IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR O R D E R S.B. Civil Writ Petition No.3131 of 2004. Ghamandi Singh son of Shri Ramji Lal. VERSUS Sub Divisional Officer, Bharatpur & Others Date Of Order ::: 04/03/2008. Hon'ble Mr. Narendra Kumar Jain J. Mr. Alok Garg, Counsel for the petitioner Mr. S.S. Hasan, Counsel for the respondents By the Court : Heard learned counsel for the parties. The petitioner has preferred this writ petition, wherein he made following prayer :- “Therefore, it is humbly prayed that the writ petition may be accepted and appropriate writ order and direction the order of S.D.O. Bharatpur dated 27/06/2003 (Annexure-10) be quashed and set aside and the respondent no.3 may be directed to charge the interest at the rate of 6& yearly basis and the direction may further be given to the respondent no.3 for making a fresh statement after due determination of the amount payable and also the respondent no.3 may be directed that the petitioner is entitled to benefit of all the guidelines of the Reserve Bank of India and any other any relief.” Learned counsel for the petitioner submits that the petitioner applied for grant of loan for buying a Tractor with the respondent no.3-Bank for agricultural purposes on 18.02.1995. The respondent no.3-Bank agreed to grant a loan of Rs.1,70,000/-. As per terms and conditions of the agreement, the repayment of the loan was to be made in nine-instalments. The first eight instalments were of Rs.19,000/- and the last instalment was of Rs.18,000/-. The certified copy of the agreement has been placed on record as Annexure-1. The instalments were to be paid on yearly basis and first instalment was made due and payable on 18.08.1995, and the last instalment was to be paid on 18.08.2004. The petitioner made the following payments : 3/6/1995 Rs.30,000.00 4/6/1995 Rs.30,000.00 18/5/1998 Rs.45,000.00 8/9/1999 Rs.10,000.00 25/5/2000 Rs.35,000.00 29/6/2001 Rs.1,00,000.00 Total : Rs.2,50,000.00 The respondent no.3-Bank gave notice of the balance amount of Rs.93,198/- and the said action of the Bank was challenged by the petitioner before the District Consumer Forum, Bharatpur and soon thereafter the respondent no.3-Bank with an ulterior motive filed an application before the S.D.M. Bharatpur under the provisions of the Rajasthan Agricultural Credit Operation (Removal of Difficulties) Act and the S.D.O. without going into the merits of the case and without considering the objections raised by the petitioner passed an order dated 27/06/2003. Learned counsel for the petitioner contended that from Annexure-10, the order-sheets of the Court of S.D.M. Bharatpur reveal that the Bank filed an application on 09.05.2003 and the notice was issued for 26.06.2003. The petitioner appeared before the Court of S.D.O. on 26.06.2003, and the case was fixed on 27.06.2003. The petitioner filed his reply/objection petition on 27.06.2003, which was not considered properly, and the S.D.M. wrongly determined the amount of Rs.1,03,326/-. He contended that as per agreement of loan, the interest was to be charged at yearly rests, whereas as per the statement of account, it is clear that the Bank has charged interest at half-yearly rests. He referred the order of S.D.O. dated 27.06.2003 and contended that the Bank Officer appeared before the Court of S.D.O. and contended that as per agreement the Bank charged interest at yearly rests, whereas the Bank has charged interest at half-yearly rests and on that basis the S.D.O. has determined the amount to be recovered from the petitioner, which is absolutely illegal. Learned counsel for the petitioner also contended that on 26.06.2003, he appeared before S.D.O. and on that day itself, the proper opportunity to file reply was not given and the case was fixed on the next day i.e. 27.06.2003. However, he filed his reply on 27.06.2003, but the same has also not been considered properly while passing the order determining the amount under the provisions of the Act on 27.06.2003. Learned counsel for the petitioner placed reliance on Corporation Bank Vs. D.S. Gowda and Another, reported in (1994) 5 S.C.C. Page 213, wherein the Hon'ble Apex Court considered the directives and circulars of the Reserve Bank of India and held that so far as the agricultural loan are concerned, the Banks are entitled to charge interest on yearly rests and the Bank cannot be allowed to charge interest on quarterly or half-yearly rests. He, therefore, contended that the impugned order passed by the S.D.O. is not only violative of principle of natural justice, but it is contrary to the judgment of the Hon'ble Supreme Court also and the same is liable to be set aside. The respondent-Bank supported the impugned order (Annexure-10) passed by the S.D.O. and contended that the Bank is fully justified in charging interest on half-yearly rests. However, the learned counsel for the respondent-Bank is unable to give any answer or clarification to the observations made by the S.D.O. in its order dated 27.06.2003 that the Bank Officer has contended before him that the interest has been charged at yearly-rests and not at half-yearly rests. I have considered the submissions of the learned counsel for the parties and examined the documents annexed with the writ petition and also the reply filed by the respondents. The learned counsel for the petitioner has pleaded that the petitioner took a loan of Rs.1,70,000/- on 18.02.1995 for buying a Tractor for agricultural purposes and he made the payment of Rs.2,50,000.00 as per details given in Para No.5 of the writ petition. The respondents in reply to Para No.5 of the writ petition has not disputed the payment of Rs.2,50,000.00, as per details given in Para No.5 of the writ petition. It appears that the Bank filed an application before the S.D.O. Bharatpur under the provisions of the Rajasthan Agricultural Credit Operation (Removal of Difficulties) Act on 09.05.2003 and the notice was issued to the petitioner for 26.06.2003 and on that day the case was adjourned for 27.06.2003 and on that day the S.D.O. without waiting for the petitioner determined the amount of dues under Section 6 of the Act to the tune of Rs.1,03,326/-. However, the petitioner filed his reply/objection petition, which was taken on record by S.D.O. on that day itself and he further passed an order that so far as charging of interest at half-yearly rests or yearly- rests is concerned, the Bank Officer contended before him that it has been charged as per yearly-rests. However, the Bank in its reply filed before this Court has admitted that the Bank has charged interest at half-yearly rests. From the order-sheets of the Court of the S.D.O. dated 26.06.2003 and 27.06.2003, it shows that the S.D.O. did not give proper opportunity to the petitioner to represent his case. It further shows that the objections taken by the petitioner in its reply have not been taken into consideration properly by the S.D.O. and only on the basis of the contention of the Bank Officer passed an order without examining as to whether the interest in the present case has been charged at yearly rests or half-yearly rests by the Bank. It appears that there is total non-application of mind on the part of the S.D.O. Bharatpur while passing the impugned order dated 27.06.2003. The Hon'ble Supreme Court in the case of Corporation Bank Vs. D.S. Gowda and Another (Supra) has held that according to the circulars/directives, so far as loans for agricultural purposes are concerned, at best interest may be charged with yearly rests and may be compounded if the loan/instalment become overdue. For ready reference, Para No.23 of the aforesaid judgment is reproduced as under :- “23. Insofar as Civil Appeal No.544 of 1986 is concerned it relates to the Bank's right to charge compound interest i.e. interest with periodical rests on agricultural advances. We have already referred to the various circulars issued by the Reserve Bank from time to time in exercise of power conferred by Section 21/35-A of the Banking Regulation Act. We have pointed out that the said circulars/directives provide that agricultural advances should not be treated on a par with commercial loans insofar as the rate of interest thereon is concerned because the farmers do not have any regular source of income except sale proceeds of their crops which income they get once a year. The question of recovery of interest with quarterly or six-monthly rests from farmers is, therefore, not feasible. The fact that the farmers are fluid at a given point of time every year has to be kept in mind in determining the point of time when they should be expected to repay the loan or pay the instalment /interest on advance. Therefore, to allow the banks to charge interest on quarterly or half-yearly rests from farmers would tantamount to virtually compelling them to pay compound interest, since they would not be able to pay the interest except once in a year i.e. when they receive the income from sale proceeds of their crops. The Reserve Bank has shown concern for the farmers by directing all banking institutions to so regulate the recovery of interest as to coincide with the point of time when the farmers are fluid. It has, therefore, been emphasized by the Reserve Bank that interest should be charged once a year to coincide with the point of time when the farmer is fluid and interest on current dues should not be compounded although it may be done when the advance/instalment becomes overdue. Thus according to the circulars/ directives, so far as loans for agricultural purposes are concerned, at best interest may be charged with yearly rests and may be compounded if the loan/instalment becomes overdue. In the present case, since interest was charged with six-monthly rests that was clearly in contravention of the Reserve Bank circulars/directives. Compounding of interest on current dues on agricultural advances having been discouraged, the Bank was not entitled to charge interest with shorter periodical rests and compound the same. The Bank could add interest outstanding to the principal and compound the interest when the crop loan or term loan becomes overdue having regard to the tenor of the circular dated 14.03.1972. The High Court was, therefore, fully justified in coming to the conclusion that the Bank was not entitled to charge interest with half-yearly rest. From the submissions of the learned counsel for the parties, it is clear that the Bank has charged interest at the half-yearly rests and not at yearly rests. In these circumstances, I find that the impugned order dated 27.06.2003 passed by the S.D.O. Bharatpur (Annexure-10) is not only contrary to the principles of natural justice, but it is contrary to the judgment passed by the Hon'ble Supreme court in the above referred judgment also, and in my view the present writ petition deserves to be allowed and the case is required to be remitted back to the S.D.O. Bharatpur with a direction to decide the matter afresh after affording proper opportunity to the petitioner and after considering the judgment of the Hon'ble Supreme Court, as above referred. Consequently, the writ petition is allowed. The impugned order passed by the S.D.O. Bharatpur dated 27.06.2003 (Annexure-10) is set aside. The matter is remitted back to the S.D.O. Bharatpur with a direction to afford afresh and proper opportunity to the petitioner as well as Bank and decide the matter afresh in the light of observations made here-in-above and also in the judgment of the Hon'ble Supreme Court, as referred above. Both the parties are directed to appear before the S.D.O. Bharatpur on 21st April, 2008. There will be no order as to costs. (Narendra Kumar Jain) J. ashok/