M.P. Financial Corporation vs Prakash Chandra Chaturmohta

Rajendra Menon, J.—In this appeal under Section 2(1) of the Madhya Pradesh Uchcha Nyayalay (Khand Peeth Ko Appeal) Adhiniyam, 2005, challenge is made to an order Annexure A-1 dated 10.07.14 passed by the Writ Court in W. P. No. 4541/02.

Facts in brief goes to show that the respondent Prakash Chandra Chaturmohta was a partner in the small scale industry which advanced certain loan by the Madhya Pradesh Financial Corporation for the purpose of establishing a small scale industry under the Central Investment Subsidiary Scheme sponsored by the Central Govt. The establishment by the name M/s Sailo Tiles Factory was established in village Naitra, Distt. Balaghat after obtaining loan from the appellants'' Corporation and finally, it seems that the repayment of loan was not done in accordance with the agreement entered into sometimes in the year 1999. A sum of Rs. 12.64 lacs was found to be outstanding. The matter was taken up in negotiation between the parties and finally on 21.07.99 a certificate Annexure P-4 was issued which reads as under :-

To Whomsoever It May Concern

This is to certify that a term loan of Rs. 12.64 lacs was advanced by the Corporation to M/s Sailo Tiles Factory, Village Naitra, District Balaghat. The loan account was settled at Rs. 10.91 lacs which has been paid by the firm. Now there is no outstanding against the firm and the account stands closed.

Regional Manager

As per this, it is seen that the entire outstanding amount of loan was settled for a sum of Rs. 10.91 lacs and it was indicated that all claim pertaining to the loan transaction is settled. Subsequently, it is seen that the petitioner respondent was granted certain subsidy by the Central Govt. and they were required to be paid a sum of Rs. 5.34 lakhs after adjusting a part claim of the Central scheme to the extent of Rs. 4.54 lakhs. An amount of Rs. 0.80 lakhs was approved as the final payment in settlement of the Central Investment Subsidy by the Corporation vide Annexure P-5 on 29.01.2000. When this amount of Rs. 0.80 lakhs was not granted to the petitioner, it seems that respondent no. 1 claimed this amount in W. P. No. 16/02 and this Court disposed of the writ petition directing the appellants to decide the claim of the respondent no. 1. The claim was rejected vide Annexure P-1 dated 27.04.2002 and based on the resolution passed by the Board of the appellants� Corporation on 17th February, 2000, it was said that as the Corporation while settling the earlier claim has sacrificed an amount of Rs. 2,36,147/-, an amount of Rs. 80,000/- is adjusted in accordance with the policy contained in the resolution dated 7th /17th February 2000. This action was challenged before the Writ Court and the Writ Court has held that once, the claim is settled and the dispute with regard to the entire loan amount is resolved by mutual agreement by virtue of the settlement entered as per the resolution dated 21.07.99 and when the subsequent resolution dated 17th February, 2000 does not have a retrospective effect, the recovery of Rs. 80,000/- for adjusting the account as sacrificed amount was found to be unsustainable and the petition of the respondent was allowed.

Shri V. K. Shukla takes us through the various communications and decision on record and emphasized that it was the policy decision of the Government that whenever in the matter of settlement of outstanding dues, a settlement is arrived at by the Corporation by sacrificing certain amount, then a provision is made available for recovery of this sacrificed amount at the time of making payment of any subsidiary and as this was incorporated in the resolution dated 7th /17th February, 2000, the recovery done was proper. It was argued by him that there is no question of retrospective effect of the resolution in question.

Inviting our attention to the resolution, Shri Shukla argued that the resolution itself contemplates a provision that the Board can recover the loan amount which has been sacrificed in the past while settling of the amount. Accordingly, contending that the resolution has given retrospective effect and, therefore, the Writ Court has committed an error, this writ appeal has been filed.

Shri P. N. Dubey refuted the aforesaid and argued that as far as the resolution and decisions of the Corporation are concerned, they are the internal management resolution of the Corporation or its Board. They were never communicated to the respondent no. 1 and when the respondent no. 1 approached the Board Corporation for settlement of his claim without reserving their right to recover the amount said to be sacrificed by the Corporation, as the claim was settled on 21.07.99 now in the absence of any stipulation to the contrary, the recovery of Rs. 80,000/- from the disputed claim which already stood settled is not permissible.

Accordingly, Shri P. N. Dubey argues that now the appellants cannot based on their new circular without consent and agreement between the parties effect the recovery which has the effect of undoing the earlier settlement dated 21.07.99.

We have heard learned counsel for the parties and perused the record. The only question warranting consideration is as to whether the amount sacrificed by the appellants while entering into the earlier settlement to the tune of Rs. 2,36,147/- on 21.07.99 can now be recovered by adjusting Rs. 80,000/- as Central Investment Subsidy awarded to the respondent no. 1.

When the respondent''s loan account was found to be outstanding in the year 1999 and when a sum of Rs. 12.39 lacs was to be recovered from the respondents, it seems that negotiations took place and as per the agreement between the parties, the dispute with regard to outstanding loan of Rs. 12.39 lacs were settled by a payment of Rs. 10.91 lacs by the petitioners. After this settlement was concluded vide Annexure P-4 on 21.07.99, a certificate for settlement was issued which is reproduced hereinabove.

From the aforesaid settlement entered into and the certificate issued, it is clear that the loan amount was settled in the year 1999 at a sum 10.91 lacs was paid by the firm and was received by the Corporation and it was clearly stipulated in this certificate that there is no other dues outstanding against the firm and the account stands closed. It is a fact that while entering into this settlement, the Corporation has sacrificed a sum of Rs. 2,36,147/- and now it is the case of the Corporation that this being public money which was sacrificed and they have a right to recover the same vide resolution dated 7th /17th February, 2000.

The resolution in question which was filed as Annexure R-2 contemplates a provision which provides that the Corporation may appropriate Central Investment Subsidy against sacrifices in cases where loan amounts have been settled in the past with sacrifices.

Even though, this decision is taken by the Corporation but there is nothing available on record to show that this decision has statutory effect and can be enforced as a matter of legal consequence on all settlements entered into in the past. This is a resolution taken in a meeting of the officers and there is nothing to indicate that this decision was never communicated to the petitioner and he has accepted the same.

That apart, when the settlement for clearing the outstanding dues of Rs. 12.39 lakhs was undertaken in the year 1999, there was no agreement or undertaking between the parties for effecting the recovery of the sacrificed amount in the future. The decision taken by the Corporation in the matter of recovery of sacrificed amount can be enforced upon only if the respondent accept the same or there is a provision under law that such a decision can be enforced. The decision in question is not statutory in nature and it is arrived at much after the dispute in question with regard to unpaid loan was settled by the parties and there is nothing on record to show that while settling the amount in the year 1999, any reservation was made or a right was reserved by 6 the Corporation for recovery of the sacrificed amount. A general decision for recovery of the sacrificed amount cannot be imposed upon the petitioner until and unless a provision for recovery of the sacrificed amount is agreed to between the parties or a provision which can have statutory force is available which can be imposed unilaterally upon the respondent petitioner.

Accordingly, in the facts and circumstances of the case, we see no error in the order passed by the learned Writ Court in allowing the petition of the respondents and, therefore, we see no reason to interfere into the matter.

The appeal is therefore dismissed.