M/s VaidiyalingamRice Mill v. The Branch Manager

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 4.10.2007CORAM:THE HON'BLE MR.JUSTICE M.CHOCKALINGAMW.P.NO.40576 OF 2002M/s VaidiyalingamRice Mill rep. by Thiru Vaidiyalingam ...PetitionerVs.1. The Branch Manager, Kancheepuram Central Cooperative Bank, Kundrathur Branch, Kancheepuram District.2. The Special officer, Kancheepuram Central Co-operative Bank, 15 G, Shiekpet North Street, Kancheepuram 631 501. ..RespondentsPetition filed under Article 226 of the Constitution of India toissue a writ of Certiorarified Mandamus as stated withinFor Petitioner : Mr.V.LakshminarayananFor Respondent No.2 : Mr.M.S.PalanisamyFor Respondent No.1 : Mrs.G.ThilagavathiO R D E RSeeking to issue a writ of Certiorarified Mandamus to quash theproceedings of the second respondent made in Na.Ka.No.468/2002-03/VA3 dated 18.9.2002, the above writ petition has been broughtforth before this Court.2. The affidavit filed in support of the petition is perused.3. The Court heard the learned counsel on either side.4. The case of the petitioner in short is that the petitionersought for a loan of Rs.5.13 lakhs agreeing to repay the same within aperiod of 7 years from the date of its grant. It was also agreed that the https://hcservices.ecourts.gov.in/hcservices/ interest payable on the said loan is at 15% p.a., Though the loan wassanctioned in August, 1994, after the legal notice issued on 24.11.1995,the first part of the loan was paid to him after a long delay. Pursuant tothe loan transaction, a registered mortgage deed was executed by thepetitioner on 11.8.1994 in favour of the first respondent. On 3.8.1995,just before the completion of one year of the execution of the mortgage, aletter was dispatched by the Head office calling upon the first respondentto pay a sum of Rs.40,000/-, but the said amount was not paid for a longtime. Again, the petitioner issued a notice on 24.11.1995 calling upon thefirst respondent to disburse the loan amount within a period of 15 daysfrom the date of receipt of the notice. Thereafter the loan was disbursedon 31.12.1995. The period to repay the loan amount expires only on30.12.2002. The bank officials were pressing for repayment. The awardalso came to be passed by the Arbitrator in AR.C.No.8/2001 on 25.4.2001for a sum of Rs.8,82,338/-. The award was not served upon the petitioner.While the matter stood thus, the first respondent had sent a notice on20.5.2002 by registered post with acknowledgment due confirming that a sumof Rs.7,51,769/- if paid, the entire loan transaction would stand erasedand the petitioner will be entitled to have the mortgage annulled and havethe return of documents. Relying upon the Government Order 70 dated28.3.2002 issued by the Government of Tamil Nadu that any loan pendingon 31.3.1998 would be treated as NPA and the penal interest and interestwould not be included in recovery and a flat rate of 12% interest would berecovered from the mortgagor. Accordingly, the petitioner made the firstpayment of Rs.1,83,669/- on 28.6.2002 and on 28.9.2002 he has paid a sumof Rs.5,68,100/- as demanded by the respondent. Thus, the entire amount asfound in the notice viz. Rs.7,51,769/- was completely paid. While thematter stood thus, instead of returning the documents, the impugned noticewas served by the second respondent on 18.9.2002 stating that thepetitioner was not entitled to the benefits under the scheme and furtherdemanded the repayment of the entire loan amount. Under suchcircumstances, the petitioner had no other option than to approach thisCourt for setting aside the same.5. Advancing his argument on behalf of the petitioner, learnedcounsel would submit that a letter was issued to the petitioner by thefirst respondent, pursuant to G.O.70 dated 28.3.2002 as referred to aboveand it was also issued for the purpose of one time settlement, which wouldbe applicable to all the Cooperative Societies and no discretion could bemade, as could be seen from the G.O. itself. Under such circumstances,having made a sum of Rs.7,51,769/-, the entire loan transaction wouldbe closed and having received the said amount as per the notice issued,the bank cannot now be permitted to come forward with a notice that thepetitioner is not entitled to have the benefits under the scheme and heis liable to pay the rest of the payment as if the interest was not paid.Under such circumstances, the subsequent notice under challenge has nolegal basis. Under such circumstances, it has got to be set aside. https://hcservices.ecourts.gov.in/hcservices/

6. Learned counsel for the first respondent would submit that inthe instant case originally an award was passed by the Arbitrator. A copyof which was also served upon the petitioner. Had the petitioner beenreally aggrieved, he should have challenged the said award, but he had notdone so. Further, he has got a right of appeal under the relevantprovisions of Cooperative Societies Act and hence once there is anefficacious and effective remedy available, he should not have invoked thewrit jurisdiction. On that ground, the writ petition has got to bedismissed . 7. Learned counsel for the second respondent would submit thatin the instant case, the petitioner relies upon the notice issued by theBranch Manager of the first respondent bank on 20.5.2002 and the firstpayment of Rs.1,83,669/- was made by him on 28.6.2002 i.e. 1/4 of thepayment and this was actually placed by the Manager for approval beforethe District Central Cooperative Bank. But, it was not sanctioned andsubsequently it was also rejected. It was however intimated that he is notentitled for the benefit under the scheme and hence he is liable to makethe payment and after the first payment was made and before making thesecond payment on 28.9.2002, it was made clear that the petitioner wasnot entitled for the benefit under the scheme and thus after havingknowledge of the fact that he was not entitled under the scheme, he hasmade the said payment. Further the Manager of the first respondent bankwho sent the notice was not competent to do the same, and even without theapproval he had done so. Under such circumstances, the notice that wasissued by the Manager who was not competent to do so, cannot have theeffect of the same. Hence, the writ petition has got to be dismissed.8. The Court paid its anxious consideration on the rivalsubmission made. After looking into the materials available on record,this Court is of the considered opinion that the writ petition requiresvery short order in the positive. It is not in controversy that thepetitioner applied for loan and has also executed a mortgage deed with thefirst respondent bank. Though the sanction was not made, after legalnotice issued through a lawyer, the sanctioned amount was disbursed. Thetime for payment as per the agreement between the parties came to an endin the month of December, 2002. Pending the same, an award came to bepassed by the Arbitrator on 23.4.2001 and thus it would be quite clearthat though the period for the entire payment came to an end in the monthof December, 2002, the award came to be passed on 23.4.2001. The serviceor non-service of the award copy of the Arbitrator does not assume anyimportance. Now, it remains to be stated that it is not in controversy https://hcservices.ecourts.gov.in/hcservices/ that the notice was served upon the petitioner by the Manager of the firstrespondent on 20.5.2002 calling upon him to make the payment ofRs.7,34,674/- and if paid on or before 30.6.2002, the entire loantransaction would be over and relying upon the notice issued by theManager of the first respondent, the petitioner has paid 1/4th of theamount i.e. Rs.1,83,669/- on 28.6.2002 and the matter was placed forapproval by the Manager along with the said payment before the DistrictCooperative Bank. A copy of which is placed in the hands of this Court,from which it is clear that it was issued pursuant to the G.O. for onetime settlement. Thereafter, if the petitioner makes such a payment, theentire transaction would be over and on the strength of the notice andfurther the contents of the notice, the petitioner has acted so and he hasalso made 1/4th of payment accordingly. Now, it is contended on the sideof the second respondent bank that the Manager of the bank was not at allcompetent to issue such a notice and hence the petitioner could not havethe benefit under the said GO. A copy of the said G.O. has also beenplaced before this Court. The said G.O. does not make any discretionwhether the Manager of the first respondent bank was competent to issuethe notice or not and it is well within the administration of the Bankwith which the petitioner was not at all concerned. Now the question thatwould arise is whether the bank can be allowed to go back after issuingsuch a notice through its Manager, who was acting on its behalf. It iscontended by the second respondent that such a notice would not be bindingon the petitioner and hence he has to make the rest of the paymenttowards interest which he is liable to pay. Attractive though the argumentadvanced by the learned counsel appearing for the second respondent bank,this Court is of the considered opinion that having paid Rs.7 lakhs infull quit and the first respondent having sent a notice stating that ifthe said amount is paid, the entire transaction would come to an end, thesecond respondent bank cannot be now permitted to say that a person whowas serving as Manager of the first respondent Bank at that time, was notcompetent or empowered to issue such a notice. It is pertinent to pointout that when the notice was issued by the first respondent on 20.5.2002and originally an award was passed which was subsisting, whereby thepetitioner was liable to pay the balance, no question of paying thebalance amount would arise at this stage for the simple reason that oncethe notice for one time settlement pursuant to G.O. was issued by theBank, to put an end to entire transaction by way of one time settlement,this Court is at a loss to understand how the said G.O. cannot be appliedto the present petitioner. In the instant case, after sending such aletter through the Manager of the bank who was serving at that time, now,the second respondent bank is estopped from saying that the petitioner isnot entitled to the benefit under the scheme. The petitioner had paid theentire amount as per the demand made in the notice dated 20.5.2002 . https://hcservices.ecourts.gov.in/hcservices/ Hence, the notice issued by the second respondent which is now underchallenge, has no legal consequence, and it has got to be set aside. Thewrit petition is ordered accordingly and the impugned notice is quashed.The first respondent Bank is also directed to return the document asexpeditiously as possible, preferably within a period of eight weeksherefrom. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarVJYTo1. The Branch Manager, Kancheepuram Central Cooperative Bank, Kundrathur Branch, Kancheepuram District.2. The Special officer, Kancheepuram Central Co-operative Bank, 15 G, Shiekpet North Street, Kancheepuram 635 501. 1 cc To Mr.S.Palaniswamy, Advocate, SR.61874.1 cc To Mr.V.Raghavachari, Advocate, SR.61827.1 cc To Mr.G.Thilagavathi, Advocate, SR.61874.W.P.NO.40576 OF 2002 TEJ(CO)RVL 17.10.2007