1. This appeal has been preferred by the above named appellant-bank against the part of the judgment and order dated March 11, 2002, passed by the then presiding officer, DRT, Jabalpur in O. A. No. 246 of 2000, whereby and whereunder the claim of the bank has been reduced to Rs. 17,57,199 from the claim of Rs. 34,17,000 and also reduced the interest from the bank rate to that of simple interest.
Respondent No. 1 is a partnership firm having partners defendants Nos. 2 to 7 and Shri Vishnu Kumar Rongta (deceased) and was engaged in doing business of steel re-rolling mill and for the purpose of purchase of raw material and meeting other business needs, partners of respondent No. 1-firm applied for financial help from the appellant-bank and cash credit loan was sanctioned to the tune of Rs. 15.50 lakhs at interest of 16.5 per cent. per annum with quarterly rests together with other charges on the cash credit facility. The partners had bound them by executing several documents as required by the appellant-bank and respondent No. 9--Smt. Savitri Devi Rongta had also created equitable mortgage by hypothecating land properties including the house property. The loan was sanctioned on February 24, 1988. The limit of Rs. 15.50 lakhs had been enhanced to Rs. 23 lakhs on August 29, 1989, and on September 6, 1999, all banking documents had been executed by the partners and guarantors. Time to time the balance amount was acknowledged by confirmation slips which were marked as exhibit No. A-45-53. The last acknowledgment was on July 1, 1998. Revival letters were also there which were marked as exhibit Nos. A-47 and A-54, the last of which was dated August 21,1998. The respondents failed to pay up the debts as per the agreement arrived at and ultimately after due notice Original Application No. 246 of 2000 was filed on June 21, 2000, for a claim of Rs. 34,17,000. For and on behalf of the bank six affidavits were filed by way of evidence by the personnel of the bank who were present at the time of granting of loans and execution of banking documents.
3. The respondents being defendants in the original application had contested the case by filing the written statement. Taking of loans have not been denied. Execution of documents had also not been denied, but the only plea was that signatures were obtained on blank documents.
The main plea was that the business of the respondents/defendants had suffered due to non-co-operation of the bank's officials in not disbursing the loan amount in time. Their plea was that in the year 1997 the cash credit limit was ordered to be enhanced from Rs. 23 lakhs to Rs. 30 lakhs, but ultimately the same had not been disbursed and the respondents had not been allowed to take advantage of such enhancement as a result of which the factory of the respondents had to be closed down and in that way after 1997 the bank was not entitled to get any interest at the bank rate. There was also plea regarding the admissibility of the mortgaged deeds.
4. On consideration of the pleas being taken by the parties and evidence adduced, the learned presiding officer, DRT, Jabalpur, had rejected all other pleas of the respondents-defendants except that of the mortgage regarding land property should be restricted to 1,93,406 sq.ft. instead of whole land property mortgaged as the rest of the property were agriculture property and had not been converted into construction or factory. The learned presiding officer had also reduced the claim of the appellant-bank holding that the legal notice issued by the bank on July 2, 1999, was only for Rs. 27,58,199 which included bank interest up to December 31, 1998. The reason given is that against the notice the respondents had given reply which was marked as exhibit No. D/1/7 stating that for not giving proper co-operation by the bank and not realising the enhanced cash credit limit of Rs. 30 lakhs, the factory and business of the defendants had to be closed down and the reasonings given by the appellant-bank in the rejoinder to the written statement, that the business of the defendants were not viable, etc., were only afterthought and that had not been pleaded in the original application. It should be mentioned here that during the pendency of the original application the defendants had deposited an amount of Rs. 10,01,000 on sale of some of their properties and the same has been adjusted towards Rs. 27,58,199.90 and thus reducing the same, amount to Rs. 17,57,199.90. It was further ordered that up to the month of November, 2001, the bank will get simple interest at 10 per cent. on Rs. 27,58,199.90 and after November, 2001, the bank will get interest at the same rate on balance amount of Rs. 17,57,199. It has been ordered also in the impugned judgment that the decreed amount can be recovered by sale of 1,93,406 sq. ft. on the immovable property and also from the construction thereon.
5. This part of reduction of the claim of the bank has been challenged in the present appeal. It should be further mentioned here that although in the memo of appeal objections have been raised regarding the deduction of the area of mortgaged property, but during the course of argument, the same has not been challenged. Perhaps because the order of reduction is perfectly legal in view of the M. P. Land Revenue Regulation. The first point of challenge of the impugned judgment is that the learned presiding officer has committed error in reducing the interest from the bank interest to that of the simple interest up to the date of filing of the suit, when his jurisdiction is debarred under Section 21A of the Banking Regulation Act, 1949, then the jurisdiction of the court remains discretionary regarding imposition of interest with regard to pendente lite and future interest alone. The second point urged is that the learned presiding officer has committed error in reducing the claim from Rs. 34 lakhs and odd to that of Rs. 27 lakhs and odd and the reasons given are wild and totally unforceable in the eye of law. The third point urged is that the amount of Rs. 10 lakhs and odd deposited during the pendency of the original application cannot be deducted from the principal amount, rather that should be deducted from the interest part alone first and then if balance remains, it should be against the principal amount. But the learned presiding officer has committed error in deducting the amount deposited from the claim amount.
6. Learned counsel appearing for and on behalf of the respondent has submitted that the loan was of the category of cash credit and not term loan and in that way there is no separate calculation regarding principal and the interest, rather those were kept running simultaneously in the same account in the regular course of business of the bank and in that way deduction of the deposited amount by the learned presiding officer from the claim amount cannot be said to be illegal and improper. His further submission is that when the bank has failed to give facility of enhanced limit and afterwards giving some reasoning which were not made available to the respondents at the relevant time, then definitely the respondents are entitled to get relief on the interest portion as per bank rate.
7. On rival submissions of the learned advocates of both the parties I have gone through the records of the case and also carefully read the impugned judgment in between the lines.
8. First of all let me take up the second point urged for and on behalf of the appellant as this is a vital issue in this appeal. A legal notice was given by the bank to the borrower on July 2, 1999, claiming Rs. 27,58,199.90 as balance amount as per the accounts up to June 16, 1999, wherein the bank interest at 16.5 per cent. annual interest with quarterly rest up to December 31, 1998, was included but the original application was filed on June 21, 2000, i.e., after one year and by that time the amount had swelled to Rs. 34,17,000 and this amount was admitted/acknowledged by the respondents in their reply which was marked as D/1/7 and they claimed that they were ready to pay up the amount by selling their factory, land, building, plant and machineries and very curiously this amount has only been construed by the learned presiding officer as the claim amount, although there is no objection from the side of the respondents, that this admitted amount of Rs. 27,58,199.90 cannot be swelled up to the date of institution of the claim to Rs. 34,17,000. It might be that because of non-getting the facility of enhanced cash credit amount to the tune of Rs. 30 lakhs had caused hardship to the respondents, but this can only be considered for the purpose of calculating interest or reducing it while granting interest for pendente lite and future interest, but up to the date of filing of the claim, there is no scope for the court or the presiding officer, Debts Recovery Tribunal to reduce the contracted bank interest to simple interest at 10 per cent. per annum. On this point practically Mr. V. D. Chauhan, learned counsel for the respondent could not give any plausible reply and perhaps he has no reply also in view of the provision of Section 21A of the Banking Regulation Act, 1949. From the impugned judgment I could not find any plausible reason in reducing the claim from Rs. 34 lakhs and odd to Rs. 27 lakhs and odd as has been done in the impugned judgment. It has been discussed in the impugned judgment that non disbursement of the enhanced cash credit limit was not proper as the reasoning given by the bank were afterthought. An amount even if agreed upon and had not been disbursed cannot be an issue in reducing the claim of the creditor. Moreover, there was no scope for the bank to plead anything in this regard in the original application, when this non disbursement was not an issue. When such issue was raised from the side of the respondents in their written statement, then the opportunity came and then the bank had explained as to why they did not disburse the enhanced cash credit limit. It might be that this non disbursement has caused hardship to the respondent and practically for that reason their factory, etc., had been closed down, but this can be a consideration for the purpose of reducing the bank interest in future and pendente lite interest but it cannot go beyond the date of filing of the claim. In that way definitely the learned presiding officer has committed error in reducing the claim of the bank from Rs. 34 lakhs and odd to Rs. 27 lakhs and odd. This part of the judgment is bad in the eye of law. The second point raised from the side of the appellant is answered accordingly.
9. The first point raised has also been discussed in the foregoing paragraphs while considering the reducing of the claim amount to 10 per cent. simple interest as granted by the learned presiding officer from November, 2001, up to the date of filing of the claim is hereby set aside and the claim amount remains to be decreed for Rs. 34,17,000 as claimed from the side of the appellant as it is. 10 per cent. interest as granted simple shall be applicable only regarding future and pendente lite interest. Considering the fact that the respondents had to face hardship even to the extent of closing down their business because of non co-operating attitude of the banking officials in not allowing the respondents to get the fruit of sanctioned enhanced limit of Rs. 30 lakhs and viability of business of the respondents were to be considered before sanction of the enhanced limit and not afterwards as has been done in the present case, in that way the learned presiding officer was right in reducing the agreed bank interest for future and pendente lite interest. It has rightly been granted simple interest at 10 per cent. from the date of filing of the suit till realisation.
10. Regarding third point I find force in the submission of Mr. V.D.Chauhan, learned counsel appearing for and on behalf of the respondents. The accounts filed at the time of filing of the original application had not been hanged after deposit of Rs. 10,01,000 from the side of the respondent during the pendency of the original application.
They could have shown it by filing a revised account as to how much amount should be adjusted towards interest and how much towards principal. The consolidated amount of Rs. 34,17,000 has been claimed including interest and principal and when no such revised account is there and endeavour was there from the side of the respondents to pay up the dues and in that way they had deposited Rs. 10,01,000, then the same should be deducted from the claim amount of Rs. 34,17,000 and thus the amount of Rs. 24,16,000 would be the proper and just amount to be recovered against the respondents with simple interest of 10 per cent.
from the date of filing of the original application up to the date of realisation. Recovery certificate should be issued accordingly by the learned presiding officer.
11. The appeal is thus allowed in part and the impugned order of recovery as passed by the learned presiding officer is modified to the extent that Rs. 24,16,000 shall be made payable to the appellant-bank by the respondents together with simple interest at 10 per cent. from the date of filing of the original application up to the date of realisation. The other order regarding the sale of mortgaged property as passed by the learned presiding officer in the impugned judgment shall remain intact. No order as to cost in the appeal but the cost in the original application as ordered by the learned presiding officer shall remain intact on the enhanced amount as ordered in the appeal.