanent injunction as prayed for? OPP.

Whether the suit is not maintainable in the present form? OPD

Whether suit is bad for non-joinder of the necessary parties? OPD

Whether the plaintiff has not casue of action to file the present suit? OPD.

Whether this Court has no jurisdiction to file the present suit? OPD.

Relief.

On appreciation of evidence, the learned Courts below decided issue No. 1, in favour of the respondent/plaintiff, by invoking principle of promissory estoppel, as it was not disputed that the Scheme floated by the defendants was margin money scheme for purchase of harvester combine.

Once it was not disputed that the Scheme floated was for purchase of harvester combine, and it was also proved on record that in pursuance of the Scheme, the respondent/plaintiff applied for loan, which was considered and forwarded by defendant No. 1 to the Bank. The Bank accepted the proposal of defendant in pursuance thereto the plaintiff spent money, and also repaid the loan, the learned Courts below righly invoked the principle of promissory estoppel to restrain the defendant/appellant from recalling the margin money deposited with the bank by way of impugned decree.

The learned Counsel appearing on behalf of the appellant contends that the appeal raises the following substantial questions of law:

Whether the suit for injunction in the facts and circumstances was competent?

Whether in view of the stipulation in the terms of the loan, could injunction be granted in favour of the plaintiff/respondent?

In support of first substantial question of law, the learned Counsel for the appellant vehemently contends that the plaintiff/respondent should have filed suit for declaration to challenge the order of recall, and mere suit for injunction for restraining the Bank from implementing the order was not competent, as in absence of declaration that order was null and void, no injunction could be granted.

The plea of the learned Counsel for the appellant cannot be accepted. It is not in dispute that in pursuance to the Scheme, defendant/appellant had, in fact, deposited margin money, in the account of the plaintiff/respondent, therefore, the suit for injunction was competent, as the letter of recall was prima facie null and void, being in violation of settled principle of promissory estoppel.

The substantial question of law is answered against the defendant/appellant.

The learned Counsel for the appellant thereafter contends that undertaking was given by the plaintiff/respondent that in event of nonacceptance of the Scheme by the defendant No. 2, he would refund the amount. The learned Courts below, therefore, were not justified in decreeing the suit The plaintiff had no legal right to the amount in view of the undertaking given while advancing loan, as admittedly the Scheme was not accepted by the Commission.

This contention of the learned Counsel for the appellant also cannot be accepted. Once under the Scheme, parties have acted in good faith and had changed position to their detriment, the defendants were estopped from recalling the margin money.

Under the contract, the defendants could have sought the refund of money by taking legal recourse against the plaintiff/respondent, but they had no such authority to unilaterally back out, from the Scheme floated on the ground that the Scheme was not acceptable to the Commission, without any valid reason.

The learned Courts below in the facts and circumstances, therefore, rightly applied the principle of promissory estoppel to grant decree of permanent injunction.

The condition in loan agreement could not come in the way of the plaintiff, once they had changed their position to their detriment on the assurance given by the defendant/appellant.

Consequently, the second substantial question of law is also answered against the appellant.

No merit.

Dismissed in limine.