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1996 DIGILAW 329 (KAR)

SYNDICATE BANK v. I. KRISHNAMMA

1996-06-25

H.N.NARAYAN, P.KRISHNA MOORTHY

body1996
P. KRISHNA MOORTHY, J. ( 1 ) WRIT Appeal Nos. 35 to 45 of 1994 arises out of a common judgment in Writ Petition Nos. 5869 to 5879 of 1993, Writ appeal No. 1909 of 1994 is against the judgment in Writ Petition no. 15244 of 1994. ( 2 ) THE writ petitioners in all these writ petitions are Small Rubber Growers who were advanced loans by the first respondent-Syndicate Bank under an agreement produced as annexure-A in Writ Petition Nos. 5869 to 5879 of 1993. An agreement entered into by all the writ petitioners are of the same nature and they were executed between the year 1984 to 1986. The agreement provides for the payment schedule as also the time schedule for repayment under the agreement. There is gestation period of seven years for the payment of interest due on the first seven years. The question involved is as to whether under the agreement the writ petitioners are liable to pay simple interest on deferred interest or whether they are liable to pay compound interest on deferred interest. ( 3 ) ACCORDING to the petitioners, as per the prayer in the writ petition they are liable to pay only simple interest on deferred interest though according to the Counsel for the petitioners at the argument stage it was submitted that they are not liable to pay interest at all. Anyhow, it is not necessary for us to go into that question at this stage. According to the first respondent-Bank petitioners are liable to pay the compound interest which is provided for in the agreement Annexure-A. Petitioners are also challenging the circular issued by n. A. B. A. R. D. evidence by Annexure-H which shows that interest is payable on deferred interest in case of loans advanced to rubber Growers before 1-7-1987. On the basis of that first respondent-Bank has also sent a communication evidenced by annexure-G to one of the petitioners stating that they are liable to pay interest on deferred interest as the loans are sanctioned prior to 1-7-1987. In these writ petition petitioners are challenging their liability to pay interest on deferred interest. ( 4 ) WRIT Petition Nos. 5869 to 5879 of 1993 were disposed of bya Single Judge by his judgment dated 29th day of September, 1993, I. Krishnamma and Others v Syndicate Bank, Manipal and Others. In these writ petition petitioners are challenging their liability to pay interest on deferred interest. ( 4 ) WRIT Petition Nos. 5869 to 5879 of 1993 were disposed of bya Single Judge by his judgment dated 29th day of September, 1993, I. Krishnamma and Others v Syndicate Bank, Manipal and Others. In that judgment, learned Single Judge following the decision of the Supreme Court in Kumari Shrilekha vidyarthi v State of Uttar Pradesh and Others, considered the question as to whether the agreement is arbitrary and unreasonable. Construing the provision of the agreement, the learned Single Judge came to the conclusion that the petitioners are not liable to pay any interest on accrued/deferred interest until the due dates of instalments to pay the accrued interest and a second direction was also issued to the Bank to recompute the accounts of the petitioners. The writ petition was allowed in the above manner. Syndicate Bank has filed Writ Appeal Nos. 35 to 45 of 1994 against the above judgment. ( 5 ) WRIT Petition No. 15244 of 1994 came before another learned Single Judge and the learned Single Judge dismissed the above writ petition holding that the question as to whether the interest has to be levied on deferred interest is a matter which is to be determined by the interpretation of the clauses in agreement Annexures-A and C and that it can be determined only in an appropriate civil proceedings and the jurisdiction under Article 226 of the Constitution of India cannot be invoked in such matter. The learned Judge followed the decision of the supreme Court in Central Inland Water Transport Corporation limited and Another v Brojo Nath Ganguly and Another and held that the principles of reasonableness of the agreement will not come into play where both parties are businessmen and the contract is commercial transaction. In that view of the matter, learned Single Judge dismissed the writ petition against which the writ petitioners has filed Writ Appeal No. 1909 of 1994. ( 6 ) WE heard Counsel for the appellant, Counsel for N. A. B. A. R. D. and Counsel for writ petitioners at length. After hearing them, we are clearly of the view that the judgment in writ Petition No. 15244 of 1994 has to be upheld. ( 6 ) WE heard Counsel for the appellant, Counsel for N. A. B. A. R. D. and Counsel for writ petitioners at length. After hearing them, we are clearly of the view that the judgment in writ Petition No. 15244 of 1994 has to be upheld. ( 7 ) IT is an admitted fact that the rights and obligations of the parties are governed by Annexure-A agreement entered into between the writ petitioners and the Bank. Now the question is as to whether the petitioners are liable to pay any interest or whether they are liable to pay simple interest or whether they are liable to pay compound interest on deferred interest. It is well-settled that when there is relationship of debtor and creditor between the writ petitioner and Bank the rights of parties are to be determined on the terms of the agreement. That can be determined only in a regularly instituted suit wherein all questions can be gone into. It is not proper for this Court under article 226 of the Constitution of India to enter into such controversies and determine the right of parties which arises under the terms of the agreement. The proper remedy of the parties is to agitate all such questions in regard to liability to pay interest before the Civil Court when an appropriate motion is made by the appropriate party at the relevant time. ( 8 ) THE Counsel for writ petitioners have challenged the circular issued by N. A. B. A. R. D. evidenced by Annexure-H and communication issued by Bank to one of the creditors evidenced by Annexure-J wherein it is said that the writ petitioners are liable to pay interest on deferred interest as the loans are advanced before 1-7-1987 wherein there was a change in the scheme. But it is to be noted that the circular is only the opinion expressed by N. A. B. A. R. D. on interpretation of the agreement. But it is to be noted that the circular is only the opinion expressed by N. A. B. A. R. D. on interpretation of the agreement. So also Annexure-J is the interpretation given by the Bank to the agreement between the parties on the basis of the circular by n. A. B. A. R. D. The statement in either in Annexure-H or J can bind the petitioner or Court which will interpret the terms and conditions embodied in Annexure-A. The liability of the parties will have to be independently determined by the appropriate civil Court on a true interpretation of the provisions of annexure-A. The learned Single Judge in Writ Petition Nos. 5869 to 5879 of 1993 has interpreted the agreement and has come to the conclusion that the petitioners are not liable to pay interest. We think that the learned Judge was not justified in interpreting the agreement in a proceedings under Article 226 of the Constitution of India which has to be properly done by the civil Court when any action is initiated to recover the amount from the writ petitioners. Learned Single Judge has exceeded his jurisdiction under Article 226 of the Constitution of India by entering into a controversy of interpretation of the document. In that view, judgment of the learned Single Judge in Writ Petition nos. 5869 to 5879 of 1993 has to be set aside and we do so. ( 9 ) WE make it clear that by setting aside the judgment in Writ Petition Nos. 5869 to 5879 of 1993, we have not ventured to interpret the terms of the document nor we have expressed any opinion on the question of liability or non-liability of the petitioner in regard to payment of interest on deferred interest. It is a matter to be decided by the Civil Court by interpreting the document as and when it arises for the same. In Writ Petition no. 15244 of 1994 the learned Single Judge has taken a view that this matter has to be adjudicated in the Civil Court with which we agree and accordingly Writ Appeal No. 1909 of 1994 is only to be dismissed leaving open parties to raise all their contentions in the Civil Court. ( 10 ) IN the result, we allow Writ Appeal Nos. 35 to 45 of 1994, set aside the judgment and dismiss Writ Petition Nos. ( 10 ) IN the result, we allow Writ Appeal Nos. 35 to 45 of 1994, set aside the judgment and dismiss Writ Petition Nos. 5869 to 5879 of 1993. Writ Appeal No. 1909 of 1994 is also dismissed. We once again make it clear that we have not expressed any opinion on the question of liability of the petitioners to pay interest on deferred interest which will have to be decided by the appropriate Civil Court untrammelled by any of the observations contained in any of the impugned order. In the light of the above, we dismiss Writ Petition Nos. 8429, 9786 and 9787 of 1994, Writ Petition Nos. 10603 to 10609 of 1994 with the above liberty reserved to those petitioners as well. --- *** --- .