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Judgment
N. Paul Vasanthakumar, J.—The prayer in this writ petition is to issue a Writ of Mandamus forbearing the respondents from levying and
recovering the commercial rate of interest for the petitioner''s Staff Housing Loan sanctioned in F. No. 29/28, dated 23.7.1980 or recovering
overdue interest on his agricultural loan sanctioned in No. 71/124, dated 11.6.1981.
The case of the petitioner is that the petitioner was appointed in the service of the respondent bank on 3.2.1975 as Shroff-cum-Godown
Keeper and posted at Madurantakam Branch. On 1.7.1988, he was promoted as Special Assistant and transferred to Acharapakkam Branch. In
the year 1991, he was re-transferred to Madurantakam Branch and he served in the said branch upto 31.1.2001, i.e till the date of his voluntary
retirement.
The petitioner while in service, applied for a Staff Housing Loan to the bank in the year 1980 and the same was sanctioned by order of the
fourth respondent dated 23.7.1980. As per the sanction order, the petitioner has to repay the sanctioned loan of Rs. 50,000/- in twenty five years
through deduction in salary at the rate of Rs. 235/- per month. For first 100 months, Rs. 285/- per month for the next 100 months, and at the rate
of Rs. 235/- for the remaining period. The said housing loan was sanctioned with a simple interest at the rate of 4%. The petitioner availed the first
stage of loan of Rs. 20,000/- on 4.8.1980 to carry out the construction work upto the basement level and availed the second stage of Rs.
15,000/- on 26.2.1981. The petitioner purchased construction materials like cement etc., and timber for window and door frames.
According to the petitioner, due to sudden rainfalls the building materials got damaged and therefore, he could not complete his house
construction. Even subsequently, he could not complete the house due to illenss of the petitioner''s wife, the death of the petitioner''s father-in-law.
Since the construction was not further made, he has not availed the third stage loan of Rs. 15,000/-. Thus, the petitioner availed only a sum of Rs.
35,000/- as loan from the respondent bank. From February, 1982 onwards the repayment of instalments began. The petitioner submitted a
representation to reduce the rate of instalment due to his family difficulties and consequently, the Central Office reduced the monthly payment from
Rs. 235/- to Rs. 165/- per month, which the petitioner paid. The petitioner also obtained agricultural loan from the respondents for a sum of Rs.
31,900/- to irrigate the petitioner''s agricultural lands.
The petitioner after his voluntary retirement apprehended that the respondent bank will levy commercial rate of interest from the date of sanction
of the loan and therefore filed the above writ petition.
The respondents have filed a counter affidavit by stating that as per condition No. 11, of accepting voluntary retirement, the petitioner has to be
relieved on 31.1.2001 and the branch should sent copies of the relieving letter to Settlement Section, Pension Cell, Regional Office,
Kancheepuram and subject to closure of Staff Housing Loan with commercial rate of interest and recovery of crop loan with overdue interest, the
petitioner will get the terminal benefits. The petitioner accepted the said condition by accepting the copy on 29.1.2001 and he was relieved on
31.1.2001. The petitiner having agreed, he is not entitled to challenge the commercial rate.
Additional counter affidavit was also filed by the respondents by stating that the petitioner availed a sum of Rs. 35,000/- as housing loan in two
stages. The repayment was re-scheduled at the rate of Rs. 165/- per month from his salary from February, 1982 onwards. The monthly amount
deducted from the petitioner''s salary was credited towards principal, and interest accrued at the concessional rate was calculated on the principal
outstanding every month on simple interest separately. Interest was not debited to the loan account. The simple interest accrued will be recovered
without interest on the amount. These concessions have been withdrawn in the case of the petitioner, since the petitioner did not utilise the loan for
the purpose to which it was sanctioned.
It is also stated in the additional counter affidavit that the petitioner has not liquidated the loan in full with commercial rate of interest as
demanded by the bank. The bank continued to allow the concession, the principal amount of Rs. 35,000/- was liquidated on 19.10.2000. The
interest accrued at the concessional rate of 4.25% per annum as on 31.1.2001 on which date the petitioner was relieved on voluntary retirement
scheme, was Rs. 15,750/-. The petitioner was relieved under voluntary retirement scheme by proceedings dated 29.1.2001 subject to closure of
Staff Housing Loan at commercial rate of interest. Out of the terminal benefits, Provident Fund was adjusted towards other loans and gratuity
amounting to Rs. 2,11,065/- was not released and kept in sundry creditors account of Madurantakam Branch towards dues under the Staff
Housing Loan and Agricultural Loan on 23.6.2001.
It is further stated in the counter affidavit that as on 16.8.2008, the amount payable by the petitioner towards staff housing loan at the
commercial rate of interest works out to Rs. 12,92,180/-. With regard to agricultural loan, it is stated that on 18.11.2008, the petitioner had
addressed a letter to the respondent-bank undertaking to remit a sum of Rs. 87,543/- towards closure of the loan from the terminal benefits and on
22.11.2008, the respondent-bank accepted the proposal submitted by the petitioner.
The learned Counsel for the petitioner submitted that the petitioner having been sanctioned the housing loan for a sum of Rs. 35,000/- on 4%
interest as he was employed in the respondent bank and the petitioner having been paid the monthly instalments towards adjustment of principal
sum and the petitioner having voluntarily retired from service on 31.11.2001, the respondents are not entitled to demand commercial interest from
February, 1982 and they can only calculate the commercial rate of interest, which was due as on 1.2.2001. In so far as the agricultural loan
sanctioned to the petitioner is concerned, as per the loan waiver benefit given by the Government of India, the petitioner is not entitled to repay the
same and therefore, the respondents are bound to pay the balance, which is withheld from the gratuity or adjusting the amount due towards interest
payable to the housing loan from 1.2.2001.
The learned Counsel for the respondents submitted that the petitioner having voluntary retired from service with effect from 31.1.2001, the
bank calculated interest on commercial rate from February, 1982 and calculated a sum of Rs. 12,92,180/- payable by the petitioner as on
16.8.2008. The petitioner''s gratuity amount, a sum of Rs. 2,11,065/- is withheld due to the non-payment of housing loan as well as agricultural
loan dues. The learned Counsel also submitted that in so far as the agricultural loan is concerned, the petitioner need not pay the same due to the
waiver given by the Central government.
I have considered the rival submissions made by the learned Counsel for the petitioner as well as the learned Counsel for the respondents.
The question arises for consideration in this writ petition is as follows:
i) whether the respondents are justified in demanding commercial interest for the housing loan sanctioned to the petitioner when the principal was
repaid as early as on 19.10.2000?
ii) Whether the respondents are justified in demanding commercial rate from February, 1982 and not from 1.2.2001?
Admittedly, the petitioner was sanctioned with the housing loan amount of Rs. 50,000/- on 23.7.1980 with 4% interest and he availed a sum of
Rs. 35,000/- and the respondents also sanctioned agricultural loan and the agricultural loan has been waived, which is admitted by the respondents
in this case. Now, this Court is concerned with the loan sanctioned to the petitioner towards housing loan.
The petitioner availed a sum of Rs. 35,000/- out of sanction of Staff Housing Loan of Rs. 50,000/-. The repayment commenced from
February, 1982. As per the rescheduled payment, the respondents are bound to deduct Rs. 165/- per month proportionately from petitioner''s
salary from February, 1982. It is also admitted in the counter affidavit that the petitioner being an employee of the bank, the monthly instalment
deducted from his salary goes to liquidate the principal loan and interest at the concessional rate is calculated on the principal outstanding every
month as simple interest and kept separately as interest accrued. After the liquidation of the principal, the monthly instalment will be credited to the
outstanding accrued interest. Thus, the simple interest accrued on the reducing balance will be recovered without any interest on the amount.
Though it is stated in the counter affidvit that those concessions have been withdrawn in the case of the petitioner as the petitioner did not utilise
the loan for which it was sanctioned, no order was passed by the respondents. It is not stated in the counter affidavit that the entire principal
amount of Rs. 35,000/- was liquidated as early as on 19.10.2000, and the interest accrued as on 31.1.2001, the date on which the petitioner was
relieved on voluntary retirement scheme, was Rs. 15,750/-.
The petitioner has filed the writ petition on 9.2.2001, which was admitted by this Court on 13.2.2001. The prayer in the writ petition is to issue
a writ of mandamus forbearing the respondents from levying and recovering the commercial rate of interest for the petitioner''s Staff Housing Loan
sanctioned on 23.7.1980. Interim injunction was granted by this Court, which was also vacated by this Court on 4.10.2001.
From the additional counter affidavit filed in January, 2009, it is clear that even before the petitioner''s retirement, he has liquidated the entire
principal amount as early as on 19.10.2000 and the amount accrued towards interest as on the date of retirement was only Rs. 15,750/-.
The facts having not been disputed as per the additional counter affidavit, I have directed the respondents to state as to how a sum of Rs.
12,92,180/- was arrived at which according to the respondents is payable by the petitioner.
The learned standing counsel for the respondents produced a calculation memo, wherein commercial rate of interest is calculated from the date
of sanction i.e. from 4.8.1980 for Rs. 35,000/-. As per the above calculation, the following amounts are arrived at:
As on 31.10.1982- Rs.49,466/-
31.12.1986- Rs.82,369/-
31.12.1988- Rs. 1,07,412/-
31.12.1990- Rs. 1,41,323/-
31.09.2000- Rs. 4,91,953/-
31.01.2001- Rs. 5,12,326/-
31.08.2008- Rs. 12,68,272/-
21.It is relevant to note that as per the additional counter affidavit filed by the Deputy General Manager, it is stated that as on 31.1.2001, the
amount payable by the petitioner was only Rs. 15,750/-. The petitioner having been in service till 31.1.2001 and the principal amount having been
paid as early as on 19.10.2000, the respondents can claim commercial rate of interest from the petitioner only from 1.2.2001 for the said sum of
Rs. 15,750/- only. Even though the loan sanction order of the petitioner was not produced before this Court, a model sanction order was shown,
wherein it is stated that if an employee is ceased to be an employee of the bank on any circumstance, the whole of the said loan or such part
thereof as is still outstanding together with interest due thereon shall immediately become payable on all sums due at the rate as a bank normally
charge from any other borrower from time to time.
The above clause also clearly states that the amount payable to the bank shall become payable at such rate as any other borrower. The
petitioner having cleared the principal amount of loan as early as on 19.10.2000 and the amount payable on his voluntary retirement date towards
interest being Rs. 15,750/-, the respondents are justified only in claiming commercial rate of interest for the said amount and not the amounts
already paid. On the basis of the above finding, the statement made by the respondents in the counter affidavit that as on 16.10.2008, the
petitioner is liable to pay a sum of Rs. 12,92,180/- towards Staff Housing Loan cannot be sustained.
The learned Counsel for the respondents submitted that the bank is liable to pay a sum of Rs. 2,11,065/- towards the gratuity payable to the
petitioner and the accrued interest for the said amount from 31.1.2001 to 30.6.2009 comes to Rs. 1,36,234/- and the total amount payable to the
petitioner by the bank is Rs. 3,44,299/-.
The respondent bank is not at all justified in demanding a sum of Rs. 12,92,180/- from the petitioner, who is liable to pay a paltry sum of Rs.
15,750/- as on 31.1.2001. The housing loan availed by the petitioner was for a sum of Rs. 35,000/-. The entire principal amount was repaid as
early as on 19.10.2000. Taking such a stand before this Court discloses the mindset of the officials of the bank even after bank nationalisation.
Admittedly, the respondents withheld the gratuity amount of Rs. 2,11,065/- which is payable to the petitioner as on 31.1.2001. The officials of the
respondent-bank shall realise that money is valuable not only for the bank, but also to all persons including the petitioner. The attitude of the bank
cannot be approved as it is capricious, unreasonable and arbitrary.
In view of the above finding, this writ petition is disposed of with a direction to the respondents to arrive at the amount payable by the
petitioner after calculating (adding) the appropriate commercial rate of interest for the sum of Rs. 15,750/-, being the amount payable by the
petitioner as on 1.2.2001. On arriving such amount, the same shall be deducted from the amount payable to the petitioner by the respondents,
which is withheld from his gratuity amount. The respondents are also directed to pay interest for the gratuity amount as per the provisions of the
Payment of Gratuity Act, 1972 and Rules framed thereunder. The said exercise shall be completed and difference in amount shall be paid to the
petitioner, within a period of two weeks from the date of receipt of copy of this order. No costs.