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Judgment
B.S. Verma, J.—Heard learned Counsel for the parties and perused the record.
Admit the petition.
By means of this writ petition, the Petitioner has sought the following relief:
I. To issue a writ, order or direction in the nature of certiorari by quashing the recovery citation dated 23.6.2009 (Annexure No. 1) issued by the Respondent No. 1 against the Petitioner for recovery of Rs. 4,03,174.50 plus other charges.
II. To issue any other writ, order or direction or grant such other further relief in favour of the Petitioner which this Hon''ble Court may deem fit and proper in the facts and circumstances of the case.
III. Award the cost of the petition to the Petitioner.
Briefly stated, the facts giving rise to the present writ petition are that the Petitioner is a proprietorship firm and Ramesh Kumar Arora is its proprietor, running the business of hosiery material. The Petitioner approached the Respondent No. 2-Bank to seek financial assistance and the Respondent No. 2 bank sanctioned the cash credit facility of Rs. 30,000/- to the Petitioner. Subsequently the cash credit limit of the Petitioner was enhanced to Rs. 2,50,000/-. The Petitioner could not maintain his cash credit facility account and the Respondent-Bank declared the account of the Petitioner as non-performing asset. The Respondent No. 2-Bank approached the Registrar, Co-operative Societies, Uttarakhand for reference u/s 70 of the Cooperative Societies Act (for short the Act) on 1.11.2002 and the Registrar by his order dated 4.6.2003 appointed the Deputy Registrar Co-operative Societies Uttarakhand as arbitrator to decide the reference under Sections 70 and 71 of the Act.
The Arbitrator (Deputy Registrar, Co-operative Societies Uttarakhand) after hearing the parties gave award of Rs. 1,77,713-45 in favour of the Respondent No. 2-Bank and directed the Petitioner to pay the said amount along with simple interest prevailing on the said date from the date of application.
It is made clear at this juncture that the application for reference was moved before the Registrar, Co-operative Societies on 1.11.2002 and the reference was made by the Registrar on 4.6.2003, therefore, the date of application shall be treated as 4-6-2003 for the purposes of payment.
According to the Petitioner, he is ready to pay the amount but it is contended that the Respondent-Bank had wrongly calculated the amount due and the amount of Fixed Deposit Receipt amounting to Rs. 34,193-34, which was forfeited by the Respondent Bank was not deducted.
On behalf of the Respondent No. 2-Bank counter affidavit has been filed. The Respondent-bank has annexed the statement of account as Annexure-3 to the counter affidavit. A perusal of the Annexure-3 reveals that on 22-2-2005 an amount of Rs. 34,193.34, which is shown at item No. 13, the amount of F.D.R. was adjusted and according to the Respondent-Bank, the outstanding amount against the Petitioner is Rs. 3,99,983.22.
It also reveals from a perusal of the statement of account annexed by the Respondent No. 2-Bank that the bank had charged penal interest also. It is made clear that the Arbitrator has not directed to charge compound/penal interest, therefore, the calculation of the Bank is prima facie wrong.
It has been vehemently contended by the learned Counsel for the Petitioner that only the civil court has jurisdiction to recover the amount of impugned award as decree of the civil court as per provision of Section 92(c) of the Act. The argument of the learned Counsel for the Petitioner is misconceived for the simple reason that admittedly the impugned award was passed for the recovery of money u/s 71 of the Act and the same has to be executed in the manner provided by law for the time being in force for the recovery of arrears of land revenue where the order is for the recovery of money as per provision laid down in Clause (a) of Section 92 of the Act.
From the material placed before this Court, the Petitioner has to pay the awarded amount of Rs. 1,77,713.45 (-) Rs. 34,193-34=1,43,520.11.
So far as the interest part is concerned, as per Section 34 of the Code of Civil Procedure, the prevailing rate of interest could be maximum @ 9% per annum in view of the Apex Court verdict in the case of C.K. Sasankan v. Dhanalakshmi Bank Ltd. 2009 (107) RD 707.
The Apex Court in the case of Central Bank of India Vs. Ravindra and Others, , while considering the provisions of Section 34 of the CPC 1908 has held in Clause (1) of Paragraph 55 as under:
(1) Though interest can be capitalised on the analogy that the interest falling due on the accrued date and remaining unpaid, partakes the character of amount advanced on that date, yet penal interest, which is charged by way of penalty for non-payment, cannot be capitalised. Further interest i.e. interest on interest, whether simple, compound or penal, cannot be claimed on the amount of penal interest. Penal interest cannot be capitalised. It will be opposed to public policy.
For the reasons and discussion above, the writ petition deserves to be partly allowed.
The writ petition is partly allowed. The amount deposited in this Court be remitted to the Respondent No. 2-Bank. The Respondent No. 2-bank is entitled to recover the amount of Rs. 1,43,520.11 from the Petitioner along with simple interest @ 9% per annum w.e.f. 4-6-2003 till payment. It is directed that the Recovery Officer shall calculate the simple interest @ 9% on the said amount from the date of reference i.e. 4-6-2003 and shall also deduct the amount deposited in this Court, which is being remitted to the Respondent-bank. The Petitioner would be at liberty to submit the calculation before the Recovery Officer and the Recovery Officer after hearing the Petitioner on the calculation whether the amount has been rightly calculated as per order of this Court shall proceed further for recovery, if the amount is due against the Petitioner. The Petitioner may move an application before the Recovery Officer within a period of four weeks from today, after supplying a copy thereof to the Respondent-Bank.