(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Mandamus to direct the first and the second respondents to grant the benefit of the subsidy scheme of NABARD with regard to the Rural Godown constructed by the petitioner at 1) 2/146S-1 STERLITE MAIN GATE, MADURAI BYE PASS ROAD, MILLAVITTAN VILLAGE, TUTICORIN 628 002 and 2) 2/146S-II STERLITE MAIN GATE, MADURAI BYE PASS ROAD, MILLAVITTAN VILLAGE, TUTICORIN 628 002 and release a sum of Rs.22,44,340/-.)
1. The Writ Petition has been filed praying for a Writ of Mandamus to direct the first and the second respondents to grant the benefit of the subsidy Scheme of NABARD with regard to the Rural Godown constructed by the petitioner at 1) 2/146S-1 STERLITE MAIN GATE, MADURAI BYE PASS ROAD, MILLAVITTAN VILLAGE, TUTICORIN 628 002 and 2) 2/146S-II STERLITE MAIN GATE, MADURAI BYE PASS ROAD, MILLAVITTAN VILLAGE, TUTICORIN 628 002 and release a sum of Rs.22,44,340/-.
2. The facts leading to the Writ Petition is that the petitioner is the first generation educated Women Entrepreneur. She availed a term loan facility of Rs.40.00 Lakhs for construction of a Rural Go-down under NABARD subsidy Scheme in the year 2007 from the respondent bank. As per the terms and conditions, the loan has to be repaid in 120 monthly installments of Rs.33,333/- per month with a holiday period of 12 months from the date of sanction. While so, the petitioner had availed yet another term loan for construction of Rural Godown under NABARD Subsidy Scheme for a sum of Rs.55.00 Lakhs which was to be repaid in 120 monthly installment of Rs.43,833/- and with a holiday period of 12 months from the date of sanction. As per the Subsidy Scheme of NABARD, the petitioner was sanctioned for the first term loan of Rs.40.00 Lakhs and for the second term loan of Rs.55.00 Lakhs respectively.
2.1. While the situation stood thus, the petitioner had completed the construction of the godown and the NABARD also had released the subsidy portion of Rs.6,32,000/- with regard to the first term loan and Rs.11,99,040/- with regard to the second term loan to the first respondent bank. The first respondent bank credited the amount to the loan account of the petitioner. The balance amount of Rs.6,23,000/- was held back by the second respondent. By that time, it is claimed that the petitioner had also made substantial payment in the loan account. However, all of a sudden, the bank reversed the subsidy amount from the loan account resulting in the accounts becoming a Non-Performing Asset. Due to the sudden withdrawal of Rs.19.00 Lakhs in the loan account, the petitioner was unable to repay the same. The bank instead of helping the petitioner by granting an additional limit, chose to initiate SARFAESI action as well as recovery proceedings before the Debts Recovery Tribunal by filing an Original Application for recovery of the amount due under the term loan for the godowns as well as for yet another loan availed by the petitioner. Subsequently, a compromise was reached before the Lok Adalat conducted by the Debts Recovery Tribunal, Madurai.
2.2. Although the petitioner insisted on the subsidy account received from NABARD to be included in the compromise, the Bank did not agree for the same but assured to take up the matter with NABARD. The Lok Adalat recorded the compromise and passed an award on 18.09.2014 for a sum of Rs.60,10,000/- as full and final settlement of the entire amount due on or before 30.10.2014. As per the direction of the Lok Adalat, the entire amount was paid to the Bank on 05.11.2014. Before paying the entire amount, the petitioner filed an application I.A.No.1668 of 2014 before the Debts Recovery Tribunal for a direction to release the subsidy amount held by the first respondent Bank. However, the Debts Recovery Tribunal, Madurai, was pleased to record the settlement. As far as interlocutory application for direction to refund of the subsidy amount, the Tribunal was pleased to dismiss the same by order dated 03.12.2014 and left it open to the Bank to take up the matter with NABARD.
3.3. The respondent Bank neither adjusted the subsidy amount granted by the NABARD nor took up the matter with the second respondent for settling the matter amicably. However, returned the said subsidy amount to the second respondent NABARD. When the petitioner approached NABARD, they informed that it is for the first respondent bank to adjust the amount and they do not have a say in this matter. The reason for not adjusting /releasing the subsidy amount by the second respondent was that as per the NABARD Scheme once the account become a Non-performing Asset the subsidy amount cannot be credited to the borrowers account in view of the letter dated 19.04.2012 issued by the second respondent. According to the said letter, if the bank account becomes NPA and the financing bank fails to recover the entire dues, subsidy benefit would not be available for the project. Accordingly, in cases where subsidy is released, the same has to be returned to the Government of India through NABARD. Whereas, the Debts Recovery Tribunal had interpreted the above aspect to the effect that recovery of 'entire dues' would mean recovery of the 'entire amount' and not amount settled after granting concession to the petitioner. In this connection, the petitioner sent a representation dated 12.12.2014 to NABARD requesting it to direct the first respondent to refund the subsidy amount. Whereas, till date there is no reply from NABARD ?. Though the petitioner approached the NABARD for refund of subsidy amount, it advised the petitioner to approach the first respondent bank to refund the subsidy amount. Pursuant to which, the petitioner made another representation to the first respondent in this regard on 07.01.2015. Still, the first respondent did not choose to reply for the letter dated 07.01.2015. Hence, the present Writ Petition has been filed for a Mandamus directing the respondents 1 and 2 to grant the benefit of subsidy scheme of NABARD with regard to the rural godown constructed by the petitioner firm by the respondents to the tune of Rs.22,44,340/- being the subsidy amount.
4. The second respondent has filed a counter affidavit inter alia stating that as per the subsidy Scheme, the second respondent NABARD will release the subsidy amount to the participating bank and the same will be kept in the Subsidy Reserve Fund of the Concerned Borrower since it is a back end subsidy. The second respondent NABARD has released the subsidy amount of Rs.18,31,340/-. The borrower is eligible for the subsidy amount only when he complied with all the conditions of the said Scheme. In the case on hand, the petitioner has not complied with the conditions and defaulted in repayment of her loan and thus the loan account of the petitioner turned 'Non-performing Asset'. Therefore, she is not eligible for subsidy and the first respondent bank returned the said subsidy amount to the second respondent NABARD as per the extant guidelines/scheme of Government of India.
4.1. Further, if the bank account becomes NPA and if the financing bank fails to recover the entire dues then the subsidy benefit could not be available for the project and in cases, where the subsidy is released, the same has to be returned to the Government of India through NABARD. The account of the petitioner was declared as NPA due to non-payment of the loan and the first respondent IOB has also proceeded against the petitioner for recovery of the loan amount and has subsequently filed an original application in O.A.No.166/11 for recovery of a sum of Rs.1,84,95,665/- on the file of the Debts Recovery Tribunal, Madurai by clubbing the other accounts of the petitioner, namely, M/s.Umesh Shipping Service Private Limited. The petitioner has not paid the entire dues to the first respondent, whereas, the account was settled under Lok Adalat for a sum of Rs.60,10,000/-. The said facts have been clearly narrated in the order passed in I.A.No.1668/14 in O.A.No.166/11 on the file of the Debts Recovery Tribunal, Madurai. Since the petitioner has not paid the entire dues and since the account was declared as NPA and the account was closed without payment of entire dues to the first respondent, the petitioner is not eligible for any subsidy. Further, the first respondent has returned the subsidy to the second respondent.
4.2. It is further averred that the second respondent is only a pass through agency and is bound by the Schemes/Guidelines and instructions issued by Government of India in this regard. Insofar as NPA account is concerned, under the instruction of Government of India, NABARD had issued a Circular No.105 dated 06.05.2004. Further, the Government of India vide their letter dated 05.09.2013 informed that the procedure to be followed is with regard to operational issues of Gramin Bhandaran Yojana. When the matter was brought to the knowledge of the Government of India, it was informed that it will not be eligible for subsidy, once the account of an applicant turns Non-Performing Assets (for short 'NPA'). The Government of India instructed that the stipulation as envisaged in the Operational Guidelines in para 3(xxiii) has to be followed in this regard.
4.3. Apart from the said fact, the petitioner already approached the issue in question in I.A.No.1668 of 2014 on the file of the Debts Recovery Tribunal. Her claim was negatived by the Debts Recovery Tribunal. If at all aggrieved, she should have filed an appeal before the DRAT. Without doing so, she has come forward with the present Writ Petition. The Writ Petition is also not maintainable for non-joinder of Department of Agriculture and Government of India.
5. The petitioner has also filed a rejoinder to the counter affidavit filed by the second respondent in which it is stated that as per the Scheme, 50% of subsidy amount should be released on approval and acquisition of land and balance 50% of subsidy amount should be provided after godown has reached roof level and the subsidy provided as interest free loan shall be adjusted only after construction of godown has been completed to the satisfaction of NCDC. It is an admitted position that the land had been purchased and construction of godowns have been completed in the year 2008 itself and the Bank is supposed to have received the subsidy amount for both the loans. However, the bank has not taken any steps to credit the subsidy amount to the loan account and took up the matter only in the year 2011. Therefore, neither the first respondent nor the second respondent had acted in tune with the object and purpose of the Scheme. Although the first respondent Bank had written to the second respondent about the interest burden that had to be borne by the petitioner for the subsidy amount, yet nothing was done by the second respondent which resulted in the accounts of the petitioner becoming a NPA ?. By the time, the subsidy amount was received from the second respondent, the first respondent bank had initiated action for recovery against the petitioner. The first respondent Bank filed O.A.166/2011 for recovery of the loan availed by the petitioner, in respect of the two term loans and another loan in the name of M/s.Umesh Shipping Service Private Ltd. The total amount due claimed was Rs.1,84,95,665/-. After availing the loan, a sum of Rs.1,03,48,862/- was paid in respect of the two term loans as well as the loan availed in the name of M/s.Umesh Shipping Service Private Ltd. Before the Lok Adalat, the petitioner was directed to pay a sum of Rs.60,10,000/- as full and final settlement of Original Application Claim. The first respondent instead of taking up the matter with NABARD as directed by the Debts Recovery Tribunal had sent the subsidy amount back to the second respondent bank, who is now leaning upon the observation of the Debts Recovery Tribunal on the interpretation of the term entire amount due ?. In the case on hand, the issue to be resolved in this Writ Petition is whether the repayment of amount as per the Lok Adalat Award dated 18.09.2014 will tantamount to paying the entire amount due or not. It is important to note that the Lok Adalat is decree in the eye of law. The proceedings of Lok Adalat is under Chapter IV of the Legal Service Authority Act. As per Section 21 of the Act, an award passed by the Lok Adalat is deemed to be a decree of Civil Court and every award made by Lok Adalat shall be final and binding on both the parties to the dispute and no appeal shall lie to any court against the said award. Therefore, neither the first respondent nor the petitioner can go behind the award and claim any amount more or less. It is also relevant to point out on payment of the entire amount due under the award the bank had given a clean chit and released the title deeds based on which mortgage was created. In such a situation to interpret that the entire amount due has not been paid and it was closed without payment of entire dues (as observed by Debts Recovery Tribunal) is not only an absurd interpretation but also it is against the statute namely the Legal Services Authority Act. Thus, he prayed for the allowing of the Writ Petition.
6. It is the case of the petitioner that the petitioner has availed a term loan to the tune of Rs.40.00 Lakhs for construction of a Rural Godown under NABARD subsidy scheme in the year 2007 from the first respondent bank. The petitioner has also availed another term loan for construction of Rural Godwon under NABARD Subsidy Scheme for a sum of Rs.55.00 Lakh. The first loan was to be repaid in 120 monthly installments at the rate of Rs.33,333/- per month with a holiday period of 12 months from the date of Sanction and the second loan was to be repaid in 120 monthly installments at the rate of Rs.43,833/- with a holiday period of 12 months from the date of sanction. Now, it is the submission of the learned counsel for the petitioner that in respect of the first loan, she has paid substantial payment. According to her, 50% of subsidy amount should be released on approval and acquisition of land and balance 50% of subsidy amount should be provided after godown has reached roof level. Admittedly, the petitioner has constructed the godown and same was put into use. However, in the mean time, the petitioner was not in a position to repay the entire loan amount and therefore, the subsidy amount was sent back to the Central Government through the Bank. Subsequently, two loan accounts of the petitioner were clubbed together by the respondent bank along with another loan availed by the petitioner in the name of M/s.Umesh Shipping Service Private Ltd. Thereafter, the matter was referred to the Lok Adalat for settling the loan amount availed by the petitioner. Accordingly, the matter was settled before the Lok Adalat conducted by the Debts Recovery Tribunal, Madurai. The Lok Adalat Settlement was arrived at Rs.60,10,000/- as full and final settlement of the entire amount due and payable by the petitioner. The said amount was also paid by the petitioner on which there is no dispute over it. When that being the position, the subsidy amount of the petitioner was sent back to the first respondent. Now, the petitioner is eligible for the subsidy for the reason that she has paid the entire amount to the Bank before the Lok Adalat.
6.1. It is the further contention of the learned counsel for the petitioner that since the amount has been settled in the Lok Adalat, the petitioner is eligible for the subsidy amount for which he relied upon a judgment reported in (2012) 2 SCC 51, K.N.Govindan Kutty Menon Vs. C.D.Shaji to state that the decision arrived at the Lok Adalat is deemed to be a decree and therefore, the respondents cannot go back on their words.
6.2. The learned counsel for the petitioner submitted that the respondents have failed to note the intent of the legislature on this aspect. The purpose of NABARD is to help the entrepreneurs to a maximum extent, of course, subject to four corners of law. It is a beneficial legislation for the entrepreneurs that cannot be taken away by misinterpretation nor it can be misconstrued by the respondents. The proceedings of the Lok Adalat is under Chapter IV of the Legal Service Act and as per Section 21 of the Act, an award passed by the Lok Adalt is deemed to be a decree of Civil Court and every award made by the Lok Adalat shall be final and binding on both the parties to the dispute and no appeal shall lie to any court against the said Award. Therefore, neither the first respondent nor the petitioner can go behind the award nor claim more than the award amount. Under such circumstances, it is unfair on the part of the respondents to interpret that the 'entire amount due' has not been paid and it was closed without payment of entire dues is not only an absurd interpretation but also it is against the Statute, namely, the Legal Service Authority Act. He further submitted that every effort must be made to protect the interests of the entrepreneurs in order to make the business economy thrive in our country. In the case on hand, the land had been purchased and the constructions have been put up in the year 2008 itself by the petitioner and the said fact is not under dispute. As per the NABARD Scheme, the first respondent Bank should have taken steps to credit amount for both the loans availed by the petitioner, as soon as the construction is over, however, it has failed to do so. Even after settling the loan amount before the Lok Adalat, the first respondent bank by relying upon the second respondent letter's dated 19.04.2012, more particularly, by citing Clause No.4, has refused to credit the subsidy amount. Even going by the said clause, it is crystal clear that if the bank fails to recover the entire dues alone, the respondent can invoke Clause No.4 of the letter dated 19.04.2012. Since the respondent bank has recovered the entire amount, the benefit of subsidy should go to the petitioner.
7. The learned Standing counsel for the first respondent submitted that in the present case, the role of the first respondent bank is limited. If the second respondent releases the subsidy amount to the petitioner, they have no objection in releasing the same to the petitioner. A letter dated 27.07.2011 has also been written to NABARD in this regard, however, no reply is forthcoming from the second respondent bank. For no fault of the first respondent bank, now, they are in a fix. Therefore, they are not in a position to consider the request of the petitioner.
8. The learned counsel for the second respondent, namely, National Bank for Agriculture and Rural Development, ( for short 'NABARD') submitted that since the entire amount has not been paid by the petitioner, the petitioner is not eligible for the subsidy amount. No doubt, the settlement is arrived at in the case on hand. But it does not mean that the entire amount due has been paid by the petitioner.
8.1. No doubt, the purpose of NABARD is to extend help to the small agricultural farmers so as to enable them to come up in their life without being caught by the private financial institutions. The said organization is established with a view to boost the economic growth of the Country. Further, the subsidy admissible to the promoter under the Scheme will be kept in the Subsidy Reserve Fund Account (borrower-wise) in the books of the financing accounting process. No interest would be charged on this by the Bank. It is the Central Government sponsored Scheme by which subsidy is provided to the small farmers provided that they comply with the norms given by the bank from time to time. Admittedly, the petitioner has failed to remit the loan amount as per the schedule of the first respondent bank. Left with no other option, the first respondent bank had returned the subsidy to the second respondent, who in turn, returned it to the Government. The concession given by the Central Government has not been property utilised by the petitioner. Subsidy itself is a concession, beyond which, the petitioner cannot travel on it.
9. I heard the submissions made by all the parties concerned and perused the materials available on record.
10. The admitted fact in this Writ Petition is that the petitioner had availed loans from the first respondent bank under NABARD Subsidy Scheme for the purpose of construction of a rural godown on the terms and conditions stipulated therein and for some reason, she had defaulted in paying the loan amount to the first respondent bank, resulting in the second respondent returning the subsidy to the Government. The second respondent, in a nutshell, pointed out that the petitioner had failed to pay the entire dues as per extant Scheme and therefore, they are not in a position to release the subsidy to the petitioner. As already pointed out earlier, the vital point that is to be decided in this Writ Petition is whether the action of the respondents is justified in returning the subsidy back to the Government despite the fact that the petitioner had settled the amount to the first respondent bank through a Lok Adalat.
10.1. There can be no secondary opinion that the award of the Lok Adalat will have a force of a decree of a civil Court. The Lok Adalat is one of the Alternative Dispute Resolution (ADR) mechanisms. It is as good as an order obtained in the regular Court. No doubt the Lok Adalat award is enforceable as a decree and it is final. In all force, the endeavour of the Lok Adalat is only to see that the disputes are narrowed down and make a final settlement so that the parties are not driven again to further litigation or any dispute. Though the award of a Lok Adalat is not a result of a contest on merits just as a regular suit by a Court on a regular trial, however, it is equal and on par with a decree on compromise and will have the same binding effect and conclusion just as a decree passed on the basis of a compromise cannot be challenged in a regular appeal, the award of the Lok Adalat also cannot be challenged. Once the petitioner defaults to pay the loan amount to the first respondent, in no minute, the account of the petitioner turns into NPA and consequently the first respondent bank becomes functus officio on account of the instruction issued by the Union of India to the effect that if the bank account of an applicant becomes NPA and the financing bank fails to recover the entire dues, thesubsidy benefit would not be available for the project in question. Accordingly, in cases, where subsidy is not released, the same has to be returned to the Government of India through NABARD.
10.2. No doubt, the Lok Adalat is a beneficial legislation through which matters are resolved in an amicable manner with less expenses and speedy redressal of grievances. Although the matter is amicably settled in the Lok Adalat between the first respondent bank and the petitioner, the latter did not press to reserve any of her rights in respect of subsidy to be given by the first respondent Bank or the second respondent bank or at least, the NABARD was arrayed as one of the parties to have any say in this matter. As a result, it can be only construed that the petitioner had settled the claim in the case field against him by the first respondent bank in respect of the loan availed by the petitioner but the said Lok Adalat Award will not bind on the second respondent. If there is any delay in repaying the loan amount, the legal course will follow. Therefore, in order to avoid the matter become complicated, the petitioner has settled the amount before the Lok Adalat. Therefore, the concession extended by the Bank cannot be taken as a ground to extend the loan subsidy given by the NABARD.
10.3. What is more important is that for the same relief, the petitioner has already approached the Debts Recovery Tribunal, Madurai, where, she lost her claim for getting subsidy from the second respondent bank. Naturally, as against the order of the Debts Recovery Tribunal, the petitioner should have worked out her remedy before the DRAT. Therefore, for the very same cause of action also, this Writ Petition cannot be entertained.
10.4. The contention of the petitioner that they have paid the entire dues cannot be countenanced. In this regard, it is useful to refer the dictionary wherein, the word entire dues means, 'with no part left out' or 'whole amount'. But, here, admittedly, a concession was extended to the petitioner, who has paid substantial portion of the amount to the first respondent bank, of course, not the entire amount as required by the first respondent bank or as instructed by the second respondent bank. Therefore, the Lok Adalat settlement will bind only the parties before such Lok Adalat, so as to say that the second respondent herein has not been in the picture at all before the Lok Adalat against whom the petitioner seeks subsidy. Therefore, this Court cannot compel the second respondent to release the subsidy in favour of the petitioner. The term subsidy cannot be exploited under any circumstances in any manner lest the purpose for which the term 'subsidy' created will come to a grinding halt. If the claim of the petitioner that the entire due is paid and it is accepted, then in future, the loanees, after settling the amount before the Lok Adalat to some extent, will try to get undue gain by asking for the release of subsidy amount when the principal amount itself alone is recovered than the amount supposed to be recovered from an applicant.
10.5. The first respondent bank has filed an original application for a whopping sum of Rs.1,37,37,089/- to recover the same from the petitioner, whereas, after negotiation in the Lok Adalat, the amount was settled to tune of Rs.60,10,000/-. It is an admitted fact that the petitioner has not paid the amount in full. Therefore, it cannot be said that the petitioner has cleared off the entire dues of the loan amount availed by her from the first respondent bank.
11. In view of the foregoing reasons, I am not inclined to accept the submission of the learned counsel for the petitioner that the entire amount has been settled before the Lok Adalat and thereby she is entitled to avail the subsidy extended by the Central Government through the respondent Bank.
12. In the result, this Writ Petition fails and accordingly, the same is dismissed. No costs. Consequently, connected miscellaneous petition is closed.