Shri Loknath Baniya vs The Assam Financial Corporation

Heard Ms. A. Das, the learned counsel appearing for the petitioner. The Assam Financial Corporation (AFC) and their Managers (respondents) are represented by the learned advocate Ms. T. Goswami.

The petitioner''s brother Sambhu Ram Baniya secured loan of Rs.1,62,000/- from the Assam Financial Corporation (AFC) in 1984 to purchase a Truck. The petitioner stood as the guarantor and mortgaged his immovable assets at village Jatia in Mouza-Beltola in addition to their family property at Nagaon. The loan A/C No.918 carried interest @14.5% per annum.

The purchased truck met with an accident and accordingly the borrower with due permission, sold the vehicle on 25.02.2009 and deposited the sale proceed of Rs.1,20,000/-, with the AFC. But because of the unpaid balance, the loan account was not closed by the AFC.

The borrower on 23.02.2010, repaid Rs.2,37,208/-. But even then the AFC issued the letter to the borrower on 15.12.2010 (Annexure-8) indicating that the balance loan due is Rs.2,15,312.85/- with delay period interest @12% per annum. The payable sum in this communication of the AFC dated 15.12.2010 was quantified at Rs.4,52,520.85/- based on the special package extended to the borrower. The follow up letter of the AFC was addressed to the borrower on 23.12.2010, where the borrower was again asked to pay the entire settlement package of Rs.4,52,520.85/- (as on 31.01.2010), with further interest @12% as per the special package offered for the outstanding loan. Both communications were made subject to the decision of the Board of Directors of the AFC.

The borrower made no payment in pursuant to the two communication(s) dated 15.12.2010 and 23.12.2010, but Ms. A. Das, the learned counsel submits that by 23.02.2010, for the loan of Rs.1.62 lakh, the borrower had repaid the much larger sum of Rs.4,20,559/-.

Representing the AFC, Ms. T. Goswami, the learned counsel submits that the special package approved long back cannot now be enforced by the borrower, as they failed to repay the stipulated amount under the special package in due time.

As regards the petitioner''s contention about huge repayment being demanded for the loan of Rs.1.62 lakh, notwithstanding the repayment of the substantial sum of Rs.4,20,559/- by 23.02.2010, it cannot be overlooked that the AFC is an instrumentality of the State, which deals with public money and it can operate only with regular realisation of instalment. In fact, the AFC raises capital from the Government or other financial institutions and are required to bear interest on the borrowed sum. Thus for loan defaults, the powers under Section 29 of the State Financial Corporation Act, 1951 can be invoked by the AFC and they have the power to sale the mortgaged property to realise the loan dues.

For the loan of Rs.1.62 lakh sanctioned on 24.09.1984, the case records indicate that the borrower had re-paid substantial portion of the principal amount on 28.02.1989 by selling the truck. Additional sum towards interest is also paid from time to time and according to the figures available, the Rs.4,20,559/- in all was repaid by 23.02.2010 by the borrower. Therefore, the precise loan default is required to be re-assessed in the context of the amount received from the borrower towards principal and interest for the loan A/C No.918.

The hypothecated assets measuring 1 katha 15 lechas under Patta No.36 Dag No.323 at village Jatia, Mouza-Beltola, Dispur with the residential house standing thereon, is a high value asset and therefore invocation of Section 29 of the 1951 Act to dispose this valuable asset will surely cause prejudice to the borrower and the guarantor (writ petitioner). But at the same time, when substantial re-payment is received, keeping the loan account alive to add further interest on the borrower/guarantor, would also require a re-visit by the AFC.

Appearing for the guarantor, Ms. A. Das, the learned counsel submits that the guarantor and his brother are agreeable to pay a reasonable sum for closure of the loan A/C No.918, but the repayment figure should be determined in the context of the heavy repayment towards principal, for the borrowed sum of Rs.1.62 lakh.

Following the above, the Court is of the view that the AFC should address the issue from a practical perspective. Hence the petitioner and the borrower should file representation within 2(two) weeks, for the closure of the loan A/C No.918 on repayment of reasonable sum, as may be determined by the AFC. When the representation is received, the AFC should reflect on the past repayment towards principal and also the additional payment towards interest and communicate the acceptable figure to the petitioner/guarantor. Mutual discussion may also be made to determine the reasonable sum. Once the amount is decided, the borrower/guarantor must repay the payable sum to the AFC for the closure of the loan A/C No.918 opened in the year 1984. Until the ordered exercise is undertaken, the AFC should not proceed on the basis of the impugned notice dated 12.09.2011 (Annexure-1). It is ordered accordingly.

With the above order the case stands disposed of. No cost.