Himachal Pradesh Financial Corporation vs Himachal Lithographers

Dharam Chand Chaudhary, J.—Challenge herein is to that part of the judgment and decree dated 22nd July, 2005 passed by learned District Judge, Shimla in Civil Suit No. 10-S/1 of 2004/89 whereby learned trial court has declined to decree the suit for the recovery of Rs. 2,58,886.12 claimed by the appellant, hereinafter referred to as ''the plaintiff'' towards interest allegedly accrued upon the loan amount due and payable by the respondents, hereinafter referred to as ''the defendants'' during the period 1985 to 1988.

That part of the judgment and decree under challenge in this appeal has been sought to be quashed and set aside which reduces the decretal amount by Rs. 2,58,886.12, as aforesaid and the suit has been sought to be decreed for the recovery of whole amount, i.e. Rs. 8,23,235.15 together with future and pendente lite interest on the ground that for learned trial court there was no occasion to have reduced the amount sought to be recovered in the plaint. As per further case set out in the memorandum of appeal, it has been submitted that the defendants were liable to repay the outstanding loan amount together with interest upto date and resorting to a particular mode to recover the same from the defendants is immaterial and, as such, withholding a sum of Rs. 2,58,886.12 from the suit amount on the ground that the plaintiff has resorted to the mode of recovery of loan amount by moving to the Collector, to recover the same from the defendants instead of the mode of recovery prescribed under Section 29 of the State Financial Corporations Act, 1951 (hereinafter referred to as ''the Act'' in short), is immaterial. In this regard, it has further been submitted that the plaintiff-Corporation was well within its right to resort to the recovery of the loan amount from the defendants by way of initiating proceedings before Collector in this behalf.

It is seen that the defendants have raised term loan from the plaintiff-Corporation to the tune of Rs. 2,28,000/- and soft loan to the tune of Rs. 25,000/- on 16.12.1980 and 1.6.1981 for purchase of plant and machinery to set up an industrial unit at Shimla. The loan was sanctioned on execution of the agreement and hypothecation deed etc. The defendants seem to have become irregular in repaying the loan amount. This has led in issuance of notices to them with the command to repay the outstanding loan amount within the specified period, failing which to face the proceedings proposed to be initiated for recovery of the same in the court of law. The defendants, however, failed to repay the outstanding loan amount on the receipt of legal notice also. This has led in initiation of proceedings qua recovery of the loan amount against the defendants before Collector, Shimla in the year 1982. It is during the currency of the said proceedings, the possession of the unit of the defendants with all assets was taken over by the Collector from them and entrusted to the plaintiff-Corporation on superdari . The unit and machinery installed therein remained sealed during the period 1985, 1986 and 1987. Instead of taking the proceedings initiated before the Collector to its logical end, the same were ultimately withdrawn in January, 1988 and the mode of recovery of the loan amount envisaged under Section 29 of the Act resorted to. Consequently, the possession of the plant and machinery as well as hypothecated goods was taken over by the plaintiff-Corporation and sold in an open auction. After the adjustment of the sale proceeds towards loan amount outstanding against the defendants, the suit was filed for the recovery of the remaining amount plus interest, i.e. Rs. 8,23,235.15 in this Court. The same, however, later on was transferred to the court of learned District Judge, Shimla on enhancement of the pecuniary jurisdiction of the Courts of Distract Judges in the State.

The defendants contested the suit on several grounds, however, mainly that the plaintiff in league with the landlord of the defendants kept them involved in criminal and civil litigation and thereby not permitted them to carry on their business. On account of loss in the business, the installments towards repayment of the loan amount as agreed upon could not be deposited well in time. While admitting that the plaintiff had taken over the assets of the defendants, it is averred that on account of failure of the plaintiff to put the same for sale well in time has caused loss to the defendants. Also that the assets later on were sold at very low price. Had the assets of the defendants been sold in time, the same would have fetched sufficient amount to discharge their liability. Replication was also filed.

The pleadings of the parties on both sides have culminated in framing of the following issues:-

Whether the suit has been filed by the plaintiff''s Corporation through a competent person to do so? ...OPP.

Whether the suit is within limitation, as alleged? ...OPP.

Whether the defendants'' liability stands discharged because of in-action of the plaintiff''s Corporation in not having recovered their loan amount through the sale of attached goods, as alleged? ...OPDs.

Whether the plaintiff''s Corporation is entitled to recover the suit amount or any other amount from the defendants? ...OPP.

Relief.

Learned trial judge after holding full trial has decreed the suit partly for the recovery of Rs. 5,64,349.03. The suit has not been decreed for the sum of Rs. 2,58,886.12 on the grounds that the plaintiff-Corporation was not entitled to claim interest over the outstanding amount for the period 10.1.1985 to 9.1.1988 when the proceedings initiated for recovery of the loan amount against the defendants before Collector, Shimla remained pending for disposal and instead of taking the same to its logical end, were ultimately withdrawn. It is this part of the judgment and decree under challenge has been sought to be quashed and set aside.

On hearing learned counsel representing the parties on both sides and also going through the record, there is no quarrel qua initiation of the proceedings for recovery of outstanding loan amount against the defendants before Collector, Shimla in November, 1982. It is during the course of these proceedings, learned Collector has taken over the possession of the assets of defendant No. 1, i.e. plant, machinery and also the hypothecated goods on 28.1.1985. The custody thereof was entrusted to the plaintiff-Corporation on superdari . The plant, machinery and goods remained in possession of the plaintiff during the period 1985 to 1988.

True it is that the plaintiff-Corporation was at liberty to have resorted to any prescribed mode for recovery of the loan amount including initiation of recovery proceedings before the Collector. Such proceedings, however, should have been taken to its logical end and the assets, i.e. plant and machinery of defendant No. 1 which were taken over during the currency of such proceedings sold at the earliest available opportunity to adjust the sale proceeds towards the outstanding loan amount in order to avoid increase of the outstanding loan amount by way of interest etc. In the case in hand, the assets including the hypothecated goods of defendant No. 1 were taken over by the Collector in the year 1985 and entrusted on superdari to the plaintiff. The same remained with the plaintiff till sold under Section 29 of the Act because the withdrawal of proceedings initiated before Collector was followed by initiation of the proceedings under Section 29 of the Act. The defendants are, therefore, absolutely justified in claiming that instead of initiating the proceedings before Collector and allowing the same to remain pending till 1988 without resorting to the proceedings under Section 29 of the Act has resulted in mis-carriage of justice to them for the reason that had the proceedings for recovery of loan amount envisaged under Section 29 of the Act been initiated at the earliest available opportunity, the liability of the defendants by way of interest etc. would have not mounted considerably. Learned trial court while declining the decree of the suit amount to the tune of Rs. 2,58,886.12 has relied upon the statement of accounts Ex. P-17. It is seen from this document that during the period from 10.1.1985 to 9.1.1988 when the proceedings for recovery of the loan amount against the defendants remained pending before Collector, the interest accrued upon this amount during this period as is apparent from the perusal of the statement of accounts, Ex. P-17 is Rs. 2,58,886.12. Had the mode to recover the loan amount envisaged under Section 29 of the Act been resorted to at the best available opportunity, i.e. initiation of proceedings before Collector and sold as well as the sale proceeds appropriated towards adjustment of the loan amount, the interest amount as above would have not been added in the loan amount due and payable at that stage. Therefore, the defendants cannot be saddled with the liability to pay this uncalled for amount. Learned trial court has, therefore, not committed any illegality or irregularity by decreeing the suit partly and declining the decree of the suit amount to the tune of Rs. 2,58,886.12. The plaintiff is entitled to the recovery of the suit amount minus Rs. 2,58,886.12. The reduction in the suit amount by the trial court while decreeing the suit is not only legally but factually sustainable. The plaintiff, therefore, is not entitled to recovery of Rs. 8,23,235.15 against the defendants, but a sum of Rs. 5,64,349.03 only.

In view of the above discussion, the appeal being devoid of any merit is accordingly dismissed. Pending applications, if any, shall also stand disposed of. No order so as to costs.