IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA RSA No. 4 of 2000 Date of Decision : October 29, 2009 The H.P. Scheduled Castes and Scheduled Tribes Development Corporation. Appellant Versus The Mahadev Shoes Makers Cooperative Industrial and Marketing Society Limited. Respondent Coram: Hon’ble Mr. Justice Sanjay Karol, Judge. Whether approved for reporting?1 No. For the appellant : Mr. H. S. Upadhaya, Advocate, for the appellant. For the respondent : Mr. Y. Paul, Advocate for the respondent. Sanjay Karol, J. (Oral) The appeal was admitted on the following substantial questions of law: “1. Whether under the provisions of the H.P. Scheduled Castes Development Corporation Act and the rules and notifications under the Act particularly the Himachal Pradesh Sch Castes and Sch Tribes Development Corporation Solan loan sub regulation (Provision of Capital Subsidy and Interest Subsidy) interest subsidy is to be given only on term loan and not on Cash Credit limit? 1 Whether reports of Local Papers may be allowed to see the judgment? 2 2. Whether in the facts and circumstances of the case the learned Courts have overlooked the proved fact that the respondent was a defaulter in the repayment of the loan and hence barred from interest subsidy?” The respondent herein, M/s Mahadev Shoes Makers Cooperative Industrial and Marketing Society Limited filed civil suit No. 11/1 of 1995, against the defendant, The H.P. Scheduled Caste and Scheduled Tribes Development Corporation, seeking a mandatory injunction to the effect that the defendant be directed to deposit the amount of interest subsidy due to the plaintiff w.e.f. 1.10.1993 up to June, 1996. The plaintiff, a Cooperative Society registered under the Cooperative Societies Act and had availed financial assistance from the defendant, in terms of letter dated 16.12.1988 with respect to a duly sanctioned project. The sanctioned amount was disbursed but however the amount towards the interest subsidy was not released in favour of the plaintiff allegedly due to defaults in repayments of instalments in time. Consequently the plaintiff filed the suit. The defendant resisted the same primarily on the ground that since the Society had become a wilful defaulter hence a sum of Rs. 80,025/- sanctioned towards interest subsidy could not be released. Based on the pleadings of the parties, the trial Court framed the following issues: 3 “1. Whether the plaintiff is entitled to the relief of mandatory injunction, as prayed for? OPP 2. Whether the plaintiff has no cause of action? OPD 3. Whether the suit is not properly valued for the purposes of court fee and jurisdiction? OPD 4. Whether the suit is bad for non-joinder of necessary parties? OPD 5. Relief.” Appreciating the plaintiff’s evidence and particularly that of Sh. Laxmi Ram (PW-1), Sh. Ganga Ram (PW-2), Sh. Madan Singh (PW- 3) and Sh. Paras Ram (PW-4) the trial Court came to the conclusion that the plaintiff was not a defaulter and thus was entitled to the interest subsidy sanctioned in terms of letter Ext. PW3/B. The defendant’s own witnesses namely Sh. S. K. Verma (DW-1) and Sh. S. C. Gaur (DW-2) were not able to prove as to how and in what manner the plaintiff had defaulted in repayment of the amount in terms of the various financial facilities accorded by the plaintiff. The Court found that the rejection of the plaintiff’s claim by the defendant in terms of letter dated 5.5.1994 (Ext. PW 4/A) was illegal and inoperative. Issue No. 1 was thus decided accordingly. Issues No. 2 to 4 were decided against the defendant for want of evidence and the plaintiff’s suit was decreed by the Civil Court in terms of the judgment and decree dated 26.11.1997. The defendant’s appeal assailing the same was dismissed by the First Appellate Court in terms of impugned judgment and decree dated 10.9.1999. The First Appellate Court, after appreciating the 4 material on record conclusively held that the defendant had failed to show as to in what manner the plaintiff was a defaulter. While arriving at its conclusion the Court has held as under: “19. Ext. PW1 is a letter issued by District Cooperative and Supplied Officer, exercising the powers of Registrar Co-operative Societies whereby the society of the respondent has been registered vide registration No. 489. Ext. PW1/A is a resolution No. 1 passed by Mahadev Shoe Makers Cooperative Industrial and Marketing Society Limited whereby the decision to institute the civil suit was taken by the society against the appellant. Ext.PW3/B is the sanctioned order passed by Managing Director, H.P. Scheduled Caste and Scheduled Tribe Development Corporation Solan dated 16-12-1988 and in para No. 4, it has been specifically mentioned that “The society shall be eligible to interest subsidy on bank loan so that the total interest burden on the society on bank loan does not exceed 7% per annum.” Ext. PW3/C is the letter issued by Director, H.P. Scheduled Caste and Scheduled Tribe Corporation dated 16.6.1993 whereby it has been mentioned that cash credit limit has been enhanced to Rs. 3 lacs and has been mentioned that the respondent society shall be entitled to interest subsidy for further three years. Ext. PW4/A is a letter dated 5.5.1994 issued by the District Manager, H.P. Scheduled Caste and Scheduled Tribe Development Corporation Jauna Ji Road, Solan whereby the interest subsidy of Cash Credit limit has been rejected. Ext.PW1/B is the notice issued by the 5 respondent society to the appellant. Ext. PW3/A is the sanctioned letter No. SCDC(E)(3)50/85-Dev-/issued by Managing Director whereby the cash credit limit was enhanced to Rs. 2 lacs from Rs. 80,000/- and it has been mentioned in para 3 that “The Society shall be eligible to the interest subsidy on the bank loan so that the total interest burden on the society on bank loan as well as the Corporation margin money does not exceed 7%.” 20. The following facts are proved on record:- (i) It is proved on record that initially appellant sanctioned the cash credit limit to Rs. 80,000/- alongwith interest subsidy. (ii) It is also proved on record vide document Ext. PW3/B that thereafter appellant sanctioned the cash credit limit to Rs. 2 lacs and in para 4 it has been specifically mentioned that the society shall be eligible to interest subsidy on bank loan so that the total interest burden on the society on bank loan does not exceed 7% per annum. (iii) It is also proved on record vide document Ext. PW3/C that the cash credit limit was extended to Rs. 3 lacs and it has been also mentioned in letter dated 16.6.1993 issued by the Director, H.P. Scheduled Caste and Scheduled Tribe Development Corporation, Jain Bhawan, Hospital Road, Solan vide letter No. SBDC/E(3)50/85 that the respondent was also entitled to interest subsidy for another three years. It is duly proved on 6 record vide letter Ext. PW3/C issued by the appellant that the interest subsidy was extended for another three years i.e. till 16.6.1996 vide the letter issued by the Managing Director extending the Cash Credit limit to Rs. 3 lacs with interest subsidy and letter has been issued vide letter No. SBDC(E)(3)50/85. (iv) In appeal the appellant has moved an application under order 41 Rule 27 CPC for filing and exhibiting the agreement PX which was allowed vide order dated 22.6.1999 and it has been specifically mentioned in the agreement in para 3 that in case of any default by the first party in the payment of any instalment in whose or in part, the whole amount then remaining due to the second party under this deed on account of principal and interest shall become recoverable at once in lump sum as arrears of land revenue under the prevailing Himachal Pradesh Land Revenue Act and the penal interest at the rate of 2% per annum would be charged from the first party with effect from the date of default. (v) The appellant has not produced any evidence proving that the respondent society has become defaulter at any point of time. No letter of bank to this effect has been placed on the record nor any official of the bank has been examined to this effect by the appellant as per the requirement of law. 7 Hence I hold that the appellant has failed to prove on record that respondent society has become defaulter. In view of the fact proved that appellant has sanctioned the cash credit limit to Rs. 3 lacs on 16.6.1993 vide letter No. SBDC(E)(3)50/85 Ext. PW3/C with subsidy interest, till 16.6.1996 appellant corporation is legally liable to pay the subsidy interest under the provisions of law in the absence of any proof that the respondent society has become defaulter. As the appellant has miserably failed to prove that the respondent society has become defaulter at any point of time on record, I hold that the judgment and decree of the Trial Court are in conformity with law and the judgment and decree of the Trial Court are confirmed. Hence the point No. 1 is decided in negative.” During the course of the hearing it could not be shown from the record as to in what manner the aforesaid observations made by the Court were erroneous, illegal or not borne out from the record. That apart, even here nothing could be shown from which it could be even inferred that the plaintiff was a defaulter in the repayment of the loan amount. In these circumstances substantial question No. 2 does not arise for consideration at all. With regard to substantial question No. 1, learned counsel has fairly stated that it does not arise for consideration because the cash credit limit in fact sanctioned by the corporation does not draw out any distinction. 8 The substantial questions of law are not answered. There being no illegality, infirmity in the impugned judgment and decree, the appeal is dismissed. (Sanjay Karol), Judge. October 29, 2009 (PK)