Naresh Kumar vs Khadi and Village Industries Commission and Others

Sanjay Kishan Kaul, C.J.—The dispute pertains to the loan advanced by respondent No. 3 to the petitioners-borrowers. The respondent No. 3 is the Haryana Khadi and Village Industries Board whose job is to promote Khadi and Village Industries with financial support from Khadi and Village Industries Commission (respondent No. 1) established u/s 4 of the Khadi and Village Industries Commission Act, 1956 for developmental programmes. The loan so advanced invariably consist of three parts-

(i) for construction of the building/shed;

(ii) purchase and machinery; and

(iii) working capital.

Amounts are disbursed under the first head and there is a moratorium period of one year. The loan has to be secured by mortgage of immovable property as a whole.

The dispute has arisen on account of the plea of the petitioners that there was delay in disbursement of loan but interest has been charged on the loan already extended even in that situation. Thus, if a shed has been constructed, lack of non-release of machinery loan would make the shed redundant, but despite this fact, interest has been charged on the initial amount released for construction of the shed. The facts of each case varies, but broadly this is the dispute at hand.

In order to appreciate the controversy better, we may refer the facts of CWP No. 10588 of 2001, which show that there was delay on part of the petitioner in securing the loan amount of Rs. 8.93 lacs as the mortgaged property was valued at only Rs. 6.50 lacs. Not only that, one of the properties of mortgage was not legally mortgaged requiring some acts to be done by the petitioner. Once the property was legally mortgaged, the sanction of the loan took place on 19.7.2000. It is the case of respondent No. 3 that the said Board demanded amount of machinery and working capital from respondent No. 1 on the petitioner doing the needful and immediately released the amount to the petitioner. However, the dates shows that the sanction was granted on 19.7.2000, the request for machinery and working capital loan was made on 9.11.2000 by respondent No. 3 to respondent No. 1 and the same was received from respondent No. 1 on 2.7.2001 and was released on the same day.

We are informed that there are similar situations in all these matters.

In our view, thus, the delay in project can be separately attributed to the following factors:-

(i) The failure of the petitioner to do the needful whether it was by proper creation of mortgage or for any other reason till such time as the loan could be properly sanctioned and a request made by respondent No. 3-Board to respondent No. 1;

(ii) Any inordinate delay between the time period petitioner completed the necessary formalities and respondent No. 3 making a request to respondent No. 1;

(iii) Delay on part of respondent No. 1 in releasing the amount to respondent No. 3;

(iv) The delay on part of respondent No. 3 in releasing the loan to the petitioner.

There can be no doubt that qua the first portion of the delay, the petitioner must bear consequences of interest even on the amount which was initially advanced in terms of the conditions of repayment whereby the first installment was to be due after 15 months from the date of release of the funds. However, in the later three delays if there were so occasioned, the burden cannot be fastened on the petitioner. It is seen from the facts stated aforesaid that in that particular case it took 3 months and 20 days from completion of documentation by the petitioner for respondent No. 3 to make a request to respondent No. 1 for release of the loan, which was the delay on part of respondent No. 3. Such a request could have easily been made within a maximum period of 15 days. Similarly, there was inordinate delay in release of the loan after the request was made on 9.11.2000 as the loan was released only on 2.7.2001. The period of 30 days would have been enough for release of the loan by respondent No. 1 to respondent No. 3. There was no delay thereafter on part of respondent No. 3.

We are thus, of the view that a similar calculation has to be done for all the cases and wherever the delay is attributable to respondent No. 1 or respondent No. 3, interest on the portion of the loan availed of at the first stage should not be charged from the petitioner. The same would be for the subsequent disbursements.

We grant two months'' time to respondent No. 3 to make the fresh calculations of the loan accounts of the petitioners and if there is any outstanding amount due, the same should be intimated to the petitioners. On the other hand, if any refund is due, the same should be remitted back to the petitioners within the same period of two months. The petitioners would deposit the balance amount, if any, as intimated within one month of receipt of the intimation. The petitions accordingly stand disposed of.