IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 21ST OCTOBER 2008 / 29TH ASWINA 1930 W.A.No.2093 of 2007(E) --------------------------------------- AGAINST THE JUDGEMENT IN W.P.(C).NO.2738/2007-A, DATED 18/07/2007 .................... APPELLANT/1ST RESPONDENT:- ----------------------------------------------- INDIAN BANK, M.G.ROAD BRANCH, ERNAKULAM, REPRESENTED BY THE BRANCH MANAGER. BY ADV. SRI.S.SREEKUMAR. RESPONDENTS/PETITIONER & RESPONDENTS 2 & 3:- ------------------------------------------------------------------------------ 1. SOMANATHAN PILLAI, S/O.VELAYUDHAN PILLAI, AGED 65 YEARS, RESIDING AT 'KARTHIKA', KEETHI NAGAR, ELAMAKKARA, KOCHI-682 026. 2. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF AGRICULTURE, NEW DELHI. 3. THE RECOVERY OFFICER, DEBTS RECOVERY TRIBUNAL, ERNAKULAM. R1 BY ADV.SRI.P.JACOB VARGHESE (SR.) & SRI.VIVEK VARGHESE P.J. BY ADV. SRI.CYRIAC KURIAN, CGSC. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 21/10/2008, ALONG WITH CROSS OBJECTION NO.1 OF 2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- H.L.DATTU, C.J. & A.K.BASHEER, J. ----------------------------------------------------- W.A.No.2093 of 2007 & C.O.No.1 of 2008 ---------------------------------------------- Dated, this the 21st day of October, 2008 JUDGMENT H.L.Dattu, C.J. This writ appeal is directed against the orders passed by the learned Single Judge in W.P.(C) No.2738/2007 dated 18th July, 2007. 2. The writ petition was filed by one V.Somanatha Pillai, who was one of the partners of M/s.Susora International Exporters, Importers and International Representations. 3. In the writ petition filed, the petitioner had called in question the recovery proceedings initiated by the respondent Bank pursuant to an award passed by the Debts Recovery Tribunal, Ernakulam in O.A.No.424/1998 dated 6th June, 2001. 4. In the impugned order, the learned Single Judge, without referring to the merits of the case pleaded and argued by the petitioner, has directed the petitioner to deposit a sum of Rs.11,50,000/- with 15% simple interest per annum from 1.6.2002 till the date of payment. The learned Judge also has directed the respondent Bank to withhold recovery proceedings till 31.8.2007. The further observation of the learned Judge is that, if payment as directed in the judgment is made, the Bank shall treat the matter closed and all the documents which the W.A.2093/07 & C.O.1/08 -2- petitioner and others had deposited shall be returned to them. 5. The Bank is aggrieved by the above direction issued by the learned Single Judge and accordingly questioning the correctness or otherwise of the above-said direction has presented this Writ Appeal. 6. For the disposal of this writ appeal, a few facts which are relevant for the purpose of the case requires to be noticed. 7. M/s.Susora International Exporters, Importers and International Representations is a partnership firm. The petitioner and 2 others were partners of the said firm. The firm was carrying on agricultural operations. For its agricultural activities the petitioner had borrowed a sum of Rs.4.5 lakhs from the appellant Bank. Subsequently, the firm and its partners had made certain payments towards the borrowed amounts. 8. Since the firm and its partners had defaulted in paying the amounts due to the Bank, the Bank had filed Original Application before the Debts Recovery Tribunal, Ernakulam in O.A.No.424/1998. 9. In the said application, the firm and its partners were made defendants. For reasons best known, though notice was served on the second defendant, namely , Sri.V.Somanatha Pillai did not any file written statement/objection. 10. The Debts Recovery Tribunal by its order dated 6th W.A.2093/07 & C.O.1/08 -3- June, 2001 has allowed the application and has decreed the suit in a sum of Rs.17,87,869/- together with future interest @ 18% with half yearly rests from 17.11.1997 till realisation. 11. The second defendant in the application, namely, Sri.V. Somanatha Pillai, being aggrieved by the judgment and decree passed by the Debts Recovery Tribunal in O.A.No.424/1998 had filed first appeal before the Debts Recovery Appellate Tribunal, Chennai (“Appellate Tribunal” for short) in Appeal No.12/2006. In the memorandum of appeal filed before the Tribunal, the appellant has taken several contentions. But, it is noticed in the orders passed by the Appellate Tribunal that, at the time of hearing of the appeal, the appellant had restricted his submission only with regard to the interest of half yearly rests as ordered by the Debts Recovery Tribunal. 12. The Appellate Tribunal by its order dated 8th June, 2006, placing reliance on the observations made by the Apex Court in the case of Corporation Bank Vs. D.S.Gowda & Another { (1994) 5 SCC 213}, has modified the judgment and decree of the Debts Recovery Tribunal by holding that the appellant is entitled to the claim of interest at annual rests and not half yearly rests as ordered by the Debts Recovery Tribunal. 13. At this stage, we intend to notice the submissions W.A.2093/07 & C.O.1/08 -4- made by the learned senior counsel Sri.P. Jacob Varghese, who , on instruction, would submit that, several other contentions on merits of the appeal was not only urged but was also argued but the same is not noticed by the Appellate Tribunal. In view of the observations made by the Appellate Tribunal in its order, it may be difficult for us to accept the submission of the learned senior counsel Sri.P. Jacob Varghese. If for any reason the writ petitioner was of the opinion that the Appellate Tribunal should not have restricted his submission only with regard to interest of half yearly rests, he should have filed a Review Petition before the Appellate Tribunal immediately after the receipt of the certified copy of the judgment of the Appellate Tribunal. That is not done in the instant case. 14. The petitioner, aggrieved by the orders passed by the Debts Recovery Tribunal in O.A.No.424/1998 and the orders passed by the Appellate Tribunal, in Appeal No.12/2006 was before this Court in W.P.(C) No.2738/2007. 15. In the writ petition filed, several grounds are taken by the petitioner. They are as under: “A. The petitioner availed of agricultural loan of Rs.450000.- on 28.6.98. 1st respondent bank have charged 18 to 19% interest on this loan amount with interest at quarterly rests. It was thus bank claimed an W.A.2093/07 & C.O.1/08 -5- amount of Rs.17,87,869/-. B. The Debt Recovery Appellate Tribunal, Chennai by Exhibit P2 has directed that the petitioner is liable only to pay ½ yearly rests. The respondent bank is entitled only for compounding of interest in annual rests. And thus calculation of interest can be only from the date of availing of the loan and not on 17,87,869-/ as on the date of institution of OA.424/98. The respondent Bank is also not entitled to penal interest and other charges. C. Exhibit P2 appellate order is directed to be quashed since the appellate tribunal has not considered that being agricultural loan they are not entitled to charge more than 12% interest as per the circulars of issued by Reserve Bank of India. D. The tribunal was appraised of the decision reported in Corporation Bank Vs. G.S.Gouda and another 1994 (5) SCC 213. However the tribunal even though accepted the judgment of the Supreme Court did not apply on its mind to the facts and circumstances of the order of DRT passed 6.6.01. The appellant tribunal failed to consider the judgment of Supreme Court in AIR 2002 (1) SCC 367. Now the petitioner's agricultural loan is mulcted with the rate of interest charged till 17.11.1997 of quarterly rests and on penal interest. Petitioner is made liable to pay half yearly interest at 18% p.a. and with annual rests at 4.5.%. E. The appellate tribunal directed the Recovery Officer to recalculate the amount due from the petitioner. The W.A.2093/07 & C.O.1/08 -6- Recovery Officer now has recalculated the amounts due and issued a notice of demand demanding Rs.73,56,882/51 on the amount of 450000/- borrowed from Ist respondent is now nearly Rs.74 lakhs. F. The bank is liable to extend one time settlement to the petitioners. In spite of the repeated requests the respondent bank is not prepared to consider the one time settlement. G. The agricultural loan of Rs.4.5 lakhs is now demanded at Rs,74 lakhs ignoring the fact that they are entitled only of simple interest, that they are entitled for interest at 12%. H. The Government of India has already declared agricultural package for giving reliefs to the farmers in the Districts of Palakkad, Kasargod and Wayanad and similar reliefs are proposed to be extended to the other districts. The Govt. of India and the state government and RBI have been repeatedly direction the banks to implement one-time settlement in respect of agricultural loans. These aspects are insisted for one time settlement are not being considered by the respondent bank and hence the petitioner is helpless.” 16. The learned Single Judge, without considering any one of the grounds urged and argued by the petitioner's learned counsel, has only directed the petitioner to settle the amounts due to the Bank by directing the petitioner to pay a sum of Rs.11,50,000/- with 15% simple W.A.2093/07 & C.O.1/08 -7- interest per annum from 1.6.2002 till the date of payment. Further, as we have already observed, has directed the Bank to withhold the revenue recovery proceedings till 31.8.2007, and further observation as we have already noticed is that if the payments as ordered is made by the petitioner, the Bank will accept the same and treat it as a full and final settlement of all the amounts due to the Bank. 17. The petitioner has not questioned the correctness or otherwise of the orders passed by the learned single Judge, for the reason, that he was satisfied with the orders and directions issued by the learned Single Judge; but it so happens that the Bank, which has paid just a sum of Rs.4.5 lakhs, to the contesting respondent, is not satisfied with the orders and directions issued by the Court, and, therefore has filed the present appeal. 18. We have heard Sri.S.Sreekumar, learned counsel appearing for the appellant and Sri.P.Jacob Varghese, learned senior counsel appearing for the contesting respondent. 19. Sri. S.Sreekumar, learned counsel appearing for the Bank would submit that the learned Judge was not justified in directing the Bank to accept a particular amount with a particular rate of interest, and, further ought not have directed the Bank to accept that amount in full and final settlement of all dues to the Bank when admittedly the W.A.2093/07 & C.O.1/08 -8- amounts due from the contesting respondent is much more than what is stated in the order passed by the learned Single Judge. 20. Sri.P. Jacob Varghese, learned senior counsel appearing for the contesting respondent would submit, that, the respondent had borrowed only Rs.4.5 lakhs as agricultural loan, and, the Bank without following the guidelines issued by the Reserve Bank of India, could not have calculated the interest at different rates for different periods. It is further stated that the amount that is calculated by the respondent Bank is contrary to the observations made by the Apex Court in the case of Corporation Bank Vs. D.S.Gowda and Another { (1994) 5 SCC 213}. It is further argued by the learned senior counsel that the quantification of interest payable by the contesting respondent is contrary to the Circular instructions issued by the Reserve Bank of India which is binding on the appellant Bank, which is a Nationalised Bank. Apart from this, the learned counsel would submit that, in order to buy peace, his client is ready and willing to deposit a sum of Rs.45 lakhs within a month's time from today as against the borrowed amount of Rs.4,50,000/-. 21. Sri.S.Sreekumar, learned counsel appearing for the appellant, on instruction, would submit that his client is not agreeable to the last suggestion of the senior counsel Sri.P. Jacob Varghese. Further, W.A.2093/07 & C.O.1/08 -9- it is stated by the learned counsel that, during the pendency of the writ appeal, the Bank has sold the property which was mortgaged by the contesting respondent in public auction and the same has been confirmed, and, in view of the pendency of the appeal delivery of possession of the property is not given to the auction purchaser. 22. What requires to be considered by us in this writ appeal is, whether the learned Single Judge, firstly, was justified in directing the Bank to accept a particular amount in full and final settlement of their claims? The next question is, whether the learned Single Judge was justified in disposing of the writ petition without going into the merits or demerits of the contentions raised and canvassed by the petitioner? 23. The admitted facts are: The contesting respondent in this appeal has borrowed a sum of Rs.4.5 lakhs from the appellant Bank towards its agricultural operations. But for various reasons neither the partnership firm nor the partners were in a position to pay off the entire dues of the Bank. They also could not take the benefit of OTS Scheme offered by the Bank. 24. Before the Debts Recovery Tribunal, the contesting respondent herein could not effectively participate, though he was served with notice of the Original Application filed by the Bank. Since the W.A.2093/07 & C.O.1/08 -10- defendants in the O.A. did not participate in the proceedings, the Debts Recovery Tribunal had no other alternatives but to decree the application filed by the Bank. 25. The next stage is the appeal filed by the contesting respondent before the Appellate Tribunal. In the appeal, it is informed to us that, several contentions were taken but none of the contentions are noticed by the appellate Tribunal. We do not intend to express any opinion on that aspect of the matter. 26. In the writ petition filed, the contesting respondent herein who was the petitioner therein has taken up several contentions while questioning the correctness or otherwise of the orders passed by the Debts Recovery Tribunal as well as the Appellate Tribunal. In our view, in matters of this nature where parties are seriously disputing their liability and the Bank is not interested in settling the issue, the learned Single Judge, without directing the petitioner to pay off certain amounts, ought to have decided the legal issues which are urged and argued before him. This is not done by the learned Single Judge. 26. In view of the above, we have no other alternative, but to set aside the orders passed by the learned Single Judge and remit the matter to the learned Single Judge to take a decision on merits on the contentions raised by both the parties in the writ petition. We request the W.A.2093/07 & C.O.1/08 -11- learned Single Judge to take a decision as expeditiously as possible, at any rate within four months from today. Till a decision is taken by the learned single Judge, the appellant Bank shall not resort to any coercive steps to take possession of the property in dispute. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS/dk