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IN THE HIGH COURT OF ORISSA AT CUTTACK SA No.106 of 1995 (In the matter of an appeal under Section 100 of the Code of Civil Procedure, 1908) Orissa State Financial Corporation, Sundargarh …. Appellant -versus- Basanta Kumar Agarwal …. Respondent For Appellant - Mr. A.Routray,Advocate On behalf of Mr.P.K.Routray,Advocate For Respondent - Ms.M.Mishra,Advocate CORAM: MR. JUSTICE A.C.BEHERA Date of Hearing :27.08.2024:: Date of Judgment :04.09.2024 A.C. Behera, J. This Second Appeal has been preferred against the partially reversing judgment. 2. The appellant in this Second Appeal was the defendant before the Trial Court in the suit vide M.S. No.48 of 1989 and respondent before the
Legal Reasoning
1st Appellate Court in the first appeal vide M.A. No.2 of 1992. The respondent in this 2nd Appeal was the sole plaintiff before the Trial Court in the suit vide M.S. No.48 of 1989 and appellant before the 1st Appellate Court in the 1st appeal vide M.A. No.2 of 1992. SA No.106 of 1995 Page 1 of 11 // 2 // 3. The suit of the plaintiff (respondent in this 2nd Appeal) vide M.S. No.48 of 1989 before the Trial Court against the defendant (appellant in this 2nd appeal) was a suit for realization of Rs.50,308.67 Paise along with pendentelite and future interest thereon. 4. The case of the plaintiff as per his plaint was that, the defendant is the Orissa State Financial Corporation. He (plaintiff) had purchased a truck bearing registration No.OAO-5277 for Rs.1,96,000/- on being financed by the defendant corporation and when, he (plaintiff) could not able to run the said truck for his business purpose smoothly, for which, he (plaintiff) could not able to repay the loan installment dues of the defendant corporation. Therefore, the defendant corporation seized the financed truck of the plaintiff on dated 13.03.1986 by exercising its power under Section 29 of the State Financial Corporations Act, 1951 and thereafter sold the said truck on 30.03.1986 through auction for Rs.1,90,000/- to a third party. After selling the seized truck, the defendant-corporation intimated him (plaintiff) that, after adjustment of the outstanding loan dues of Rs.1,57,913.30 Paise from the sold money of the truck, the surplus amount i.e. Rs.32,667.95 Paise shall be refunded to him (plaintiff), after payment of the entire sold money by the auction purchaser of the truck. When, the defendant-corporation did not pay the said amount to the plaintiff, then, he (plaintiff) requested the defendant-corporation through a notice by his Page 2 of 11 SA No.106 of 1995 // 3 // Advocate for providing him the surplus sold money i.e. Rs.32,667.95 Paise with 18% interest thereon since the date of selling of the truck i.e. since 30.03.1986 till its payment, but the defendant-corporation did not respond to his request. For which, without getting any way, the plaintiff approached the Civil Court by filing the suit vide M.S. No.48 of 1989 against the defendant-corporation for realization of the surplus sold money of the truck i.e. Rs.32,667.55 Paise plus 18 % interest per annum thereon i.e. Rs.17,640.72 Paise in total Rs.50,308.67 paisa along with the pendentilite and future interest thereon. 5. Having been noticed from the Trial Court in the suit vide M.S. No.48 of 1989 filed by the plaintiff, the defendant-corporation challenged the same by filing its written statement taking its stands therein, admitting the sanction of loan of Rs.1,90,000/- in favour of the plaintiff for purchasing the truck with interest at the rate of 121/2% per annum thereon, but, due to failure of the plaintiff to repay all the installments of the loan in due time, a sum of Rs.1,57,913.30 Paise including interest as on 31.12.1985 became outstanding against him (plaintiff). For which, the financed truck of the plaintiff was seized by the defendant-corporation exercising its statutory power under Section 29 of the Orissa State Financial Corporations Act,1951 and the same was sold through public auction on dated 30.03.1986 for Rs.1,90,000/- and the auction purchaser Page 3 of 11 SA No.106 of 1995 // 4 // made down payment of Rs.80,000/- and the balance consideration money was stipulated to be paid in equal monthly installments of Rs.10,000/- starting from the month of May 1986, for which, the interest upon the outstanding loan dues against the plaintiff was calculated for the period from 01.01.1986 to 30.03.1986 and the interest on the outstanding dues during that period became Rs.4,677.43 Paise and in addition to that, the defendant-corporation had spent a sum of Rs.595.25 Paise for the seizure of the financed truck for its auction sell. Therefore, through addition of the above interest i.e. Rs.4,677.43 Paise for the period from 01.03.1986 to 30.03.1986 on the outstanding loan dues of Rs.1,57,913.30 Paise plus Rs. 595.25 Paise towards the cost of seizure, the total outstanding dues till the auction of the financed truck against the plaintiff became Rs.1,62,590.73 Paise, for which, after deduction of the said Rs.1,62,590.73 Paise from the sold money i.e. Rs.1,90,000/- of the financed truck, the plaintiff was entitled to be refunded of Rs.26,804.27 Paise from the defendant-corporation as per Section 29 (4) of the State Financial Corporations Act, 1951, only after the payment of the entire sold money by the auction purchaser, for which, there is no provision under law for payment of interest on the surplus amount. Therefore, the plaintiff is not entitled for the decree as prayed for by him against the SA No.106 of 1995 Page 4 of 11 // 5 // defendant-corporation. So, the suit of the plaintiff is liable to be dismissed. 6. Basing upon the aforesaid pleadings and matters in controversies between the parties, altogether four numbers of issues were framed by the Trial Court in the suit vide M.S. No.48 of 1989 and the said issues are:- Issues 1. Whether the plaintiff is entitled to receive the suit amount with interest as prayed for? 2. What amount was due payble by the plaintiff to the defendant, interest as on 30th March 1986? 3. To what amount, the plaintiff is entitled to receive from the defendant? 4. To what relief, the plaintiff is entitled to? 7. In order to substantiate the aforesaid relief(s), sought for by the plaintiff against the defendant, he (plaintiff) examined him as P.W.1 and relied upon the documents vide Exts.1 to 4/B on his behalf. On the contrary, in order to nullify/defeat the suit of the plaintiff, the defendant-corporation examined one witness i.e. one of its Officer as D.W.1 and relied upon the documents vide Exts.A to B/1. 8. After conclusion of hearing and on perusal of the materials, evidence and documents available in the record, the Trial Court answered only issue No.1 in part in favour of the plaintiff, but answered other issues i.e. issue Nos.2 and 3 against the plaintiff and in favour of the defendant and basing upon the findings and observations made by the Trial Court in SA No.106 of 1995 Page 5 of 11 // 6 // the issues, the Trial court decreed the suit of the plaintiff in part on contest against the defendant entitling the plaintiff for Rs.26.804.27 Paise from the defendant-corporation as the surplus amount of the sold money of the financed truck after adjustment of the loan outstanding dues against him (plaintiff) with interest, but he (plaintiff) is not entitled for any interest on the same as per its judgment and decree dated 24.01.1992 and 04.02.1992 respectively. 9. On being dissatisfied with the aforesaid part judgment and decree of the suit of the plaintiff vide M.S. No.48 of 1989 by the Trial Court declining the claim of interest on the surplus amount of the sold money of the truck, he (plaintiff) challenged the same by preferring the 1st Appeal vide M.A. No.2 of 1992 being the appellant against the defendant arraying the defendant-corporation as respondent. 10. After hearing from both the sides, the 1st Appellate Court allowed that first appeal of the plaintiff vide M.A. No.2 of 1992 in part on contest against the defendant-corporation as per its judgment and decree dated 28.01.1995 and 09.02.1995 respectively and modified the judgment and decree of the Trial Court entitling the plaintiff for Rs.26,804.27 Paise along with interest at the rate of 6% thereon since 30.03.1986 i.e. since the date of auction till the date of decree passed by the Trial Court, in total SA No.106 of 1995 Page 6 of 11 // 7 // Rs.43,837.20 Paise assigning the reasons that, since the date of selling of the financed truck of the plaintiff by the defendant-corporation, the plaintiff has been entitled for the surplus consideration amount of the sold truck, for which, for retention of that amount of defendant-corporation without refunding the same to the plaintiff has made the plaintiff entitled under law to get interest on the said amount from the defendant- corporation. 11. On being aggrieved with the aforesaid part judgment and decree passed by the 1st Appellate Court in M.A. No.2 of 1992 against the defendant-corporation, the defendant-corporation challenged the same by preferring this 2nd Appeal being the appellant against the plaintiff arraying the plaintiff as respondent. 12. This 2nd Appeal was admitted on formulation of the following substantial question of law i.e.:- (i) Whether the defendant-appellant (State financial Corporation) is liable to pay interest whatsoever on the differential amount payble to the plaintiff-respondent when, the corporation took action under Section 29 (1) and received money under Section 29 (4) of the S.F.C. Act, 1951? 13. I have already heard from the learned counsel for the appellant- corporation (defendant) as well as from the respondent (plaintiff). 14. As per the mandate of sub Section (4) of Section 29 of the State Financial Corporations Act, 1951, “where the corporation takes any action Page 7 of 11 SA No.106 of 1995 // 8 // against the lonee as per sub Section (1) of Section 29 of the State Financial Corporations Act, 1951 for seizure of financed item/vehicle to its possession and sells the same for realization of the loan outstanding dues, then, in absence of any contract to the contrary, be held by it in trust to be applied firstly in payment of costs, charges and expenses incurred towards such seizure and possession and then, secondly take steps towards the discharge of debt due to the financial corporation and after adjustment of the above both from the sell proceeds of the financed item/material, then, the residue (surplus money) thereof so received by the corporation from the purchaser of the unit/item shall be paid to the person entitled thereto”. 15. So, the sub Section (4) of Section 29 of the State Financial Corporations Act, 1951 provides the word shall be paid, which means, “must be paid” to the surplus amount of the sold money of the auctioned property to the person entitled to. 16. Therefore, according to the mandate of said sub Section (4) of Section 29 of the S.F.C. Act, 1951, the plaintiff was entitled to receive the surplus amount of the sold money of the truck from the defendant-corporation since the date of selling of his financed truck i.e. since 30.03.1986. It has been held through the concurrent findings of the Trial court as well as 1st Appellate Court that, by the time of selling of the truck through auction on dated 30.03.1986, the outstanding dues against the plaintiff including the loan, interest and expenditures for seizure of the truck was Rs.1,63,185.73 Paise, but the truck was sold for Rs.1,90,000/- and after Page 8 of 11 SA No.106 of 1995 // 9 // deduction of Rs.1,63,185.73 Paise from Rs.1,90,000/-, the surplus amount thereof was Rs.26.804.27. Therefore, as per the mandate of section 29(4) of the State Financial Corporations Act, 1951, the plaintiff was entitled to get Rs.26.804.27 Paise from the defendant-corporation since 30.03.1986 and it was the duty and obligation of the defendant-corporation to pay the said surplus amount i.e. Rs.26.804.27 Paise immediately to the plaintiff, but the defendant- corporation did not pay the same to the plaintiff. For which, the plaintiff approached the Civil Court for realization of the same with interest thereof. As, since 30.03.1986, the plaintiff had the legal due of Rs.26.804.27 Paise on the defendant-corporation and it was the legal duty and obligation of the defendant-corporation to pay the same to the plaintiff, for which, the above retention of the money of the plaintiff by the defendant-corporation without paying the same to the plaintiff is an unjust enrichment of the defendant-corporation. For such unjust enrichment of money i.e. Rs.26.804.27 Paise of the plaintiff by the defendant-corporation since 30.03.1986, the plaintiff is entitled to get interest on the same. On this aspect, the propositions of law has already been clarified by the Hon’ble Courts and Apex Court in the ratio of the following decisions:- SA No.106 of 1995 Page 9 of 11 // 10 // (i) AIR 2001 (S.C.) 5: Himachal Pradesh State Financial Corporation, Shimla Vrs. Prem Nath Nanda & Others—State financial corporations Act (63 of 1951), Section 29—In appropriate cases interest may be awarded lieu of compensation or damages for allegedly in wrongfully retaining the amount payable to a party. Interest can be awarded on equitable grounds. (Para 6) (ii) 2008 (I) C.J.D. (SC) 341: Everest Wools Pvt. Ltd. & Others Vrs. U.P. Financial Corporation & Others—State Financial Corporation Act, 1951—Section 29—Power under—When corporation takes over possession, it acts as a trustee—Its action must be fair and reasonable. (Para 19) (iii) (2011) 8 S.C.C. 161 : INDIAN COUNCIL for ENVIRO-LEGAL ACTION VRS. UNION OF INDIA AND OTHERS—Unjust enrichment—Meaning thereby— Unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice, equity and good conscience. (Para 152 to 156) (iv) 2018 (1) CLR 1191 : The Postmaster General, Sambalpur and another vrs. Miss Sanjukta Hota—Unjust Enrichment—A benefit obtained from another, not intended as a gift and not legally justifiable, for which, the beneficiary must make restitution or recompense. (Para 14 & 17) 17. The defendant-corporation being a model as well as virtuous litigant should not harass its poor loanee i.e. plaintiff retaining his legitimate dues/claims unjustly. 18. Here, in this suit/appeal at hand, when the defendant-corporation has retained the legitimate dues of the plaintiff since the date of auction of the truck i.e. since 30.03.1986 unjustly and when the Acts and activities of the defendant-corporation are not fair and reasonable as per the discussions and observations made above, then at this juncture, in view of the Page 10 of 11 SA No.106 of 1995 // 11 // principles of law enunciated in the ratio of the aforesaid decisions of the Hon’ble Courts and Apex Court, the non-refund of the same to the plaintiff is an unjust enrichment of the defendant-corporation. For which, the judgment and decree passed by the 1st Appellate Court modifying the judgment and decree of the Trial court for payment of the surplus amount of sold money of the financed truck after adjustment of the outstanding loan dues, interest and expenditures since the date of selling of the truck i.e. since 30.03.1986 till the date of decree passed by the Trial Court in the suit and the future interest thereon cannot be held as unreasonable or erroneous. Therefore, there is no justification under law for making interference with the said judgment and decree passed by the 1st Appellate Court through this 2nd Appeal filed by the appellant-corporation. So, there is no merit in the 2nd appeal filed by the appellant- corporation. The same must fail. 19. In result, the 2nd appeal filed by the appellant-corporation is dismissed on contest against the respondent (plaintiff), but without cost. The judgment and decree passed by the 1st appellate Court in M.A. No.2 of 1992 is confirmed. Signature Not Verified Digitally Signed Orissa High Court, Cuttack Signed by: BINAYAK SAHOO 4th of September, 2024/ Binayak Sahoo// Reason: Authentication Junior Stenographer Location: High Court of Orissa, Cuttack Date: 06-Sep-2024 13:36:44 SA No.106 of 1995 (A.C. Behera), Judge Page 11 of 11