IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.11.2009 CORAM: THE HONOURABLE MR.JUSTICE P.JYOTHIMANI W.P.No.7063 of 2009 & M.P.No.1/09 V.M.Palanisamy .. Petitioner Vs. 1. The Manager Erode District Central Co-op. Bank Ltd. Gobichettipalayam, Erode District. 2. The Special Officer Erode District Central Co-op. Bank Ltd. Gobichettipalayam, Erode District. .. Respondents PRAYER: Petition under Article 226 of the Constitution of India for issue of a writ of Mandamus to direct the respondents herein to furnish the calculation sheet with statement of accounts prepared in terms of the rate of interest fixed as per G.O.No.2D dated 22.7.2009 issued under Non Farming Sector Loan interest Waiver Scheme - 2006 and also order refund of Rs.14,52,873.00 being the amount paid in excess by the petitioner towards the loan account No.100 & 286. (Prayer amended as per order dated 27.11.2009 by PJMJ in M.P.No.1/09 in WP.7063/09.) For Petitioner : Mr.N.Jothi for M/s.N.Manokaran For Respondents : Mr.R.Murali Additional Government Pleader for 1st respondent Mr.M.R.Raghavan for 2nd respondent ORDER This writ petition is for a direction against the respondents to furnish the calculation sheet with statement of accounts prepared in terms of the rate of interest fixed as per G.O.(2D) No.12, dated 28.2.2009 to enable the petitioner to pay the loan dues in respect of loan Nos.100 and 286 under the Non Farming Sector Loan Interest Waiver Scheme by considering the legal notice dated 21.3.2009. 2.1. The brief facts leading to the filing of this writ petition are that the writ petitioner has borrowed Term Loan of Rs.10,00,000/- https://hcservices.ecourts.gov.in/hcservices/ on 25.6.2002 and also availed Cash Credit Loan of Rs.25,00,000/- on 4.5.2002 from the first respondent/Bank and it is stated that he has been repaying the loan with interest periodically between 10.7.2002 and 18.7.2008 in respect of the Term Loan No.286 and also repaying the amount with interest from 6.5.2002 and 13.8.2008 towards the Cash Credit Loan No.100. It is the complaint of the petitioner that in spite of the repayment many of the amounts have not been given given credit to and irregularities have been committed. 2.2. The first respondent/Bank has introduced "Non-farming Sector Loan Interest Waiver Scheme" which was propounded by G.O.Ms.No.327, dated 27.2.2006, by which the defaulters have been granted waiver of penal interest on payment of 25% of the loan amount on or before 31.3.2007 and for payment of the remaining amount of 75% time was granted up to 30.6.2007. Subsequently, the time for payment of 25% as well as 75% was extended up to 30.6.2007 and 31.12.2007 respectively by G.O.Ms.No.96, dated 29.3.2007. It is stated that the Government has extended from time to time the said period and ultimately, the State Government in G.O.Ms.No.11, dated 23.1.2008 has permitted the persons who availed loans to remit the due in one lumpsum or instalments on or before 31.3.2008 by way of waiver of penal interest of 3%. 2.3. At the request of the Registrar of Co-operative Societies, the said period has been extended by the Government up to 30.6.2008 for giving one more opportunity to the borrowers to clear their dues to the Bank and that was by G.O.Ms.No.73, dated 25.4.2008. It is stated that the first respondent/Bank has accordingly intimated the petitioner to avail such interest waiver scheme in respect of both the loans stating that in respect of Cash Credit Loan No.100, 25% comes to Rs.8,47,554/- and the balance amount 75% comes to Rs.25,42,660/-, to a total extent of 33,90,214/- and in respect of the Term Loan No.286, 25% comes to Rs.2,17,032/- and the balance 75% comes to Rs.6,51,097/-. By subsequent demand notice dated 26.2.2008, the first respondent has demanded the following amounts, viz., in respect of Cash Credit Loan No.100 a sum of Rs.26,55,109/- and in respect of Term Loan No.286 a sum of Rs.4,25,210/-. 2.4. It is stated that now the Government has issued G.O.(2D) No.12, dated 28.2.2009 by extending the time to pay the amount under Non-Farming Sector Loan Interest Waiver Scheme till 30.6.2009 and the petitioner has been ready and willing to avail the said benefit. It is stated that the respondents have not furnished proper statement of accounts to enable the petitioner to make payment under the Non- Farming Sector Loan Interest Waiver Scheme. 2.5. The first respondent, by notice dated 13.3.2009, has made the following demands, viz., in respect of Cash Credit Loan No.100 a sum of Rs.30,08,109/- and in respect of Term Loan No.286 a sum of Rs.4,59,566/-. The petitioner is stated to have sent a https://hcservices.ecourts.gov.in/hcservices/ representation under the Right to Information Act requesting the first respondent to furnish the details of disbursement of the loan amount and the amount payable by him under the Non-Farming Sector Loan Interest Waiver Scheme, for which the first respondent has furnished a copy of the statement with incorrect particulars. It is stated that the first respondent has made a further demand, viz., in respect of Cash Credit Loan No.100 a sum of Rs.27,35,305/- and in respect of Term Loan No.286 a sum of Rs.5,84,013/-. 2.6. It is stated that the statements given by the first respondent on various occasions are different and contradictory. The petitioner has issued a legal notice on 21.3.2009. However, the first respondent has not chosen to give any details. It is stated that the petitioner is prepared to pay the amount under the Non- Farming Sector Loan Interest Waiver Scheme if proper statement of accounts are given, of course after adjustment of the payment of 25% made already. Therefore, it is the case of the petitioner that 25% of the amount has already been paid and he is liable to pay the balance as per the said scheme and the present writ petition is filed for a direction as stated above. 3.1. In the counter affidavit filed by the respondents dated 11.7.2009, while questioning the maintainability of the writ petition against the co-operative society and stating about the non- maintainability of the writ petition in contractual matters, the respondents have admitted that the petitioner has taken the said two loans and the same were renewed on 31.3.2004 and 31.3.2005. It is stated that subsequent to 1.2.2004, the petitioner has not honoured the commitments and the loan was treated as a non-performing asset and not renewed. It is stated that the passbook of the petitioner has been updated periodically without any omission. 3.2. It is stated that since the Cash Credit Loan has exceeded Rs.25,13,193/- as on 31.12.2003, the petitioner was prevented from operating the account and as per the Government notification, a notice was issued by the respondents/Bank calling upon the petitioner to deposit 25% of amount on or before 31.3.2007. While it is stated that 25% has been deposited, the remaining 75% was not remitted before 30.6.2007 and therefore, it is stated that the petitioner was not entitled to concessional rate of interest. It is also stated that though time was extended up to 31.3.2008, the petitioner failed to remit the amount and even thereafter, when the scheme was extended up to 30.6.2008, the petitioner has not remitted the amount. 3.3. It is stated that insofar as Cash Credit Loan No.100 is concerned, as on 31.3.2007, the petitioner had to deposit Rs.33,90,214/-. It is stated that as per the scheme 25% of the amount, viz., Rs.8,47,544/- has been remitted and the total amount due is Rs.25,42,486/-. It is also stated that interest between 31.3.2007 and 31.3.2008 works out to Rs.3,43,224/- and as on https://hcservices.ecourts.gov.in/hcservices/ 31.3.2008, the total amount payable is Rs.28,85,710/-. It is stated that concessional interest works out to Rs.2,30,601/- and if that is taken into consideration, the amount payable by the petitioner as on 31.3.2008 is Rs.26,55,109/-. 3.4. In respect of Term Loan No.286, it is stated that the petitioner has remitted Rs.8,68,129/- as on 31.3.2008. As per the Government scheme, 25% amount works out to Rs.2,17,032/- and the petitioner has remitted Rs.2,29,262/-. As on 30.6.2007, it is stated that the petitioner owes a sum of Rs.6,38,867/- and he has remitted a sum of Rs.1,74,904/-. Interest between 31.3.2007 and 31.3.2008 works out to Rs.88,473/- and therefore, as on 31.3.2008, the total amount payable is Rs.5,49,436/-. The concessional rate of interest as announced by the Government works out to Rs.1,24,226/- and if that is taken into consideration, as on 31.3.2008, the petitioner is liable to pay Rs.4,25,210/-. It is stated that the above said particulars have been given to the petitioner. A notice was issued on 23.1.2007, calling upon the petitioner to remit the amount on or before 31.3.2007 and subsequently, on 26.2.2008, a notice was issued calling upon the petitioner to remit the amounts due as on 31.3.2008. 3.5. It is stated that the Government has issued a further scheme for persons who have not discharged their debt utilizing the scheme in G.O.2(D) No.12, dated 28.2.2009 and as per the scheme, the debtors were permitted to remit 25% of the amount on or before 31.3.2009 and the remaining 75% on or before 30.6.2009. On 13.3.2009, notice was sent to the petitioner calling upon him to deposit Rs.30,08,109/- with regard to Cash Credit Loan No.100 and Rs.4,59,566/- with regard to Term Loan No.286. The petitioner has deposited Rs.4,19,109/- towards Term Loan No.286 and Rs.27,05,000/- towards Cash Credit Loan No.100. The petitioner requested details of remittances and the same was communicated on 30.6.2009 and even under the Right to Information Act, particulars were furnished to the petitioner. Therefore, it is stated that the petitioner has not discharged his debts in terms of the loan agreements. All other averments made by the petitioner were denied. 4.1. In the reply affidavit filed by the petitioner dated 28.7.2009, the petitioner has explained the various discrepancies of demand made by the respondents as follows: Sl.No . Date of Demand Notice Amount Demanded in Loan No.100 Amount Paid in Loan No.286 1 26.02.2008 Rs.26,55,109.00 Rs.4,25,210.00 2 24.05.2008 Rs.25,42,660.00 Rs.6,51,097.00 3 25.07.2008 with penal of 1½% Rs.27,35,305.00 Rs.5,84,613.00 4 13.03.2009 Rs.30,08,109.00 Rs.6,41,662.00 https://hcservices.ecourts.gov.in/hcservices/ "1. Demand Notice dated 26.02.2008 Loan No.100 – Rs.26,55,109. Loan No.286 – Rs. 4,25,210. 2. Demand Notice dated 24.05.2008 Loan No.100 – Rs.25,42,660. Loan No.286 – Rs. 6,51,097. 3. Demand Notice dated 25.07.2008 with penal of 1½% Loan No.100 – Rs.27,35,305. Loan No.286 – Rs. 5,84,613. 4. Demand Notice dated 13.03.2009 Loan No.100 – Rs.30,08,109. Loan No.286 – Rs. 6,41,662." 4.2. It is stated that, after filing of the writ petition, the respondents have pressurized the petitioner to settle the dues by using coercive methods and during the pendency of the writ petition, the petitioner has stated that he has paid the following amounts in respect of the said loan accounts. 1 L.No.100 – Liabilities on 31.03.2008 with 12% Rs.25,89,311.00 Amount paid on 05.05.2008 Rs.11,00,000.00 Amount paid on 29.06.2009 Rs.16,05,000.00 Total Rs.27,05,000.00 Whereas amount payable with 6% is Rs.22,54,324.00 Amount paid in excess is Rs.4,50,676.00 2 L.No.286 – Liability as on 31.03.2008 with 12% Rs.4,11,104.00 Amount paid on 05.05.2009 Rs.2,70,000.00 Amount paid on 29.06.2009 Rs.1,49,104.00 Total Rs.4,19,104.00 Whereas amount payable with 6% Rs. nil Amount paid in excess Rs.6,45,483.00 and according to the petitioner, he has paid excess amounts. 5. In the meantime, the petitioner has filed M.P.No.1 of 2009 for amendment of prayer in the writ petition to include a direction to refund an amount of Rs.14,52,873/- stated to have been paid in excess towards loan account Nos.100 and 286 along with interest. https://hcservices.ecourts.gov.in/hcservices/ 6.1. Thereafter, the respondents have filed a counter affidavit in the said petition for amendment of prayer, in which, while reiterating the earlier stand taken by the respondents in the counter affidavit, it is stated that as per G.O.(2D) No.77, dated 22.7.2009, the loan should be fully overdue on 31.3.2007 and therefore, according to the respondents, in respect of Term Loan No.286, the petitioner is not entitled to the benefit of the scheme. However, it is stated that in respect of Cash Credit Loan No.100, the petitioner is entitled to the benefit of the scheme. 6.2. It is stated that the calculation of interest at the rate of 6% from 1.6.2002 is not correct and that the loan was renewed from 1.4.2004 to 31.3.2005 and on 1.4.2005 it was not renewed and therefore, the interest at the rate of 6% could be calculated only from 1.4.2005. It is stated that as per G.O.Ms.No.327, dated 27.2.2006, while the petitioner has deposited 25% of 12% interest, he has not remitted the balance 75% amount on or before 30.6.2007. It is stated that while it is true that the petitioner is entitled to benefit of the government order insofar as it relates to Cash Credit Loan, there is no provision for refund of the excess amount paid. It is stated that even though the petitioner' business was in sound position, he did not remit the first instalment on 1.4.2005. It is also stated that as far as the refund of amount is concerned, it is only a contractual obligation which can be enforced by the civil court and not under Article 226 of the Constitution of India. 7.1. To the above said stand of the respondents, the petitioner has filed a reply affidavit stating that this court by exercising the power conferred under Article 226 of the Constitution of India has jurisdiction when the respondents, being the instrumentality of the State, act contrary to public good and public interest. 7.2. It is stated that even the excess amount admittedly paid to the extent of Rs.14,52,873/- is attempted to be retained by the respondents, while even under the Indian Contract Act there is an obligation imposed to return the amount to which the respondents are not entitled to, especially with reference to Section 70 of the Indian Contract Act. It is stated that the obligation under Section 70 of the Indian Contract Act is not based on contractual principle, but based on the concept of unjust enrichment, which is a principle of equity. 8. The fact of availing of two loans by the petitioner, viz., Term Loan for Rs.10,00,000/- on 25.6.2002 and Cash Credit Loan for Rs.25,00,000/- on 4.5.2002 is not in dispute. It is the case of the petitioner, as it is seen in the reply affidavit dated 28.7.2009, that after filing of the writ petition, the petitioner has made various payments in respect of both the accounts and stated that in respect of Cash Credit Loan No.100, excess amount of Rs.4,50,676/- https://hcservices.ecourts.gov.in/hcservices/ has been paid and in respect of Term Loan No.286, excess amount of Rs.6,45,483/- has been paid and therefore, he has filed an amendment petition in M.P.No.1 of 2009 for the purpose of refund of the amount. 9. In the counter affidavit filed by the respondents after the said reply affidavit filed by the petitioner, there is no specific denial of the said excess amount stated to have been paid by the petitioner, but it has been the stand of the respondents/Bank that under the scheme there is no provision for refund of excess amount paid. 10.1. Mr.N.Jothi, learned counsel appearing for the petitioner, while meeting at the first instance the point raised on behalf of the respondents regarding the maintainability of the writ petition, would submit that the respondent, being a Co-operative Bank controlled by the Government in respect of giving effect to the beneficial schemes granted by the Government regarding repayment of loans, is performing public function and while performing the same, the respondents are expected to act with fairness and avoid arbitrariness in action. It is his contention, on the facts and circumstances of the case, that the respondents have not acted fairly and therefore, as a person entitled to the benefit of the scheme announced by the Government in respect of the repayment of loan, the petitioner cannot be directed to go to the civil court and wait for the ordeal of delay. 10.2. On the other hand, in respect of the functioning of the respondents/Bank, it is his contention that the respondents/bank is "State" within the meaning of the term under Article 12 of the Constitution of India, inasmuch as the function performed by the respondents in this regard is a public function. He would also submit that even under the concept of quasi-contractual system, the amount paid in excess or by mistake has to be refunded, since the respondents cannot be expected to be an unjust beneficiary and he would rely upon various provisions of the Indian Contract Act, including Sections 70 and 72. 10.3. To substantiate his contention that writ petition will lie against co-operative society, he would rely upon the decisions in ABL International Ltd v. Export Credit Guarantee Corporation of India and others, [2004] 3 SCC 553 and Corporation Bank v. Saraswati Abharansala and another, [2009] 1 SCC 540. 10.4. To substantiate his contention that excess amount paid has to be refunded, he would rely upon the decisions in Gurucharan Singh v. Registrar, Coop Societies, Himachal Pradesh, [2005] 7 SCC 565 and M.D., Orissa Co-operative Housing Corporation Ltd. v. K.S.Sudarshan, 2009 (2) TNCJ 663 (SC). 11.1. On the other hand, it is the contention of Mr.M.R.Raghavan, learned counsel for the second respondent that the https://hcservices.ecourts.gov.in/hcservices/ transaction between the parties is contractual in nature and it is stated that as per the provisions of the Act, the second respondent has obtained a decree against the petitioner on 21.2.2007 and when the same was to be executed, the Government passed Government orders which were extended periodically conferring certain benefits to the parties, who have obtained loans. 11.2. While admitting that as per the government orders the time has been extended from time to time, it is stated that the amendment petition has been filed by the petitioner only after the government order was passed on 22.7.2009. It is his submission that the schemes are Special Loan Repayment Schemes. To substantiate his contention that the petitioner can only go to the civil court, he would rely upon the decisions in T.N.Industrial Investment Corporation Ltd. v. Millenium Business Solutions Pvt. Ltd., 2004 (5) CTC 689; and KNS Saw Mill v. The Authorised Officer, Bank of India, Coimbatore Zone, 2005 (2) CTC 245. He would also rely upon the judgments of the Supreme Court in Ajay Hasia case 2 and 3 to substantiate his case that it is a contractual obligation which is sought to be enforced. It is also his contention that the writ petition is liable to be dismissed on the basis of laches. 12. At the outset, in the absence of any specific denial regarding the excess amount stated to have been paid by the petitioner during the pendency of the writ petition and after referring to the particulars given by the petitioner in the affidavit explaining about the details of the payments made, it has to be construed that the petitioner has, in fact, made excess payment as per the scheme. In such view of the matter, M.P.No.1 of 2009 stands ordered. 13.1. On the facts and circumstances of the case, on the basis of the pleadings it is clear that the respondents/Bank has obtained a decree against the petitioner and while the respondents attempted to enforce the decree, various schemes have been introduced by the State Government regarding the repayment of loan. The latest order issued by the Government in that regard is G.O.(2D) No.77, Co-operation, Food and Consumer Department, dated 22.7.2009. The said government order, which has been captioned as Regularisation of Special Repayment Loan Scheme in respect of non-farming debts starting from G.O.Ms.No.327, dated 27.2.2006 till G.O.(2D) No.12, dated 28.2.2009, refers to the said scheme as a Special Repayment Scheme for non- farming loans. The said scheme under the government order makes it clear that the same is applicable in respect of debts by the co- operative societies like that of the respondents. It also specifically states that the scheme applies to cases where the repayment has not been made in full as on 31.3.2007 and therefore, the non-farming loans should be pending at that time, provided instalments have been correctly paid. https://hcservices.ecourts.gov.in/hcservices/ 13.2. As per the said scheme, the person liable to repay the loan must pay 25% of the amount and enter agreement on or before 31.10.2009. He must undertake to pay the balance 75% of the amount within three months thereafter, in maximum of three instalments. The concession given is that in respect of the amount repayable, simple interest of 6% is to be paid from the date of obtaining loan till the date of agreement. It is stated in the said government order that the amounts already paid will not be refunded in the event of the debtor paying more amount. It is stated that to reimburse the loss which may be caused to the banks, Government shall bear the loss of interest to the extent of 4% and any further loss will have to be undertaken by the banks. 13.3. The operational guidelines issued by the Registrar of Co- operative Societies for implementation of the Special Loan Settlement Scheme, while speaking about the coverage, states as follows: "2. Coverage: All loans issued under the broad classifications of 'NFS' (Non-farming Sector) i.e. SRTO/Handloom/Powerloom/Industry and Business/ Document pledge loan etc. will be eligible for this scheme, subject to the conditions that a) The loan should be fully overdue by 31.3.2007 (that is as per loan agreement date, time for paying last instalment is over by 31.3.2007). b) Remains fully/partly uncollected on the date of issue of G.O. Borrowers who have opted under previous OTS/IRS schemes and have paid a part thereof, will also be eligible for availing benefit under this scheme." 13.4. Again, the settlement formula is explained in Clause 3 as follows: "3. Settlement Formula 3.1. To avail benefits under the scheme, borrower should repay 25% of the amount calculated under the scheme and enter into an agreement with the institution, before 31.10.2009. He should also undertake to repay remaining 75% of the amount within 3 months from the date of agreement in a maximum of 3 instalments. 3.2. Under the scheme, interest will be charged on the principal outstanding at 6% simple interest from the date of issue of loan upto the date of agreement. Overdue interest, penal interest and other charges already charged into the loan account will be waived. If any repayments have already been made, such will be appropriated into interest amount (calculated @ 6%) and principal outstanding on the respective day of https://hcservices.ecourts.gov.in/hcservices/ repayment. Based on such principal, the final amount to be paid by the borrower is to be arrived at. A model working sheet has been given in Annexure II (For all institutions except PCARDB) and Annexure III (For PCARDB). The principle thereon should be followed without any deviation. 3.3. If the amount so calculated is less than the amount already repaid then the loan shall be treated as fully settled. At any cost, no amount should be repaid to a borrower. 3.4. On account of implementing the scheme, there will be interest loss to the institutions. Government as a gesture had come forward to bear the loss of interest to the extent of 4% on the principal outstanding. The method of calculating such has been illustrated in Annexure II & III. 3.5. Any further loss will have to be borne by the respective Cooperative Credit Structure/Institution. In case, the loan has been refinanced by any higher financing agency, then interest loss will be shared by the higher financing agency and by the concerned institution in the ratio of 75:25. 3.6. If a borrower after paying 25% and signing the agreement fails to pay remaining 75% within 3 months from the date of agreement, he is deemed to have forfeited his benefits and all benefits under this scheme shall be withdrawn." 13.5. The procedure for implementation of the Special Loan Settlement Scheme is explained in Clause 4. The relevant clauses 4.4 and 4.9 are as follows: "4. Procedure for implementation of Special Loan Settlement Scheme. **** 4.4. The respective institutions should prepare the notice in quadruplicate. First copy should be served in person to the individual borrower and in the second copy acknowledgment should be obtained from the