Indian BankNagapattinam Branchrep. by its Managerand Power Agent,R.Venkataraman v. Dharmaiyan & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 23.01.2012CORAM:THE HONOURABLE MR.JUSTICE M.VENUGOPALSECOND APPEAL No.132 of 1999Indian BankNagapattinam Branchrep. by its Managerand Power Agent,R.Venkataraman... Appellant/PlaintiffCause title accepted vide order of Court dated 21.1.98 DR(AS)CMP.No.19025 of 1998vs.1.Dharmaiyan2.T.Mahalingam... Respondents/DefendantsSecond Appeal filed under Section 100 C.P.C. against the Judgmentand Decree dated 22.08.1996 made in A.S.No.76 of 1996 on the file ofthe Additional Sub Court, Nagapattinam, confirming the Judgment andDecree made in O.S.No.41 of 1989 on the file of the District MunsifCourt, Nagapattinam, dated 12.08.1992.For Appellant:Mr.R.SivakumarFor Respondents:No appearanceJ U D G M E N TThe Appellant/Plaintiff (Bank) has preferred this Second Appealas against the Judgment and Decree dated 22.08.1996 in A.S.No.76 of1996 passed by the Learned Additional Sub Judge, Nagapattinam inconfirming the Judgment and Decree dated 12.08.1992 in O.S.No.41 of1989 passed by the Learned District Munsif, Nagapattinam. 2.The First Appellate Court, while delivering the Judgment inA.S.No.76 of 1996, on 22.08.1996, has among other things, observedthat in Ex.A1-Term Loan Agreement for Agricultural Loans, dated28.07.1983, it is mentioned as 'Agricultural Loan' and in thataforesaid circumstance, the contentions advanced on behalf of theAppellant/Plaintiff (Bank) that the loan granted to the firstRespondent/first Defendant cannot be construed to be a loan ofconnected Agriculture in nature and the contention of theAppellant/Plaintiff (Bank) in this regard is not accepted and https://hcservices.ecourts.gov.in/hcservices/ accordingly, it has come to a conclusion that as per Sections 2(g)and 2(d) of Agricultural and Rural Debt Relief Scheme, 1990, the loanis a eligible loan and the established Gobar Gas Plant got repairedwithin six months, which has not been denied on behalf of theAppellant/Plaintiff (Bank) and in view of the fact that the firstRespondent/first Defendant is entitled to get the benefit as per theaforesaid Scheme, the Appellant/Plaintiff (Bank) is not entitled toget the reliefs and dismissed the Appeal with costs, therebyconfirming the Judgment and Decree passed by the trial Court.3.Earlier, in the main suit, one to four issues and oneadditional issue have been framed for adjudication. On behalf of theAppellant/Plaintiff (Bank), P.W.1 has been examined and Exs.A1 to A5have been marked. On the side of the Respondents/Defendants, witnessD.W.1 has been examined and Ex.B1 has been marked.4.The trial Court, on scrutiny of the entire oral anddocumentary evidence available on record, has come to a definiteconclusion that the loan availed by the first Respondent/firstDefendant is liable to be wiped off as per Sections 2(g) and 2(d) ofAgricultural and Rural Debt Relief Scheme, 1990 and since the loan isless than Rs.10,000/- as mentioned in the aforesaid Sections and asper the Scheme, the loan to be repaid by the first Respondent/firstDefendant to the Appellant/Plaintiff (Bank) is liable to be wiped offand as such the Appellant/Plaintiff (Bank) is not entitled to claimany relief and resultantly dismissed the suit with costs.5.At the time of admission of the Second Appeal, this courthas formulated the following Substantial Questions of Law fordetermination:"1.Whether Judgment and Decree of the lowerCourts are sustainable in law, when the finding hasbeen recorded without considering any of theevidence produced by the Appellant herein?2.Whether the lower Courts are right indismissing the suit holding that the Gobar Gas PlantLoan also come under the Agricultural and RuralBenefit Relief Scheme, 1990?3.Whether the Lower Courts are right inrelying Exhibit B1 when the author of B1 has notbeen examined before the trial Court?"The Contentions, Discussions and Findings on Substantial Questions ofLaw :6.In the Memorandum of Grounds in Second Appeal, theAppellant/Plaintiff (Bank) has taken a plea that the Lower Court has https://hcservices.ecourts.gov.in/hcservices/ not considered the evidence adduced by the Appellant/Plaintiff (Bank)in any manner, which has resulted in grave injustice. 7.It is the contention of the Learned Counsel for theAppellant/Plaintiff that the first Respondent/first Defendant has notestablished that he is entitled to the benefit as per Sections 2(g)and 2(d) of the Agricultural and Rural Debt Relief Scheme, 1990. 8.The plea of the Appellant/Plaintiff (Bank) is that both thetrial Court as well as the First Appellate Court have failed toappreciate that as per the instructions of the Reserve Bank of India,the Gobar Gas Plant loan is not coming under the Agricultural andRural Debt Relief Scheme, 1990.9.According to the Appellant/Plaintiff (Bank), Ex.B1-Letter bythe Lead District Manager, Indian Overseas Bank, Nagapattinam to theRespondents' Advocate, dated 26.02.1992 has not been proved in themanner known to law by examining the author of the said document.10.The case of the Appellant/Plaintiff (Bank) is that the firstRespondent/first Defendant applied to it for grant of a loan forstarting Gobar Gas Plant. The Appellant/Bank sanctioned a loan ofRs.6800/- on 28.07.1983. The loan has been credited to the accountof the first Respondent/first Defendant. The first Respondent/firstDefendant executed a pronote for a sum of Rs.6,800/- agreeing torepay the said amount to the Appellant/Plaintiff (Bank) or to itsorder with interest thereon at the rate of 2.5% over the officialrate of the Reserve Bank of India with a minimum of 12.5% per annumfrom the date to date of payment in full with quarterly rests. 11.The first Respondent/first Defendant executed an Agreementof Hypothecation on 28.07.1983 by hypothecating the Gobar Gas Plantto the Appellant/Plaintiff (Bank). The amount due as on 11.01.1986was calculated and admitted by the first Respondent/first Defendantand he executed a renewal covering letter along with the Guarantor.Further, the renewal pronote dated 11.02.1986 for a sum ofRs.6,725.90 was also executed.12.In spite of repeated demands, the first Respondent/firstDefendant has not repaid the amount due to the Appellant/Plaintiff(Bank) and discharged the debt. Therefore, the Appellant/Plaintiff(Bank) has filed a suit for recovery of a sum of Rs.9,364.83 togetherwith costs.13.In the Written Statement, the first Respondent/firstDefendant has averred that it is true that on 28.07.1983, he hasreceived a sum of Rs.6,800/- as loan from the Appellant/Plaintiff(Bank) and established the Gobar Gas Plant. From the aforesaid loanamount, a certain amount is to be construed as subsidy and the said https://hcservices.ecourts.gov.in/hcservices/ amount would be write off as informed by the Bank Manager and only onthat basis, the aforesaid loan amount has been received. Also, theManager of the Bank has given an assurance that if the Gobar GasPlant is not functioning properly, then the loan sanctioned for thatwould be write off and only on that basis, the loan amounts have beenreceived. Within six months from the date of establishment of theGobar Gas Plant, it has not functioned properly and got repaired.This fact has been informed to the Appellant/Bank's Manager, whoinformed that the said fact would be informed to the Government andhas given an assurance that he would do the needful in wiping out theloan. Further, he has obtained signature in the already printedpapers and in unfilled stamp affixed papers, and the Bank hadutilised those papers to suit its convenience. The said documentswould not in any way bind the first Respondent/first Defendant. Therate of interest claimed in the plaint is an excessive one. Sincethe Gobar Gas Plant was related to Agriculture, the firstRespondent/first Defendant is liable to pay low rate of interest.The suit was also barred by limitation.14.Ex.A1 is the Term Loan Agreement for Agricultural Loans,dated 28.07.1983 executed by the first Respondent/first Defendant toand in favour of the Appellant/Plaintiff (Bank). In Ex.A1-Agreement,there are recitals to the effect that the borrower has applied to theBank for Agricultural Term Loan of Rs.6,800/- for the purpose setforth in the borrower's proposal dated 12.05.1983 which will behereinafter called as the 'Borrower's Proposal'. Also it ismentioned that the Bank has agreed to advance the Agricultural TermLoan of Rs.6,800/- on the terms and conditions set forth in hispresence and therefore sanctioned a cheque dated 27.07.2003 and otherdocuments herein collectively referred to as 'security documents'. 15.Furthermore, as a matter of fact, in Ex.A1-Term LoanAgreement for Agricultural Loans, dated 28.07.1983, Clauses 1 to 5 ofthe Terms and Conditions of the Loan are reiterated as under:Now the borrower agrees to the following terms andconditions of the loan :1."The Borrowers' proposal" shall be deemed toconstitute the basis of this agreement for theagricultural term loan to be granted and the Borrowerhereby warrants the correctness of each and every oneof the statements and particulars therein contained andundertakes to carry out the proposals set forththerein.2.The Borrower agrees that the said advance ofRs.6,800/- shall be governed by the terms containedherein as well as those embodied in "the securitydocument" listed in the schedule hereto except in sofar as the security documents may expressly or byimplication be modified by these presents. https://hcservices.ecourts.gov.in/hcservices/

3.The Borrower agrees and undertakes to receivethe agricultural loan sanctioned in instalments atvarious stages after satisfying the Bank at each stagethat the instalments already received have beenproperly utilised.4.The Borrower expressly agrees and undertakesthat the said advance shall be utilised exclusively forthe purposes set forth in "the Borrower's Proposal' andfor no other purpose."16.Along with Ex.A1-Term Loan Agreement for Agricultural Loans,the second Respondent/second Defendant has executed a Deed ofAgreement of Guarantee on 28.07.1983 in respect of Borrower viz., thefirst Respondent/first Defendant, subject to the terms and conditionscontained in loaning document dated 28.07.1983. Also the Agreementfor Hypothecation of movable property has been executed on 28.07.1983by the first Respondent/first Defendant to and in favour of theAppellant/Plaintiff (Bank) in respect of the Gobar Gas Plant of thevalue of Rs.6,800/-. In the Schedule of Ex.A1, against detailsregarding the Accessories, the Make Name is mentioned as 6 cm GobarGas Plant, New 1983 Model, type of body as 6 cm and the value asRs.8000/-. 17.Ex.A2 is the pronote dated 28.07.1983 executed by the firstRespondent/first Defendant to and in favour of theAppellant/Plaintiff for Rs.6,800/- promising to pay the said sum withinterest at 2.5% over the official rate of Reserve Bank of India witha minimum of 12.5% per annum from the date to date of payment in fullwith quarterly rests. 18.Ex.A3 is the pronote dated 11.02.1986 executed by the firstRespondent/first Defendant for Rs.6,725.90 to and in favour of theAppellant/Plaintiff (Bank) agreeing to repay the interest at 2.5%over the official rate of Reserve Bank of India with a minimum of12.5% per annum from the date to date of payment in full withquarterly rests. 19.Ex.A4 is the Renewal Covering Letter dated 11.02.1986addressed to the Appellant/Bank Manager by the Respondents 1 and2/Defendants 1 and 2. In the renewal Covering letter, it ismentioned that the Respondents/Defendants tender herewith their freshdemand pronote on of date for Rs.6,725.90. The said Renewal has beenexecuted by Respondents 1 and 2/Defendants 1 and 2 to and in favourof the Appellant/Plaintiff (Bank).20.Ex.A5 is the Statement of Bank Account, dated 28.07.1983 inrespect of the first Respondent/first Defendant from 28.07.1983 till02.02.1987. https://hcservices.ecourts.gov.in/hcservices/

21.Ex.B1 is the communication dated 26.02.1992 of theAppellant/Plaintiff (Bank's) Lead District Manager addressed to theRespondents/Defendants' Advocate, wherein, it is mentioned as follows:"We refer your letter dated 19.02.1992. Settingup of Gobar Gas Plant comes under national project onBio Gas Development. For the review purpose of thescheme this has been classified under agriculture andallied activities. The progress of the same is beingmonitored by the Project Officer, District RuralDevelopment Agency, Nagapattinam Quaid-E-MillethDistrict. He is the authority who is releasing theState and Central Government subsidy to the Bankers forthis scheme."22.A perusal of Ex.B1-Letter of the Appellant/Plaintiff (Bank)dated 26.02.1992 shows that for the purpose of review of the Schemeof National Project of Bio Gas Development, this has been classifiedunder Agriculture and Allied Activities. 23.In Ex.A1, Term Loan Agreement, the caption is mentioned as'Term Loan Agreement for Agricultural Loans' as per the Agriculturaland Rural Debt Relief Scheme, 1990. The loan obtained by the firstRespondent/first Defendants comes under the definition therein.Under Sections 2(g) and 2(d) of the said Scheme, it is mentioned asunder:"Chronic Overdues" means overdues, includingoverdue interest, as on the effective date, of anindividual farmer or artisan who had borrowed a loanor loans from one or more banks, the principal ofwhich did not exceed Rs.10,000/- for anyagricultural or artisan activity and who hadoverdues aged more than 3 years as on effectivedate."24.Though it is vehemently contended on behalf of theAppellant/Plaintiff (Bank) that the Agricultural and Rural DebtRelief Scheme, 1990 benefits will not apply to the loan obtained bythe first Respondent/first Defendant, it is to be pointed that thesaid Scheme will apply to the first Respondent/first Defendant.However, as per Section 2(a) explanation and more specifically as perEx.A1-Loan Agreement, loan has been sanctioned for establishing theGobar Gas Scheme by the first Respondent/first Defendant and it isconnected with Agriculture and other Allied Activities and therefore,the loan obtained by the first Respondent/first Defendant is liableto be written off/discharged as per Section 2(g)(2). Moreover, theloan obtained by the first Respondent/first Defendant is less thanRs.10,000/- and that the trial Court has come to a conclusion thatthe said loan is liable to be write off and that the https://hcservices.ecourts.gov.in/hcservices/ Appellant/Plaintiff (Bank) is not entitled to claim the suit amountas prayed for in the plaint. 25.As a matter of fact, the First Appellate court has alsoopined that in Ex.A1-Term Loan Agreement, it is stated asAgricultural Loan and therefore, the contention of theAppellant/Plaintiff (Bank) that the loan cannot be construed as oneconnected with Agricultural and other Allied Activities is not to beaccepted and has come to a conclusion that as per Sections 2(g) and 2(d) of the Agriculture and Rural Debt Relief Scheme, 1990, the loanis a fit loan. The Gobar Gas plant has got repaired within sixmonths. The first Respondent/first Defendant is entitled to claim thebenefits of the said Scheme and dismissed the Appeal. 26.The Learned Counsel for the Appellant/Plaintiff (Bank)produces a Letter from the Reserve Bank of India, Rural Planning andCredit Department, Central Office, Bombay, inRef.RPCD.No.NB.BC.148/COB.31A-90/91, dated 28.06.1991 addressed tothe Chairman and Managing Director, All Public Sector Banks, contentsof which read as under:"Please refer to our telex messageendt.No.RPCD.NB.1255/1259/COB.31A-90/91 dated 25 March1991 advising that, certain issues like debt relief inrespect of biogas plants, etc. are under considerationof the Government of India. It has since been decidedby the Government that the Scheme has come to an end by31 March 1991 and no more relaxations are envisaged atpresent on any of such items. Consequently, any debtrelief granted by the Bank under the Scheme after 31March 1991 (after 30 June 1991 in States of Assam andJammu & Kashmir) and any relief provided outside ARDRScheme, 1990 i.e. to borrowers or for purposes notcovered under the Scheme will not be eligible for claimfrom Government of India. 2.Your attention is also invited to ourCircular RPCD.No.NB.BC.94/COB.31A-90/91 dated 16 March1991 and telex message Endt.RPCD.No.NB.BC.1490/COB.31A-90/91 dated 5 June 1991 regarding verification of thedebt relief provided by banks. We have so far receivedclaims against debt relief provided by your bank underthe Scheme as per details given in Annexure I. Asenvisaged in our Circular dated 16 March 1991, acertificate duly signed by a senior executive from theHead Office of your Bank may please be submitted to usin the format given in Annexure II so as to reach uslatest by 31 July 1991. This will be in addition tothe certificate/s already furnished with the claims https://hcservices.ecourts.gov.in/hcservices/ submitted by your bank."27.Also in the telex message dated 25.03.1991 vide RPCDNo.NB.530, it is mentioned that "It has since been decided that loansfor Plantations would be covered under ARDR Scheme. However, Loansprovided indirectly through Institutions/State Sponsored Corporationsare outside the purview of the Scheme. Other issues relation toLoans for Bio-Gas units and loans to Artisans and Handloom andPowerloom Weavers in Non-Rural areas are still under consideration ofthe Government. 28.Added further, according to the Learned Counsel for theAppellant/Plaintiff (Bank), this telex message has been received bythe Mount Road Branch of the Appellant/Plaintiff (Bank) and receivedby the Appellant/Plaintiff (Bank) by post on 01.04.1991 only.Although the Learned Counsel for the Appellant/Plaintiff (Bank)placed reliance on the communication of the Reserve Bank of India,Bombay dated 28.06.1991 and the Telex Message dated 25.03.1991 asreferred to supra, yet this court is of the considered view that theyare of little aid to the Appellant/Plaintiff (Bank). Even at therisk of repetition, this court pertinently points out that even inEx.A1, Term Loan Agreement, it is specifically mentioned asAgricultural Loan. As per Section 2(a) of the Agricultural and RuralDebt Relief Scheme, Agriculture has been referred to as the'Agriculture Allied Activities'.29.In view of the fact that the first Respondent/firstDefendant has obtained an Agricultural loan as per Ex.A1 and alsobecause of the fact that the Gobar Gas Plant established by him hasgot repaired within six months and also taking note of another factthat the first Respondent/first Defendant is entitled to get thebenefit under the Agriculture and Rural Debt Relief Scheme, 1990, theAppellant/Plaintiff (Bank) is not entitled to get any relief asprayed for in the plaint consequently, the Second Appeal is devoid ofmerits. Accordingly, this court holds that there is no infirmity ormaterial irregularity or any patent illegality in the judgment of thetrial Court as well as the First Appellate Court and both the courtshave rightly dismissed the suit while arriving at a conclusion thatthe Gobar Gas Plant loan comes under the Agricultural and Rural DebtRelief Scheme, 1990. 30.In law, marking of a Document is one thing. It is anotherthing to say that the contents of documents are to be proved. Evenin the absence of examination of the author of Ex.B1-Letter dated26.02.1992, the courts are justified in relying upon the contents ofthe said document, since in the said document, it is mentioned thatthe Bio Gas Development Scheme has been classified under Agricultureand Allied Activities and such an averment amounting to admissionitself will dispense with the factum of examination of the author of https://hcservices.ecourts.gov.in/hcservices/ Ex.B1. It is to be pointed out that Admission is the best piece ofevidence. Accordingly, the Substantial Questions of Law 1 to 3 areanswered against the Appellant/Plaintiff (Bank). 31.In the result, the Second Appeal is dismissed, leaving theparties to bear their own costs. Resultantly, the Judgment andDecree of the First Appellate Court dated 22.08.1996 made inA.S.No.76 of 1996 are confirmed by this court for the reasonsassigned in this Appeal. The suit filed by the Appellant/Plaintiffin O.S.No.41 of 1989 on the file of the District Munsif Court,Nagapattinam is dismissed.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarabeTo1.The Additional Subordinate Judge, Nagapattinam.2.The District Munsif, Nagapattinam.1 CC to Mr.R.Sivakumar, Advocate, SR.4034 1 CC to Mr.V.Raghupathi, Advocate, SR.4565Copy to:The Section Officer, VR Section,High Court, Madras. S.A.No.132 of 1999JP(CO)SRA(26/03/2012)