IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) 23-04-2010 PRESENT THE HON'BLE MR JUSTICE NOUSHAD ALI WRIT PETITION NO : 6484 of 2002 Between: G.Aruna ..... PETITIONER AND The Recovery Officer (Deputy Tahsildar), State Bank of Hyderabad, Kachiguda, Hyderabad and two others. .....RESPONDENT(S) THE HON'BLE SRI JUSTICE NOUSHAD ALI W.P.No.6484 of 2002 ORDER: Assailing the Distraint order of the first respondent dated 03-04- 2002 issued under the provisions of the A.P.Revenue Recovery Act, 1864 (for brevity ‘the Act’), this writ petition has been filed. 2. The brief facts to the extent relevant to this writ petition are that the petitioner sought for loan under the Prime Minister’s Rozgar Yojana (PMRY) Scheme, 1994-95 (for brevity ‘the Scheme’) and applied for the same to the 3rd respondent herein. The petitioner was selected as a beneficiary of the scheme for setting up a photocopy machine. The scheme appears to be for providing bank loan to an extent of 80% of the cost of the unit, 15% subsidy from the Government and the balance 5% is the margin money to be borne by the beneficiary. The petitioner availed the term loan for a sum of Rs.95,000/-. The 2nd respondent-bank by letter dated 23-11-1994 informed the petitioner about the sanctioned loan amount of Rs.1.00 lakh and by a further letter dated 18-01-1995 indicated the loan component, consisting 15% subsidy and 5% margin money. In the said letter, it was also indicated that the repayment of the loan should be paid @ 1150/- per month in 84 monthly instalments commencing from April 1995 with a condition that the machinery should also be insured. 3. It appears that the petitioner did not adhere to the payments and became a defaulter. The 2nd respondent-bank received a sum of Rs.16,000/- on 30-03-1996 towards the insurance claim and the same was credited to the loan account. The 2nd respondent bank by letter dated 14-05-1996 appraised the petitioner that due to non-payment of the loan amount, the account had been classified as sub-standard/NPA and called upon the petitioner to deposit the over due amount of Rs.17,554/- plus interest as on 01-10-1995 out of the outstanding amount of Rs.90,534/-, indicating further that in default, necessary legal action would be initiated for the recovery of the over dues/regularization/adjustment of account. The petitioner appears to have responded by letter dated 01-07-1996 explaining that the machine was not properly working and that she would repay the loan amount in due course of time. On the failure of the petitioner to repay the amount despite the undertaking as per the letter dated 01-07-1996, it appears as evident from the counter affidavit filed on behalf of the 2nd respondent that the petitioner was called upon to regularize the loan account and pay the instalments overdue. The petitioner failed to do so. The 1st respondent invoked the provisions of the Act and issued distraint order dated 03-04-2002 and called upon the petitioner to discharge the amount due for Rs.1,57,874/-. This order is impugned in this writ petition. 4. Heard the learned counsel for the petitioner. None appeared for the respondents. While respondentNo.2 has filed counter, respondents 1 to 3 failed to do so. 5. The sole and substantial contention of the petitioner is that the debt has become time barred and, as such the same cannot be recovered resorting to the provisions of the Act. This contention is based on the assertion that the loan was sanctioned in the year 1995 and the distraint order was passed in the year 2002, after a lapse of approximately seven years. The learned counsel elaborated his submission on this aspect and contended that admittedly the petitioner, although, availed the loan in the year 1995, did not repay a single instalment. He relied on the counter affidavit of the 2nd respondent- bank, wherein the 2nd respondent-bank admitted that the petitioner never paid the instalments as agreed except the insurance claim of Rs.16,000/- which was received and credited to the loan account on 30-03-1996. From this learned counsel asserted that, reckoning from the said date, as admitted by the 2nd respondent, the debt became time barred. Alternatively, the learned counsel referred to the letter dated 14- 05-1996 of the 2nd respondent, whereby, the petitioner was appraised that the account was classified as N.P.A. and the petitioner was called upon to make the payment of over due amount within seven days, reckoning from which date also, the debt became time barred. The learned counsel further submitted that this Court could go into the question of limitation and adjudicate the matter even in the exercise of extraordinary jurisdiction under Article 226 of the Constitution of India. The learned counsel in order to support his contention relied on the decision of this Court in N.A.Radha and others Vs. State of Andhra Pradesh and others[1]. 6. In order to appreciate the aforesaid contention, it is necessary to analyze the material available before this Court. The credit facility letter dated 18-01-1995 of the 2nd respondent-bank addressed to the petitioner discloses that the term loan up to a limit of Rs.95,000/- was sanctioned on condition of repayment in instalments at Rs.1150/- per month in 84 monthly instalments commencing from April 1995. In the letter dated 18-01-1995, conditions were stipulated reserving the right to amend/alter the terms and conditions or cancel/withdraw of sanction of the limit sanctioned at any time and the limits would not be operative until the documents were executed and the terms and conditions of sanction were complied with. Should the loan be not utilized for the purpose, the bank would have the option to exercise its rights on the entire loan/advance amount or any part thereof at once notwithstanding prejudice to the bank’s right to demand the loan/advance amount for violation of other terms and conditions of sanction and loan security amounts. 7. After the petitioner committed default in making instalments, the respondent-bank addressed a letter dated 14-05-1996 in which it was stated that the account became irregular/sticky and classified as sub-standard/N.P.A. It was indicated therein that the outstanding amount was Rs.90,534/- and over due amount was Rs.17,554/- (+) in. The petitioner was called upon to deposit the over due amount within seven days and in default, legal action could be initiated for recovery of the over dues/regularization/adjustment of account. In response to this letter, the petitioner addressed a reply dated 01-07-1996 expressing that he suffered loss due to break down of the machine and assured that he would start repayment after getting the machine repaired and resuming the business. As nothing emerged after 01-07-1996, the respondents issued the impugned distraint order dated 03-04-2002. It is therefore apparent that the 2nd respondent-bank did not recall the entire loan amount, instead insisted for payment of over-due amount only. 8. It is also necessary to analyze the distraint order. Therein, it was indicated that the period of arrears due is 1997-98 and the date on which the arrears fell due as 31-12-2001. As noted herein before, the petitioner sought to invoke the limitation from the year 1995 when the loan was sanctioned and initiation of proceedings in the year 2002, or in the alternative, on the basis of letter dated 14-05-1996 of the 2nd respondent, whereby, he was called upon to deposit the over due amount. It has to be noticed that the petitioner was required to repay the amount in 84 equated monthly instalments of at Rs.1150/- per month commencing from April 1995. At that rate, the instalment would extend up to March 2002. From the letter of the 2nd respondent-bank, dated 14-05-1996, it is evident as noted above that the bank was insisting for payment of only the over due amount, the 2nd respondent bank did not express that it could recover the entire outstanding amount. Therefore, the account was kept alive until the last instalment became payable. 9. It is therefore, clear that despite notice dated 14-05-1996, the bank kept the account open until the last instalment fell due in the month of March 2002. The 2nd respondent-bank did not invoke its right to recover the entire loan amount despite default and on the other hand, as is evident from the letter dated 14-05-1996 the bank was insisting only for payment/recovery of the over dues/ regularization/adjustment of account. If the 2nd respondent-bank had invoked such right and recalled the entire loan amount by the letter dated 14-05-1996, perhaps it could be said that the entire loan amount fell due on 14-05-1996 and the limitation would have to be reckoned from the said date. In such an event it could have been said that the bank waived its right to keep the account alive till the last instalment fell due and by doing so, cannot claim limitation on the basis of the last instalment. 10. From the aforesaid analysis of the letters dated 18-01-1995 and 14-05-1996, it is not possible to accede to the contention of the petitioner that the debt is time barred based on the fact that the alleged arrears fell due in 1997-98 as noted in one of the columns of the distraint order. The petitioner, in fact, had an effective alternative remedy as provided in Section 59 of the Act to institute a suit in the civil Court against the distraint order which he failed to invoke, perhaps for the obvious reasons of getting over of the limitation of six months to institute such suit against the distraint order and also to obviate establishing the essential facts by adducing necessary evidence. 11. Reference has to be made to a Judgment of learned Division Bench of this Court in Jillellamudi Dhana Lakshmi V. Union of India[2]. The appellant therein applied for a loan on 22-06-1973. After it was sanctioned, the appellant executed a promissory note and hypothecation bond on 13-07-1973. The hypothecation bond provided that if any default was committed in payment of loan under the agreement of hypothecation, or any part thereof, the entire loan outstanding should become forthwith due and payable. The appellant, however, failed to pay instalment which fell due on 25-11-1975 or on the alternative date on 30-06-1976 and the subsequent instalments as well. The 2nd instalment fell due on 30-06-1977 and 3rd instalment became due on 30-06-1978. The bank, therefore, gave notice dated 05-05-1979 to discharge the loan along with interest and on the failure, the bank filed the suit on 31-03-1980. In the circumstances, the learned Division Bench held: “A loanee cannot compel the creditor to proceed against them on the happening of the first default and that no person can be permitted to take the benefit of his own default; the option is that of the creditor. He at his option is entitled either to claim the whole amount on default of payment of any instalment or to waive the default and receive the instalment after the due date by waiving the right to claim the whole amount and allow the loanee to pay the amount which had fallen due in instalments as per the agreement. Whether the creditor has waived his right of recovering the whole amount due to the default of the loanee in non-payment of the instalment, is a mixed question of fact and law.” 12. The learned Division Bench thus held that If there is a condition that the whole amount would be recalled in case of default unless the creditor has waived this condition, limitation is not extendable and if there is no condition to that effect either expressly or impliedly then the option is that of the creditor. 13. Upon the above ratio to the present case, and as per the analysis herein before made with reference to the material placed before this Court, there is nothing to show the existence of condition as to the recalling of the whole of the amount in the case of default. The letter dated 14-05-1996 also does not show that the 2nd respondent- bank waived its right. On the other hand the distraint order dated 03-04- 2002 would show that 31-12-2001 as the date on which the arrears fell due. Even the letter dated 14-05-1996 does not indicate the intention of the second respondent-Bank even impliedly to recall the entire loan amount, but instead the petitioner was called upon to deposit the overdue amount and in the event of failure to initiate legal action for recovery of the over dues/regularization/adjustment of account. 14. As noted hereinbefore the loan amount was repayable in 84 monthly instalments commencing from April, 1995. At that rate, the last instalment would fall due in the month of March, 2002 and each of the instalments preceding March, 2002 would fall due corresponding to every month prior to March, 2002. Since the loan is payable in instalments and the second respondent bank did not intend to collect the entire loan amount in advance, each instalment is recoverable which fall within limitation in respect of each such instalment due. Calculated from this angle, the instalments due and payable from the month of May, 1999 cannot be said to have been time barred. Therefore, in any event the contention of the petitioner that the debt has become time barred cannot be accepted. 15. The learned counsel cited judgment of this Court in N.A.Radha’s case (1 supra). The facts therein are that a term loan was sanctioned to a partnership firm in the year 1971 and no payment towards instalment or interest was paid. The property was proposed to be sold on 11-03-1986. As the unit could not be disposed of, provisions of Section 52-A of the Act were invoked after waiving demand notice, dated 05-10-1988. It was contended that the claim was barred by limitation by 05-10-1988. In the said facts situation of that case, it was held that the claim was barred by limitation. However, the facts in the instant case are apparently different and I am of the opinion that the judgment cited is not applicable to the facts of this case. 16. In the above analysis the Writ Petition is devoid of merits and the same is liable to be dismissed. No order as to costs. 17. Accordingly, the writ petition is dismissed. _________________ NOUSHAD ALI, J. Date : 23-04-2010. KVR [1] 2002(2) A.L.D. 60 [2] 1992 (1) A.L.T. 696