IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.8199 of 2003 RAM JORI SINGH, son of Late Ram Ayodhaya Singh, Resident of Vill- Baijalpur, Kesho, P.S. Sonpur, Distt. Saran. ............Petitioner. Versus 1. THE STATE OF BIHAR 2. Branch Manager, Saran Kshetriya Gramin Bank, Baijalpur, Sonpur, Distt. Saran. .........Respondents ----------- 8/ 15.12.2010 Heard the parties. The petitioner has filed the present petition under Article 226 of the Constitution of India for the following reliefs: To issue writ of mandamus or any other writ or writs direction or directions commanding upon the respondents not to charge interest @ 16 % per annum from the petitioner over the agricultural loan advanced for purchase of the tractor rather to charge simple interest as held by this Hon‟ble Court in many writ applications. To pass any such other order or orders as Your Lordship may think fit and proper under the facts and circumstances of the case. The petitioner claims to be an agriculturist. The petitioner applied for an agricultural loan for purchase of a tractor, which was sanctioned on 23.7.2001 by the Branch Manager, Saran Kshetriya Gramin Bank, Baijalpur, P.S. Sonpur, Distt. Saran. It may be relevant to mention here that the Central Government in exercise of its power in term of section 23A and 23B of the Regional Rural Banks Act, 1976 has merged different Gramin Bank including the Bank in question and a new bank has been created, which is known as Uttar Bihar Gramin Bank having its Headquarter at Muzzafarpur. 2 Obviously, assets and liabilities of the Bank in question have been transferred to the aforesaid new bank referred to above. Admittedly, the petitioner was sanctioned loan amount of Rs.2,42,000/- on 23.07.2001 for purchase of a tractor. As per terms and conditions of the bank, an agreement was singed by the parties. The loanee i.e. the petitioner was required to return the entire loan amount in seven years in installments with interest payable @ 16% per annum. The petitioner claims to have returned Rs.1,94,000/- in all till date. The grievance of the petitioner is that bank has issued a demand notice asking the petitioner to deposit the entire amount wherein interest has been charged @ 16% per annum. According to the petitioner, he being an agriculturist was required to re-pay the loan amount with interest @ 6.5% only. In support of his claim he has placed his reliance on certain orders passed by this Court as contained in Annexure-4. Mr. Shankar Kumar, learned counsel for the petitioner, has submitted that if the claim of the petitioner regarding reduction of interest rate from 16% to 6.5 % is not accepted by this court, then in that case also the petitioner is entitled to have a benefit under a scheme known as Loan Waiver and Loan Relief Scheme, 2008. Under that scheme Bank was required to give relief to the agricultural loanee up to 25% and that much amount was required to be reimbursed by the central government to the Bank. Mr. A.K. Dubey, learned A.C. to AAG-9 and Mr. A.K. Sinha, learned counsel appearing on behalf of respondent no. 2 have supported the impugned action and have submitted that the petitioner 3 is obliged to pay the interest amount as per the terms and conditions of the agreement signed by the petitioner as also by the respondent Bank. Mr. Ajay Kumar Sinha, learned counsel for the respondent no. 2 has drawn attention of this court towards a document contained in Annexure- A to the counter affidavit. The aforesaid document is dated 26.7.2001 with heading „Karj Sahmati‟ (agreement). The aforesaid document has been signed by the petitioner and wherein it has been stipulated that interest @ 16% per annum shall be chargeable on the loan amount given to the petitioner. He has further drawn attention of this court towards the terms loan agreement, as contained in Annexure-B to the counter affidavit, wherein also it has been shown that Rs.2,42,000/- has been borrowed by the petitioner from the bank and interest shall be chargeable @ 16% per annum or at such other rate or rates which may be notified by the Bank from time to time to the borrower. Mr. Sinha has submitted that a learned Single judge of this Court in the case of Jahuri Yadav and Ors. V. The Bank of India and Ors. reported in 1998 (3) PLJR 214 has held that in a case of agricultural loan, the bank is not entitled to charge compound interest and at best the interest can be charged @6.5 % only. Aforesaid order was passed with respect to a proceeding started by the said bank under the provisions of Bihar Public Demands Recovery Act, 1914. Against the aforesaid order passed by a learned Single Judge, Bank of India preferred LPA no. 581 of 1998, which was finally heard and allowed by a judgment and order dated 17th May 2007 and the order passed by the learned Single Judge was set aside. The judgment of the aforesaid Division Bench is 4 based on the judgment of Apex Court in the case of Corporation Bank Vs. D.S. Gowda, reported in (1994) 5 SCC 213. The paragraph 2 of the judgment of the Division Bench is relevant and is reproduced hereinbelow: “2. The chargeable rate of interest is a matter of agreement inter se the Bank and its borrower. Such rate of interest in terms of section 21 (a) of the Banking Regulations Act, 1949 cannot re-opened on the ground that the rate of interest charged by the Bank is excessive. In those circumstances, in view of the said pronouncement of the Hon‟ble Supreme Court and in view of provisions contained in section 21 (a) of the said Act we have no other option but to interfere with the judgment and order under appeal and, accordingly, we set aside the same.” Learned counsel for the Respondent-Bank has rightly submitted that in view of judgment of a Division Bench of this Court, the order passed by a learned Single Judge of this Court, as contained in Annexure-4 series, cannot be applied in the present case. It is also urged on behalf of respondent Bank that the benefits under the Loan Waiver and Loan Relief Scheme, 2008 cannot be granted to the petitioner, since he has not deposited the entire loan amount by 29th February, 2008. After having heard the parties at length and on perusal of materials available on record, this court finds that petitioner had given his consent at the time of sanction of loan and had agreed that 16 % interest per annum shall be chargeable at the loan amount. This court further finds from the agreement signed by the parties that the interest @ 16% per annum was required to be levied on the principal amount. 5 Learned counsel for the petitioner has not brought to the notice of this court any legal provision or any government circular/orders, having statutory force, on the strength of which his claim for reduction of interest rate from 16% per annum to 6.5 % per annum is accepted. The issue stands finally concluded by a Division Bench of this Court in the case of The Bank of India Vs. Jahuri Yadav passed in LPA No.581 of 1998. Therefore, no relief for reduction in interest on the loan amount can be granted to the petitioner. The petitioner is obliged to pay the principal amount with simple interest @ 16% per annum to the Bank. This does not conclude the entire issue. The Loan Waiver and Loan Relief Scheme, 2008 was started by the Bank in question namely Uttar Bihar Gramin Bank under a policy decision of the Central Government. As per policy decision of the Central Government 25% of loan amount of the agriculturist loanee was required to be waived by the different banks including the bank in question. However, this amount was required to be reimbursed by the Central Government to the Bank in question. The present petition of the petitioner was filed as far back as on 13.8.2003 and matter remained pending before this Court due to non filing of the counter affidavit by the Bank. Consequently, the personal appearance of respondent no.2 was directed by this Court by order dated 28.6.2010 and in compliance thereof respondent no.2 was physically present in the court on 19.7.2010, on which date statement was made that counter affidavit has been filed by the respondent Bank on 9.7.2010. Obviously, the petitioner cannot be blamed for the delay in disposal 6 of the present proceeding and to some extent blame can be fastened on the head of respondent no.2. In that view of the matter, the petitioner cannot be held guilty for non-payment of entire loan amount of the Bank under the aforesaid scheme of 2008 by last date fixed to be 29th February, 2008. In the peculiar facts and circumstances of the case, the petitioner is directed to file a detailed representation to the successor bank, namely Uttar Bihar Gramin Bank, Baijalpur claiming waiver of 25 % loan amount in the aforesaid scheme of 2008 within one month from today. The respondent bank shall take into consideration of the facts that because of pendency of the present litigation, the petitioner did not deposit the aforesaid loan amount pursuant to demand notice dated 10.11.2007 (Annexure-8). From the aforesaid document, it is also not clear that the scheme was to come to an end by 31st December 2007 or by 29th February 2008. Therefore, if permissible, that benefit/privilege must be granted to the petitioner. If the aforesaid benefit of waiver is granted to the petitioner, then the bank will re- calculate the balance amount payable by the petitioner. However, if the aforesaid scheme of 2008 has come to an end and benefit of waiver to the extent of 25 % cannot be granted to the petitioner, then bank will pass speaking order rejecting his claim. In any view of the matter, the bank will recalculate the entire amount payable by the petitioner, which shall be paid by the petitioner within six months in installments fixed by the bank. The petitioner will file his representation along with certified copy of this order. However, it is made clear that if the petitioner does not appear before the Bank 7 within the specified period of one month from today along with his representation and a certified copy of this order, then it will be construed that the present petition stood rejected by this Court and thereafter, the Bank will proceed in accordance with law. There shall be no order as to costs. With the aforesaid observations and directions this application is disposed of. M.Rahman ( Birendra Prasad Verma, J )