THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.No.7688 of 2008 ORDER: This writ petition is filed seeking a Mandamus declaring the action of the first respondent in charging excessive rate of interest while recovering the amount from the petitioner towards loan account bearing No.73/2000 (Purani Haveli Branch) and overdraft account contrary to clause 5 of G.O.Ms.No.4 dated 27.2.2003 as modified by the One Time Settlement scheme dated 22.1.2005 as arbitrary and illegal and consequently direct the first respondent to refund the excess amount charged with interest from the date of recovery till the date of payment. The first respondent is a Bank registered under the A.P. Cooperative Societies Act, 1964 (for short ‘the Act’). It was started in August, 1985 and had grown rapidly by the year 2001. It became a Scheduled Bank in February, 2000 and was dealing in Foreign Exchange in June, 2001. The bank suffered liquidity problem in the year 2001 and its Chairman committed suicide on 25.2.2002, which resulted in a situation of panic among the depositors. The second respondent superceded the Board of the Bank and an Administrator was appointed to manage the affairs of the Bank on 2.3.2002. The State Government had decided to frame a scheme for revival of the Bank and accordingly, in exercise of the powers under Section 115-B of the Act with the previous sanction of Reserve Bank of India, had notified a scheme for reconstruction of the Bank through G.O.Ms.No.4 dated 27.2.2003. As per the One Time Settlement (OTS) which is in force since 22.1.2005, the Bank has to charge simple interest @ 18% per annum from the date of disbursement of the loan to 31.3.2000 after adjusting repayment on the crystallize amounts and thereafter, 11% simple interest from 1.4.2000 to 31.12.2004 on the crystallized amounts. According to the petitioner, he has paid the entire outstanding loan amount in one lumpsum and for that, the Bank has charged interest 18% per annum, which is contrary to the scheme evolved under G.O.Ms.No.4 dated 27.2.2003 and the Memo issued by the Government on 22.1.2005. Hence this writ petition. When the Charminar Bank Depositors’ Association filed Writ Petition No.12233 of 2005, this Court, while admitting the said writ petition on 17.6.2005, granted Status quo as regards the final settlement of OTS terms shall be maintained until further orders. The said order was modified on 7.10.2005 to the effect that the Bank is at liberty to enter into OTS scheme with the borrowers in accordance with the scheme prepared by the Reserve Bank of India subject to the permission of the Court. This Court permitted the Bank to enter into settlement with the borrowers under the modified OTS scheme as approved by the Reserve Bank of India through letter dated 2.6.2005 subject to obtaining necessary security from the borrowers towards the differential amount i.e. the amount payable under G.O.Ms.No.4 dated 27.2.2003 and the amount payable under the modified OTS. Petitioner approached the Bank for settlement of his account on 5.10.2006 and the Bank directed the petitioner to pay Rs.2.50 crores and Rs.23.00 lakhs respectively towards loan account and overdraft account. According to the petitioner, he had paid an amount of Rs.65,49,744/- to the bank in excess. The bank has to charge interest @ 11% per annum simple interest as per clause 5 of the said G.O. and the petitioner was also entitled for a rebate of 25% for repaying the entire amount in one lumpsum. Ultimately, the prayer of the petitioner is that in view of issuance of G.O.Ms.No.4 dated 27.2.2003 and the modified scheme vide Memo No.1901/Coop.III/1/2004-8 dated 22.1.2005, he is liable to pay only 11% simple interest instead of 18% simple interest as collected by the respondents. A detailed counter affidavit has been filed by the first respondent- Bank denying the allegations made by the petitioner. Further, it is stated that the petitioner availed term loan vide Account No.73/2000 for an amount of Rs.1,05,00,000/- on 6.10.2000. The petitioner also availed cash credit vide Account No.1 of Mehdipatnam branch for an amount of Rs.10,00,000/-. When the petitioner defaulted in making repayments, first respondent initiated arbitration proceedings vide A.R.C.No.28/2003 and after due contest of the matter, Arbitrator passed award on 27.5.2003 directing the petitioner to pay an amount of Rs.1,39,49,924/- as on 31.3.2002. Further, when the petitioner did not pay the amounts in terms of the award dated 27.5.2003, first respondent initiated execution proceedings vide E.P.No.40 of 2003. In pursuance thereto, the property of the property which was mortgaged as security with the first respondent- Bank was brought to sale and the same was auctioned on 6.9.2006 for a highest bid amount of Rs.3,27,00,000/-. In fact, petitioner approached the first respondent Bank on 3.10.2006 two days prior to confirmation of sale and offered to settle both the loan accounts in two instalments. After verifying the due amounts, petitioner paid an amount of Rs.2,50,03,916/- and Rs.23,00,000/- on 5.10.2006 towards demand loan as well as cash credit loan towards full and final settlement. Petitioner did not claim settlement of his loan accounts under any particular scheme and made the payments. As an after thought, he filed the present writ petition. The petitioner never approached the bank as stated by him on 5.10.2006. In fact, he approached the Bank on 3.10.2006 itself and sought for settlement of his accounts. The petitioner has not assigned any reasons for the delay of two years in approaching this Court. The learned counsel for petitioner strenuously contended that the petitioner is liable to pay only 11% simple interest instead of 18% simple interest since the same was modified in the reconstruction and revival of the Charminar Cooperative Urban Bank Ltd., vide G.O.Ms.No.4 dated 27.2.2003. Clauses 4 and 5 of the said G.O. reads as under: “4. The balances in all savings bank accounts, current accounts and recurring deposit accounts will be treated at par with term deposits and their repayment will also be regulated accordingly. 5. Collection of advances: (a) The bank will re-calculate simple interest on all loan accounts, from the date of disbursement to the date of reconstruction @ 18% p.a. simple and arrive at the crystallized amount of overdue principal and interest after adjusting the repayments made by the borrower till date. (b) Those borrowers, who opt for OTS and settle the account by paying the entire crystallized amount in one lumpsum during the currency of OTS scheme will be given a further rebate of 25% on the interest component in the crystallized amount. (c) Those who pay 20% upfront and balance 80% of the crystallized amount due in account with a period of 6 months will get a further rebate of 10% on the interest component payable by them. (d) The borrowers not availing the above mentioned 2 options will have their accounts rescheduled to be payable in 35 monthly instalments which will carry interest @ 15% p.a. (e) The interest waiver/concessions will in no case make the outstandings in the borrowers account negative. (f) The share capital contribution of the loanee will be adjusted against the loan account after taking borrowers consent. (g) In case any borrower fails to pay the agreed amounts, the amount paid/collected by the Bank will be adjusted against interest dues first and then against the principle thereby revoking the OTS given earlier. (h) The bank will design suitable documentation covering the above points and enter fresh agreements, while sanctioning the OTS.” The learned counsel further contended that since the petitioner has paid the entire crystallized amount in one lumpsum, he is entitled to the benefits of reconstruction scheme i.e. reduction of interest @ 11% p.a. Further in Memo No.1901/Coop.III/1/2004-8 dated 22.1.2005, it was further clarified that simple interest to be charged at 18% p.a. from the date of disbursement to 31.3.2000 after adjusting repayments and to crystallize the amount. 11% simple interest is to be charged from 1.4.2000 to 31.12.2004 on the crystallized amount. The borrowers should give applications within one month along with down payment of 10% crystallized amount. The entire amount has to be repaid on or before 31.3.2005 along with 11% simple interest from 1.1.2005. Whereas, the respondent Bank has charged interest @ 18% p.a. from the date of disbursement till the date of repayment, therefore the same is arbitrary and illegal. The learned counsel appearing for first respondent-Bank reiterated the same stand as was taken in the counter and further stated that the question of applicability of 11% interest p.a. to the case of petitioner does not arise. The petitioner never raised such a question at any point of time. Further, he did not clear the amounts in the OTS scheme. When the property of the petitioner was sought to be sold, he came forward and of course, paid the entire amount, therefore he is not entitled for claiming 11% simple interest from 1.4.2000 till the date of payment. Such reduction of interest is available only in cases of crystallized amount under OTS settlement and not otherwise. Therefore, the writ petition is devoid of merits and liable to be dismissed. I have given my earnest consideration to the respective submissions made by the learned counsel on either side and perused the material made available on record. There is no necessity of going into all the details. It is suffice to notice that when the property of the petitioner was sought to be sold in view of arbitration proceedings, he came forward and paid the entire amount on 3.10.2006 before confirmation of sale i.e. crystallized amount contemplated in the reconstruction scheme read with Government Memo dated 22.1.2005. Therefore, it cannot be said that the scheme evolved in G.O.Ms.No.4 dated 27.2.2003 is not applicable to the petitioner. A person who came forward and paid the entire crystallized amount in one lumpsum cannot be denied the benefit of such reduction in interest chargeable when the OTS scheme is in vogue. The persons who availed the OTS scheme and whose amounts were crystallized, they were charged with interest @ 11% p.a. and not 18% p.a. Petitioner cannot be treated separately from those who have come forward to avail the OTS scheme. What all needs to be seen is that under reconstruction scheme evolved under G.O.Ms.No.4 dated 27.2.2003 read with Government Memo dated 22.1.2005, whether the amount is crystallized and whether the OTS scheme was in vogue as on the date when the petitioner was directed to pay the amounts. Looking from any angle, the approach made by the Bank in collecting interest @ 18% p.a. from the petitioner instead of extending benefits of G.O.Ms.No.4 dated 27.2.2003 and the Memo dated 22.1.2005 to him, is arbitrary and illegal. A reading of the above, it would clearly emerge that the petitioner also stands on the same footing as that of the persons who had availed OTS scheme. Since the petitioner has deposited the entire crystallized amount in one lumpsum, he is entitled for reduction of interest @ 11% p.a. and as such collecting interest @ 18% p.a. from the petitioner is arbitrary and illegal. For the foregoing reasons, I deem it appropriate to direct the first respondent-Bank to reconsider charging interest @ 11% p.a. on the amounts paid by the petitioner and pass appropriate orders as per law, and communicate the same to the petitioner. The writ petition is accordingly disposed of. No order as to costs. _____________ C.V.RAMULU, J Date: 6.4.2009 DA THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.No.7688 of 2008 6.4.2009