IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.16680 of 2008 1. Ved Prakash Agarwal, S/o late Ram Gopal Agarwal 2. Sudarshan Agarwal, S/o late Ram Gopal Agarwal Both Residents of Ghirni Pokhar, Jawaharlal Road, P.O, P.S., Town & District- Muzaffarpur. ……………. Petitioners. VERSUS 1. Central Bank of India having Head Office situated at Mumbai through its Chairman. 2. The Regional Manager, Central Bank of India, Regional Office, Speaker Chowk, Muzaffarpur. 3. The Chief Manager, Central Bank of India, Zonal Office, Pawapuri Vihar, N.H. 28, Bhagwanpur, Muzaffarpur. 4. The Branch Manager, Central Bank of India, Main Branch, Saraiyaganj, Muzaffarpur. 5. The Authorized Officer, Central Bank of India, Regional Office, Speaker Chowk, Muzaffarpur. ………. Respondents. ----------- Counsel for the Petitioners: Mr. S.D. Sanjay. Counsel for the Bank : Mr. Ajay Kr. Sinha. ----------- 03 02.12.2008 The two petitioners are indebted to the Central Bank of India, Muzaffarpur, as the Directors of the M/s Deepak Electrocasting Private Limited, as well as, guarantors for financial accommodation offered by the Bank to the said Company. Being in default, lot of negotiations took place and ultimately it was agreed at the highest level of the Bank with the petitioner that the dues be compromised for an amount of Rs. 144.56 lacs (Rs. one crore forty four lacs and fifty six thousand) along with interest. Petitioners made it clear to the Bank that they could only liquidate this amount by selling mortgaged assets, permission for which was sought for and subsequently granted. Petitioners allege that there was delay in permission petitioner started paying. However, ultimately on 31.07.2006 petitioner was informed that out of the compromise amount aforesaid the balance being Rs. 2 38,06,000/- towards principal was now due with interest of Rs. 15, 54,622/-, which should be paid within the stipulated time, i.e. by 31.08.2006. On 19.08.2006, the Senior Manager of the respondent- Bank curiously wrote a letter to the petitioners canceling the compromise on the ground that though the petitioners were liable to deposit the amount by 31.08.2006, they had taken no steps in the previous 19 days to deposit any amount. Without discussion, it can be said that this letter was totally uncalled for and unjustified. However, it is not in dispute that the principal amount was then deposited and petitioners sought waiver of the interest amount alone. Even while seeking waiver of the interest amount of about Rs. 15.54/- lacs, having already paid Rs. 144 lacs, petitioners deposited Rs. 3 lacs. The respondent-Bank having not being favored with the entire interest amount, though principal was totally paid out of the compromise, Bank has now decided to take steps under Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFESI Act) to take possession of all mortgaged assets and sale the same for recovery of the entire dues ignoring the compromise totally, which dues exceed Rs. 11 crores now. Thus, effectively for realization of interest amount of Rs. 15.54 lacs, as reduced by Rs. 3 lacs paid with the waiver application entire mortgaged properties are now being sold and petitioners made defaulter of an amount in excess of Rs. 11 crores. It is on these facts, it is submitted by the learned counsel for the petitioners, Mr. S.D. Sanjay that the action of the Bank is highly inequitous and arbitrary. He further submits that an industry which has 3 closed down over 7-8 years back because of various reasons prevailing in Bihar, for a default, in spite of a prayer of waiver of interest, it is now being slapped with a liability of Rs. 11 crores, which is principal with interest over interest. The capital, as per compromise, has already been liquidated. On the other hand, learned counsel for the Bank submits that once petitioners failed to abide by the compromise, he must face the consequences of the compromise being rendered null and void. Heard the parties and with their consent the writ petition is being disposed of at the stage of admission itself. The facts noted above would show that the principal amount as agreed in the compromise amounting of about Rs. 144 lacs was duly paid. What remained was a small interest component of about Rs. 15.54 lacs. For this, even petitioners sought exemption while depositing part of the amount i.e. Rs. 3 lacs. In my view, the respondent-Bank should have taken this into consideration because otherwise the consequences are too drastic. For a balance of Rs. 12.54 lacs of interest, the waiver of which petitioners had sought, petitioners are now been made liable to pay over Rs. 11 crores. This is the magnitude of dichotomy in the action of the Bank. If petitioners were in immediate position to pay the balance of interest, it would be so done, but it sought exemption. This shows that petitioners had been hard pressed for payment as it is asked to pay not 10 times of the balance of Rs.12 lacs, but 100 times over, which goes without saying, is beyond his financial capacity. The Bank must realize that it is a public sector 4 undertaking and must balance conflicting interest. Its actions even in contractual matters must abide by Article 14 of the Constitution. The principal due as compromised and noted above was about Rs. 1.44 crores, which stood fully liquidated more than 2 years back. The balance for which the entire controversy is only Rs. 12.54 lacs and having failed to pay the same, the Bank is now seeking to realize Rs. 11 crores, this shocks the conscience of the Court. On balancing of rights and equitable consideration, in my view, justice would be met by directing the petitioner at the first instance to deposit the balance of Rs. 12.54 lacs within one week from today with the respondent-Bank. Bank would in the mean time calculate the interest as per prime bank lending rates on the amount of Rs. 12.54 lacs from 01.09.2006 up to date and communicate the same to the petitioners. The petitioners would then arrange to pay the same within one month without demur. On making this payment the Bank would have got its interest with interest and that should satisfy equity and the Bank which would then close the account as settled. With these observations and directions, the writ petition stands disposed of. Trivedi/ ( Navaniti Prasad Singh, J.)