IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. CWP No.20072 of 2006 Date of decision: 19.11.2008 M/s Pabla Cold Storage and Ice Factory -----Petitioner Vs. State of Punjab and another -----Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N.MITTAL Present: Mr. Surja Puri, Advocate for the petitioner. Mr. Piyush Kant Jain, Addl.A.G.Punjab for respondent No.1. Mr.GS Gill, Advocate for respondent No.2. Adarsh Kumar Goel, J 1. This petition seeks a direction for quashing notice dated 24.11.2006, Annexure P.6. 2. Case set out in the petition is that the petitioner took a loan of Rs.13 lacs from respondent No.2 Punjab Financial Corporation in the year 1982. Certain re-payments were made but 1 CWP No.20072 of 2006 there was default in payment of some of the installments. The Financial Corporation announced a concessional scheme dated 18.7.1986, Annexure P.1, which contemplated payment of simple interest at the rate of 10% and in case of default, further interest at the rate of 6% by way of penal interest. According to the petitioner, entire amount as per the said Scheme was paid and thus, it paid a sum of Rs.29 lacs which was more than its liability. Still, respondent No.2 raised further demand, which is arbitrary. 3. Stand of the petitioner was noticed in the order of this Court dated 18.12.2006, which is as under:- “Counsel for the petitioner states that as per letter dated 31.12.1986, the petitioner was directed to pay an amount of Rs.10,94,122/-, after charging interest @ 10% as per policy decision taken by the respondent-Corporation. Counsel states that thereafter, the petitioner had paid more than Rs.29 lacs. Now again, it has received a notice for payment of Rs.9,38,000/-. Counsel further submits that if the interest is calculated as per Annexure P/1, it is not liable to pay any amount, however, to show its bonafide, the petitioner is ready to make payment of Rs.3 lac to the respondent-Corporation within two weeks from today. 2 CWP No.20072 of 2006 4. Thereafter, vide order dated 13.8.2003, this Court appointed a Chartered Accountant to give his report. The said order is as under:- “Learned counsel for the petitioner suggests, that the issue which remains to be adjudicated at the hands of this Court, is only a matter of reconciliation of the statements of account furnished by the Chartered Accountants engaged on behalf of the petitioner and respondent No.2, and as such, this Court should nominate a Chartered Accountant to reconcile the statements of account furnished on behalf of the petitioner, as also, respondent No.2. We are of the view that the suggestion made at the hands of the learned counsel for the petitioner is fully justified. Accordingly, at the recommendation of Mr. Parveen Chander Goel, Senior Deputy Advocate General, Punjab, we hereby nominate Mr. Anil Khanna, Chartered Accountant, SCO No.10, Sector 17-E, Chandigarh, for the purpose under reference. The petitioner shall pay Mr. Anil Khanna, Chartered Accountant, Rs.11000/- as fee for the entire expenses. Mr. Anil Khanna, Chartered Accountant, shall submit a report after being assisted by the Chartered Accountants of the petitioner and respondent No.2, on or before 15.9.2008. 3 CWP No.20072 of 2006 To come up for further consideration on 22.9.2008. A copy of this order be furnished to the learned counsel for the parties under the signatures of the Special Secretary attached to this Court.” 5. Report has accordingly been submitted and the Chartered Accountant has, inter-alia, pointed out that respondent No.2 has compounded penal interest on half yearly basis. It has also been reported that interest has also been compounded. 6. In view of judgment of the Hon’ble Supreme Court in Oriental Bank of Commerce v. Sunder Lal Jain, (2008) 2 SCC 280, the question whether terms of one time settlement scheme or other concessional Scheme have been complied with or not is normally not to be gone into in writ jurisdiction. However, in view of judgment of the Hon’ble Supreme Court in Central Bank of India v. Ravindra, AIR 2001 SC 3095, penal interest cannot be compounded. 7. We dispose of this petition by setting aside compounding of penal interest, which is contrary to law but the question whether simple interest could be compounded, is a question which may require adjudication by an appropriate forum. 4 CWP No.20072 of 2006 We leave the said question open to be settled in appropriate forum. (Adarsh Kumar Goel) Judge November 19, 2008 (L.N.Mittal) ‘gs’ Judge 5