IN THE HIGH COURT OF JUDICATURE AT PATNA LPA No.780 of 2009 KRISHNADEO NARAYAN SINGH, S/O BASUDEO SINGH, R/O VILL. – MALTI, P.S. – FULWARIYA, DISTT. BEGUSARAI ….. …………………………………………..PETITIONER / APPELLANT Versus 1. THE STATE OF BIHAR, 2. THE BOARD OF DIRECTORS, B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA, 3. THE MANAGING DIRECTOR-CUM-SPECIFIED AUTHORITY, B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA, 4. THE BRANCH MANAGER, B.S.F.C., BRANCH OFFICE, 41-P, INDUSTRIAL AREA, DEONA, BARAUNI, BEGUSARAI AND 5. THE ASSISTANT GENERAL MANAGER, I/C (Z-II), B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA …….. RESPONDENTS. For the Appellant: Mr. Ranjeet Kumar, Advocate. For the Respondent No.1: Mr. Anil Kumar Jha, G.A. II with Mr. Uday Bihari Singh,A.C. to G.A. II. For the B.S.F.C.: Mr. Partha Sarthy, Advocate. ----------- with LPA No. 960 of 2009 1. MANAGING DIRECTOR-CUM-SPECIFIED AUTHORITY, B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA, ….RESPONDENT NO. 3, 2. BRANCH MANAGER, B.S.F.C., BRANCH OFFICE, 41-P, INDUSTRIAL AREA, DEONA, BARAUNI, …RESPONDENT NO. 4 3. ASSISTANT GENERAL MANAGER, I/C (Z-II), B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA … RESPONDENT NO. 5, AND 4. BOARD OF DIRECTORS, B.S.F.C., HEAD OFFICE, FRASER ROAD, PATNA ……………RESPONDENT NO.2… APPELLANTS Versus 1. THE STATE OF BIHAR …….... RESPONDENT NO. 1, AND 2. KRISHNADEO NARAYAN SINGH, SON OF LATE BASUDEO SINGH, R/O VILLAGE – MALTI, P.S. FULWARIYA, DISTT. – BEGUSARAI ……….. PETITIONER … RESPONDENTS. For the Appellants: Mr. Partha Sarthy, Advocate 2 For the Respondent No. 2: Mr. Ranjeet Kumar, Advocate. --------- PRESENT THE HON’BLE THE CHIEF JUSTICE THE HON’BLE MR. JUSTICE SHIVA KIRTI SINGH O R D E R (18.01.2010) As per Dipak Misra, C.J.- Regard being had to the assail to the order dated 09.04.2009 in CWJC No. 11322 of 2007 passed by the learned single Judge from various spectrums by the loanee- appellant and the financial institution, namely, Bihar State Financial Corporation (for short `the Corporation’), the appeals were heard analogously and are disposed of by a singular order. 2. The factual canvass being in the realm of similitude it is apropos to unfurl the same in one compartment. The appellant in LPA No. 780/2009 had availed a loan from the Corporation for establishment of a small scale industry and because of default the outstanding sum payable by the appellant came up to Rs. 96,93,222.80 as on 05.02.2007. In the year 2006 the Corporation introduced one time settlement scheme to provide a respectable exit to the defaulting units which were inhibited. The said scheme was known as `OTS-2006’. Under the said scheme various 3 options were provided to the units which they could choose. Under `Plan A’, a loanee could pay 110% of the principal outstanding and other charges within one month. Under `Plan B’, the period of payment was increased to two months and the liability was 125% of the principal sum and other charges. `Plan C’ gave option to pay within six months and the amount that was determined to be paid was 150% of the outstanding of the principal sum. `Plan D’ stipulated one year of time and fixed the liability at 200%. 3. The appellant, coming to know about the scheme, on 05.02.2007 submitted an application seeking settlement under `Plan A’ and deposited Rs. 4,80,000/- which is approximately 50% of the outstanding principal. Thus, he was required to pay the balance amount of 110% within one month of communication of acceptance. On 31.05.2007 the Corporation communicated the letter of acceptance wherein the request of the appellant was accepted under `Plan A’. It was clearly stipulated in the letter that the appellant was required to pay a sum of Rs. 1,13,695/- . It was the case of the petitioner before the Writ Court that the letter was returned undelivered. The petitioner-appellant 4 further pleaded that he was suffering from serious illness which necessitated him and his family to move to Delhi for treatment. After returning from Delhi he was served with the letter dated 02.07.2007 again intimating him the acceptance of the offer and giving a chance to pay the balance amount by 07.07.2007. The appellant responded immediately and prayed for 20 days’ extension. The Corporation by 25.07.2007 communicated to the appellant that as he had defaulted in timely payment of settlement amount, the settlement had become inoperative. 4. The legal tenability of the aforesaid decision was the subject matter of challenge in the writ petition. During the pendency of the writ petition, the appellant deposited Rs. 6,23,695/-. 5. A counter affidavit was filed by the Corporation contending, inter alia, that the case of the appellant was considered sympathetically by the Board of Directors and they agreed to extend the time with two stipulations, namely, that the case of the appellant would be considered under `Plan C’ and further that he will be liable to pay simple interest at the rate of 10% from the time the 5 amount fell due till the liability was discharged on reducing balance basis. The said communication was sent to the appellant on 22.10.2008. Because of the aforesaid action, the settlement amount stood increased to Rs. 14,85,756/- from Rs. 11,00,000/- apart from liability to pay simple interest on the outstanding sum from 01.06.2007 onwards. 6. The learned single Judge after hearing the learned counsel for the parties came to hold that the additional amount that the writ petitioner was being required to deposit is only about Rs. 3.82 lacs and, hence, the same does not warrant any interference; that his request in July, 2007 was responded and when he had already been burdened with additional payment of Rs. 3.82 lacs there was no justification to mulct the interest as that would be unfair; and that as he had shown bonafide in making the payment he should be allowed to negotiate for sale of the property and ask the purchasers to make payment directly to the Corporation and once the full payment of differential sum is made to the Corporation, the Corporation should release the sale deeds and clear the charge on the properties of the petitioner which would enable him to execute the sale deeds 6 free from all encumbrances in favour of the purchasers. 7. In the appeal preferred by the writ petitioner it is contended that the Corporation should have extended the time period to pay the amount under OTS Scheme 2006 when he was suffering from acute illness and shown his bonafides. It is urged that there was no justification on the part of the Corporation to put his offer under `Plan C’ with certain riders. It is further contended that the rejection of application is bereft of reason and that reflects the unfair attitude of the Corporation, and it has assumed the role of a private money lender. Additionally it is contended there was no warrant for imposition of interest. 8. In the appeal that has been preferred by the Corporation it is canvassed that the learned single Judge should not have interfered with the action of the Corporation as the Corporation was totally guided by the OTS Scheme 2006. It is put forth that the lonee had no inherent right to get the period extended and, therefore, he had to be considered under `Plan C’ of the Scheme. It is contended that the shifting from one Plan to other was a positive gesture by the Corporation and would clearly reflect the 7 leniency in favour of the lonee and the action being fair on the bedrock of commercial principles, the learned single Judge should not have directed for waiver of interest. 9. We have heard Mr. Ranjeet Kumar, learned counsel for the loanee-appellant and Mr. Partha Sarthy, learned counsel for the Corporation in both the appeals. 10. The two questions that emanate for consideration are that whether the Corporation was justified in bringing the case of the writ petitioner in `Plan C’ of OTS Scheme, and whether there the interest component can be waived. There is no cavil over the fact that he was extended the benefit of `Plan A’. There was delay in making the payment. As it patent, an application for extension was filed and the same was acceded to. It is urged that he was suffering from ailment and had gone to Delhi but the fact remains that the Corporation has not accepted the request in its Board meeting. Once a scheme has been framed and a benefit is extended to a loanee under a particular plan under the scheme and the same is not availed of, the Corporation cannot be commanded to put him in that plan. While extending the time the Corporation put the loanee in `Plan C’ 8 as a consequence of which the loanee reaped immense financial benefit but he cannot seek a mandamus that he should be put into `Plan A’. In our considered opinion the said stand put forth by the loanee-appellant in his appeal is sans substratum and, accordingly, the prayer cannot be allowed. 11. As far as the appeal preferred by the Corporation is concerned it is urged by the learned counsel for the appellant therein that the learned single Judge has committed illegality by waiving the interest and commanding that if the writ petitioner deposits the differential amount, the Corporation would not charge interest. It is proponed by Mr. Partha Sarthy, learned counsel for the appellant-Corporation that reliance placed by the learned single Judge on S.J.S. Business Enterprises (P) Ltd. v. State of Bihar & Ors., (2004) 7 SCC 166 contextually is not correct and, therefore, the order is unsustainable. It is also urged that the Corporation runs on a commercial principle and when there is no semblance of any unfair attitude shown in the transaction, a lenient attitude of this nature would give rise to unholy proclivity in a loanee. 9 12. To appreciate the aforesaid submissions we have perused the order of the learned single Judge bestowing immense anxiety as far as this facet is concerned. He has quoted a passage from S.J.S. Business Enterprises (P) Ltd. v. State of Bihar (supra). The said paragraph reads as under:- “23. In Jagdamba Oil Mills it was observed (at SCC p.507, para 15) that the court may “assist the borrower who has intention to repay, but is prevented by insurmountable difficulties in meeting the commitments”. The borrower in that case had made no payment whatsoever to State financial corporation of its outstanding loan. As not even a minimal portion of the amount borrowed had been paid the Court refused to help the defaulter. The borrower, in this case had paid over Rs.14 lakhs as against the principal amount of Rs. 44.56 lakhs. A further amount of Rs 10 lakhs was paid on 27-3-2002 by the appellant to BICICO i.e. the day after the impugned sale notice was published. Before the High Court a sum of Rs 10 lakhs was paid pursuant to the interim order. In addition, the appellant had approached BICICO to settle its outstanding dues under the one-time settlement policy. As we have already recorded, we entertained the special petition on the condition that the appellant would deposit a sum of Rs. 1 crore over and above the amount already paid by it to BICICO. This the appellant has also done. All this shows that the appellant could not be termed to be such a defaulter who deserved no sympathy or assistance by the court.” It is worth noting before the said paragraph the 10 Apex Court has adverted to the facts which pertain to sale of a property after seizure under Section 29 of the State Financial Corporations Act, 1951. Their Lordships in paragraphs 21 & 22 have expressed the view as follows:- “21. The third extraordinary circumstance is that Respondent 6 had submitted his offer on the day on which the sale notice was published and made payment of the entire consideration on the same day before the last date for submission of tenders was over and even before its offer could have been accepted. It is unlikely that this would have been done unless Respondent 6 knew (i) the valuation made, and (ii) that its offer would be accepted. Indeed a portion of Respondent 6’s offer had already been paid on 7-3-2002 i.e. prior to the sale notice itself. According to Respondent 6 this was pursuant to the earlier infructuous sale notice, a payment which, again for some undisclosed reasons, had not been returned by BICICO to Respondent 6.” “22. No satisfactory explanation is forthcoming from the authorities to explain these deviations from the norm. The concatenation of inexplicable and unexplained circumstances is sufficient for us to hold that the sale was unfair and consequently invalid.” 13. In this context we may also refer to the decision in Haryana Financial Corporation & Anr. v. Jagdamba Oil Mills & Anr., (2002) 3 SCC 496 which has been referred to in S.J.S. Business Enterprises (P) Ltd. v. State of Bihar (supra). In Jagdamba Oil Mills & Another 11 (supra), the Apex Court in paragraphs 6, 8 & 9 has held as follows:- “6. The Corporation as an instrumentality of the State deals with public money. There can be no doubt that the approach has to be public- oriented. It can operate effectively if there is regular realization of the instalments. While the Corporation is expected to act fairly in the matter of disbursement of the loans, there is corresponding duty cast upon the borrowers to repay the instalments in time, unless prevented by insurmountable difficulties. Regular payment is the rule and non-payment due to extenuating circumstances is the exception. If the repayments are not received as per the scheduled time-frame, it will disturb the equilibrium of the financial arrangements of the Corporations. They do not have at their disposal unlimited funds. They have to cater to the needs of the intended borrowers with the available finance. Non-payment of the instalment by a defaulter may stand in the way of a deserving borrower getting financial assistance.” xxx xxx xxx 8. The guidelines were stated to be necessary to ensure fair play. That decision, as the factual position would go to show, was rendered in a case where the borrower intended to repay the debt and was anxious to do so. While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness. “9. In matters like the present one, fairness cannot be a one-way street. Corporations borrow money from the Government or other Financial Corporations and are required to pay interest thereon. Where the borrower has no 12 genuine intention to repay and adopts pretexts and ploys to avoid payment, he cannot make the grievance that the Corporation was not acting fairly, even if requisite procedures have been followed.” 14. In the said case their Lordships have further observed the fairness required of the Corporation cannot be carried to the extent of disabling them from recovering what is due to them as the Corporation is an independent autonomous statutory body having its own constitution and rules to abide and function and obligations to discharge. Their Lordships have held while the State Financial Corporation acts unfairly or unreasonably there can be interference under Article 226 of the Constitution. Again in the said decision in paragraph 15 their Lordships have held as follows:- “15. ……. It is not to be understood that in every case the Corporations shall take recourse to action under Section 29. Procedure to be followed, needless to say, has to be observed. If any reason is indicated or cause shown for the default, the same has to be considered in its proper perspective and a conscious decision has to be taken as to whether action under Section 29 of the Act is called for. Thereafter, the modalities for disposal of seized unit have to be worked out. The view expressed in Gem Cap case appears to be more in line with the legislative intent. Indulgence shown to chronic defaulter would amount to flogging a dead horse without any conceivable result being expected. As the facts in the present case show, not even a 13 minimal portion of the principal amount has been repaid. That is a factor which should not have been lost sight of by the courts below. It is one thing to assist the borrower who has intention to repay, but is prevented by insurmountable difficulties in meeting the commitments. That has to be established by adducing material. In the case at hand factual aspects have not even been dealt with, and solely relying on the decision in Mahesh Chandra case the matter has been decided.” [Underlining is ours] 15. The Apex Court referred to the aforesaid observations made in S.J.S. Business Enterprises (P) Ltd. (supra) and took into consideration the conduct of the appellant therein and the conduct of the Bihar State Industrial Credit and Investment Corporation Ltd. and expressed the view that it was not a case wherein it could be held that the appellant was such a defaulter which deserved no sympathy or assistance by the Court. If the facts of Jagdamba Oil Mills & Another (supra) and S.J.S. Business Enterprises (P) Ltd. (supra) are considered in proper perspective, the ratio that is culled out therefrom is not applicable to the case at hand. In Ambica Quarry Works etc. v. State of Gujarat & ors., AIR 1987 SC 1073 the Apex Court has held as follows:- “18. ..…...The ratio of any decision must be understood in the background of the facts of that case. It has been said long time ago that a case is 14 only an authority for what it actually decides, and not what logically follows from it. …..” 16. At this juncture it would not be out of place to reproduce the words of Lord Denning which have been stated in paragraph 22 of Jagdamba Oil Mills & Another (supra). “Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.” * * * “Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it.” 17. In this regard we may refer with profit the decision in Sarva Shramik Sanghatana (KV), Mumbai v. State of Maharashtra & Ors., (2008) 1 SCC 494 wherein in paragraph 14 it has been held as follows:- “14. On the subject of precedents Lord Halsbury, L.C., said in Quinn v. Leathem: (All ER p. 7 G-I) “Before discussing Allen v. Flood and what was decided therein, there are two observations of a general character which I wish to make; and one is to repeat what I have very often said before-that 15 every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but are governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what it actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all.” (emphasis supplied) We entirely agree with the above observations.” 18. And again in Oriental Insurance Co. Ltd. v. Smt. Raj Kumari and Ors., AIR 2008 SC 403 it has been held as follows:- “11. Reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving a judgment that constitutes a precedent. The only thing in a Judges decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it 16 actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent (See : State of Orissa v. Sudhansu Sekhar Misra and Ors. (AIR 1968 SC 647) and Union of India and Ors. v. Dhanwanti Devi and Ors. (1996 (6) SCC 44). A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in Act of Parliament. In Quinn v. Leathem (1901) AC 495 (H.L.), Earl of Halsbury LC observed that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which are found there are not intended to be exposition of the whole law but governed and qualified by the particular facts of the case in which such expressions are found and a case is only an authority for what it actually decides.” 19. In view of the aforesaid we are of the considered view that reliance placed on the decision rendered in Jagdamba Oil Mills & Another (supra) by the learned single Judge for the purpose of waiving of the interest or commanding the Corporation not to charge the interest is not correct. That is not assisting a borrower but actually putting the Corporation, a commercial concern and autonomous body at a loss. The principle applied being faulty, the command is not sound. Ergo, the said command 17 has to be nullified and, accordingly, we so do. 20. Consequently, LPA No. 780/2009, preferred by the loanee-appellant stands dismissed and LPA No. 960/2009 preferred by the Corporation is allowed. In the facts and circumstances of the case there shall be no order as to costs. Patna High Court. The 18thJanuary,2010. AFR. Dilip (Dipak Misra, C.J.) (Shiva Kirti Singh, J.)