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2007 DIGILAW 205 (ALL)

KUMAR & SONS v. STATE OF UTTAR PRADESH

2007-01-29

R.P.MISRA, SHISHIR KUMAR

body2007
JUDGMENT By the Court.—The present writ petition has been filed for quashing the order-dated 20.9.2006 (Annexure 1 to the writ petition) passed by Ghaziabad Urban Cooperative Bank Limited, Ghaziabad, respondent No. 4. Further a writ in the nature of mandamus directing the respondents to issue ‘No Objection Certificate’ to the petitioner and also release the security pledged against the cash credit facility given by the respondent-Bank forthwith. 2. The facts arising out of the present writ petition are that the petitioner is a proprietorship concern, which is engaged in trading of Iron and Steel situated at Ghaziabad. A benefit of cash credit facility was availed from the respondent-Bank by the petitioner which was purely a part of commercial transaction between the parties for which a cash credit limit of Rs. 85.00 lacs was given by the respondent-Bank in a separate Account in the year 2001. The petitioner from time to time availed different credits and also repaid the amounts in various installments. However, towards the end of the year 2003, the trading activities of the petitioner got adversely affected due to various circumstances and consequently the petitioner could not repay the installments payable, as per schedule. As the petitioner could not repay the amount within time, as such, a request was made that the balance amount may kindly be permitted to be deposited by the petitioner in easy installments. The request of the petitioner was considered and the petitioner was permitted to deposit the balance amount in 30 monthly installments of Rs. 3,42,683.00 vide its letter dated 11.5.2004. A copy of the same has been filed as Annexure 2 to the writ petition. It has also been stated that this order dated 11.5.2004 has never been revoked or cancelled. There was some delay on the part of the petitioner in compliance of the terms and conditions of the order dated 11.5.2004, therefore, a recovery citation was issued against the petitioner on 20.12.2004 calling upon the petitioner to pay a sum of Rs. 79,01,345.00 along with the collection charges. Aggrieved by the aforesaid order, the petitioner filed a Writ Petition No. 12561 of 2005 in which an interim order was passed on 2.3.2005 in favour of the petitioner. The same is being reproduced below : "Heard Sri Nikhil Kumar, learned counsel for the petitioner and Sri Kandarp Narain Mishra, learned counsel for the respondent No. 4. Aggrieved by the aforesaid order, the petitioner filed a Writ Petition No. 12561 of 2005 in which an interim order was passed on 2.3.2005 in favour of the petitioner. The same is being reproduced below : "Heard Sri Nikhil Kumar, learned counsel for the petitioner and Sri Kandarp Narain Mishra, learned counsel for the respondent No. 4. List the writ petition for admission on 17.3.2005. The petitioner is directed to produce a bank draft of Rs. 25,00,000/- (Twenty five lacs) drawn in favour of respondent No. 4, on the date fixed. If the bank draft is not produced on the date fixed, the writ petition shall stand dismissed. Till the date fixed, no coercive steps shall be taken against the petitioner.” 3. The aforesaid order was subsequently modified on 18.3.2005. The same is also reproduced below : ”An undertaking has been filed by learned counsel for the petitioner in the shape of supplementary affidavit, whereby the petitioner has undertaken to deposit the balance of the amount as indicated in paragraph 4 of the supplementary affidavit. Accordingly, the first installment of Rs. 25,00,000/- (Rs. Twenty five lacs) will be deposited by the petitioner by 30th April, 2005. The second installment of Rs. 25,00,000/- (Rs. Twenty five lacs) will be deposited by 30th May, 2005 and the last installment for the remaining balance amount will be paid by 30th June, 2005. List for admission on 4.7.2005. The interim order dated 2.3.2005 shall remain operative till 4.7.2005. In the event of default, the writ petition shall stand dismissed.” 4. The petitioner duly deposited two installments of Rs. 25.00 lacs each by making the deposits in the following manner : 25.00 lacs on 25.3.2005. 6.00 lacs on 29.4.2005. 19.00 lacs on 5.5.2005. 5. Upon an application made by the petitioner, the matter was heard on 25.7.2005 and this Court was pleased to pass the following order : ”List on 1st August, 2005. Till then no further coercive steps shall be taken against the petitioner. Sri K.N.Mishra, learned counsel for the Bank shall receive instructions as to whether any negotiations are going on between the petitioner and the Bank for settlement of the account or not. However, it shall be open for the petitioner to move before the respondent-Bank for negotiation of the balance amount. Supplementary affidavit filed today be kept on record.” 6. Sri K.N.Mishra, learned counsel for the Bank shall receive instructions as to whether any negotiations are going on between the petitioner and the Bank for settlement of the account or not. However, it shall be open for the petitioner to move before the respondent-Bank for negotiation of the balance amount. Supplementary affidavit filed today be kept on record.” 6. In pursuant of the aforesaid order, the petitioner has applied for settlement of the matter and consequently the respondent-Bank issued a letter dated 30.7.2005 in which it has been stated that an amount of Rs. 7,59,755.00 has been deposited by the petitioner in excess. It has further been directed that from August 2005, the regular installment may be paid. The writ petition was heard finally and disposed of with an observation that the respondents shall not proceed to initiate any further recovery proceeding against the petitioner, provided the petitioner abides by the terms and conditions referred in the letter dated 30.7.2005. Further direction was to dispense with the recovery charges in case the order-dated 30.7.2005 is complied with in true spirit. 7. It has been submitted on behalf of the petitioner that the petitioner has deposited each and every installments strictly in terms of the direction of the Hon’ble Court contained in the order dated 1.8.2005 and in view of the letter dated 30.7.2005. The petitioner has also annexed a statement of account as Annexure 4 to the writ petition showing therein that the total amount has been deposited according to the direction issued by this Court. After clearance of the dues against the petitioner, the petitioner submitted an application and requested to issue a No Dues Certificate’ and the security kept against the cash credit facility. It was further prayed and indicated in the said letter that the petitioner has also requested that certain amount has been shown as recovery charges and the said amount be adjusted towards the liability of the petitioner. Subsequently reminders to this effect were also given to the petitioner. 8. Instead of issuance of No Dues Certificate’, an order impugned dated 20.9.2006 has been passed directing the petitioner to deposit a sum of Rs. 16,79,730.00. Subsequently reminders to this effect were also given to the petitioner. 8. Instead of issuance of No Dues Certificate’, an order impugned dated 20.9.2006 has been passed directing the petitioner to deposit a sum of Rs. 16,79,730.00. It has been submitted by the petitioner that the impugned order dated 20.9.2006 is clearly in the teeth of the order passed by the Hon’ble Court in Writ Petition No. 12561 of 2005 inasmuch once the liability of the petitioner was determined and the amount was actually been paid no fresh demand in support thereof can now be raised by the respondent-Bank. Since the amount has already been paid as agreed by the respondent-Bank in the letter dated 30.7.2005, it is not open for the respondent-Bank to raise any further demand. The impugned action of the Bank in going behind the settlement arrived before this Court vide letter dated 30.7.2005, as the same has been enforced by the judgment of this Court dated 1.8.2005. It has further been submitted that letter-dated 30.7.2005 clearly states that a resolution has taken place and the petitioner was given a facility to deposit the said amount. It has also been stated that the letter dated 11.5.2004 in which the request has been made by the petitioner to deposit the total amount in 30 monthly installments. It has clearly been mentioned that the installment, which was fixed that was with interest, as such, whether the permission which was given by the respondents and the petitioner has already abide by the order of this Court, the respondents cannot raise any further demand. The writ petition was dispose of vide its order dated 1.8.2005 directing to pay the installment with effect from August 2005 as per resolution dated 7.5.2004. The respondents were restrained not to initiate any further proceedings provided the petitioner abides by terms and conditions referred in the letter dated 30.7.2005. There is no dispute to this effect that the petitioner duly deposited all the installments payable as resolution dated 7.5.2004. 9. It has further been submitted that the impugned order dated 20.9.2006 is wholly arbitrary, illegal and in the teeth of settlement arrived at by the respondent-Bank, acting through the very same officer Shri Shailendra Bahadur Singh who had communicated acceptance of settlement vide order dated 30.7.2005, which had formed basis of final judgment of this Court dated 1.8.2005. 9. It has further been submitted that the impugned order dated 20.9.2006 is wholly arbitrary, illegal and in the teeth of settlement arrived at by the respondent-Bank, acting through the very same officer Shri Shailendra Bahadur Singh who had communicated acceptance of settlement vide order dated 30.7.2005, which had formed basis of final judgment of this Court dated 1.8.2005. The respondent-Bank cannot be permitted to act contrary to the judgment-dated 1.8.2005. As the aforesaid settlement was became the basis of the judgment of this Court and the same was acted upon and the respondents have received the entire amount pursuant to the said settlement, the respondents now at this stage cannot simply give a go by to it. 10. It has also been stated on behalf of the petitioner that the Reserve Bank of India had issued a policy of one time settlement and the various organizations are accepting the one time settlement in case the borrower is not in a position to pay the total money borrowed with interest. The guidelines clearly states that the compounding interest may be waived and a very simple interest may be charged. The purpose of issuance of one time settlement is that in case of borrower is not in a position to pay the total demanded amount by any financial organization then the amount actually paid that is principal amount is to be paid by the borrower. This intention of one time settlement issued by the Reserve Bank of India is binding upon several financial organization in the country. Admittedly, on the basis of request made by the petitioner, a settlement was arrived and in pursuant, the Secretary has communicated the decision of the Board and has directed to pay the amount in installments. Therefore, whether at this stage after payment and complying the order of this Court the respondents could issue a further recovery against the petitioner. 11. The reliance has been placed upon a judgment of this Court reported in 1982 ALJ 310, Satyendra Pal v. The Regional Transport Authority, Agra and another and has placed reliance upon Para 4 of the said judgment. The same is being reproduced below : "4. In fact, there is another principle of law still more puissant and not less irrevocable, viz. that he was chooses to defy the order of a Court must face the Nemesis, the wages of disobedience is penalty. The same is being reproduced below : "4. In fact, there is another principle of law still more puissant and not less irrevocable, viz. that he was chooses to defy the order of a Court must face the Nemesis, the wages of disobedience is penalty. It follows as a corollary that if a person is able to secure any advantage by flouting an order of the Court , he must be made disgorge such gain. Likewise, proceedings taken by an authority in flagrant disregard of the order of a Court are nullity and the Court should have no compunction in putting the hand of the clock back and restoring the status quo ante. Where an order of a Court is disobeyed, a writ must be issued to redress the injury suffered by a person on account of the disobedience of such order. To borrow the words of Chinnappa Reddy, J. in Capt. Dushyant Somal v. Smt. Sushma Somal, (1981) 2 SCC 277 : ( AIR 1981 SC 1026 at p. 1029) : "Where what is complained of is an impudent disregard of an order of a Court, the fact certainly cries out that a prerogative writ shall issue.” It is precisely this principle which looms large in the present case and all other aspects ultimately converge to this single point. Hence, we do not consider it necessary to advert to the submission of Sri R.A. Sharma that the petitioner in the present case was actually set up by other operators of the route and that for that reason no relief should be granted to the petitioner. Since we have held that the Transport Appellate Authority issued permits in disregard of the interim order passed by this Court, the order dated 1.10.1980 cannot be allowed to stand.” 12. In support of the aforesaid contention the petitioner submits that disobedience of order by this Court is empower to issue writ to redress injury. The doctrine of merger and honest’ is not one of universal application. It operates within a limited field and is subject to several exceptions. The proceedings taken by an authority in flagrant disregard of the order of a Court are nullity and the Court should have no compunction in putting the hand of the clock back and restoring the status quo ante. It operates within a limited field and is subject to several exceptions. The proceedings taken by an authority in flagrant disregard of the order of a Court are nullity and the Court should have no compunction in putting the hand of the clock back and restoring the status quo ante. Where an order of a Court is disobeyed, a writ must be issued to redress the injury suffered by a person on account of disobedience of such order. 13. Another judgment relied upon by the learned counsel for the petitioner in 1981 (2) SCC 277 , Capt. Dushyant Somal v. Smt. Susma Somal and another. 14. The another judgment relied upon by the counsel for the petitioner reported in 2005 (4) AWC 3563, Smt. Kesari Devi v. State of U.P., and reliance has been placed upon paragraphs 122, 123 and 124 of the said judgment. The same are being reproduced below : "122. Undoubtedly, it is settled legal proposition that any order passed in contravention of the order of the Court cannot be given effect to. It remains cannot be given effect to. It remains unenforceable and inexecutable provided the interim order passed by the Court is communicated to the authority concerned. 123. In Mulraj v. Murti Raghunathji Maharaj, AIR 1967 SC 1386 the Hon’ble Apex Court held that any order passed by the Court comes into force immediately, and if any authority passes an order in contravention of the order passed by the Court it is nullity if the order of the Court has been communicated to the said authority. The Hon’ble Apex Court further observed as under : "...........In the case where the execution proceeding is quashed, the order takes effect immediately and there is nothing left to execute but where a stay order is passed, execution still stands and can go on unless the Court executing the decree has knowledge of the stay order. It is only when the executing court has knowledge of the stay order that the Court must stay its hands and anything it does thereafter would be a nullity so long as the stay order is in force.” 124. Similar view has been reiterated in Surjit Singh and others v. Harbans Singh and others, 1995 (3) AWC 1944 (SC) : (1995) 6 SCC 50 and Government of A.P. v. Gudepu Sailoo and others, AIR 2000 SC 2297 .” 15. Similar view has been reiterated in Surjit Singh and others v. Harbans Singh and others, 1995 (3) AWC 1944 (SC) : (1995) 6 SCC 50 and Government of A.P. v. Gudepu Sailoo and others, AIR 2000 SC 2297 .” 15. It has further been submitted by the petitioner that once the settlement has arrived at between the parties before the Court, the parties cannot be permitted to act contrary to it. Reliance has been placed upon two judgments reported in 2006(1) SCC 502 , N.K. Rajgarhia v. Mahavir Plantation Ltd. and others. The further reliance has been placed by the petitioner reported in (2003) 11 SCC 372 , Jineshwardas (D) and others v. Jagrani (Smt.) and another. 16. On the other hand, Sri K.N. Misra who appears for the respondents has filed a counter affidavit and has stated that the petitioner was sanctioned a cash credit facility to the tune of Rs. 85 lacs. The petitioner was a defaulter and on 12.4.2004 an amount of Rs. 88,43,868.00 was due against the petitioner. After crediting the amount deposited by the petitioner and interest for the period April 2003 to June 2004 was debited to his account on 4.9.2004 for an amount of Rs. 11,58,803.00 and further interest for the period January 2005 to March 2005 for an amount of Rs. 2,62,175.00 as on 31.3.2005 and further interest for the period April, 2005 to June 2005 for an amount to Rs. 1,52,697.00 as on 30.6.2005, as also similar debit of interest was levelled upon the petitioner up to 30.6.2005 and Rs. 71,315.00 as on 29.9.2006. It has been submitted by the respondents that due to wrong calculation of interest the amount of Rs. 3,00,856.68p which was wrongly charged has been credited to the petitioner’s account on 6.9.2006 and after giving credit to the aforesaid amounts, the total balance as on 29.9.2006 payable by the petitioner has been arrived to the tune of Rs. 17,51,450.04p. It has been stated that the allegation of the petitioner is incorrect to this extent that any excess amount is being charged from the petitioner, only the interest due to the petitioner is being charged. It has further been submitted on behalf of the respondents that only question involved in the earlier writ petition was to fix installments which was agreed that the petitioner will pay the same in terms of the resolution dated 7.5.2004. It has further been submitted on behalf of the respondents that only question involved in the earlier writ petition was to fix installments which was agreed that the petitioner will pay the same in terms of the resolution dated 7.5.2004. It has been stated in the said letter that Bank will have no objection to the payment being made by the petitioner, in case, the petitioner proceeds and continues to make regular payment of installment as fixed vide resolution dated 7.5.2004 but the bank has never stated that future interest will not be charged from him and will not be debited to his account after 30.3.2004. The letter dated 30.7.2005 of the Bank only states that the amount due against the petitioner is to be deposited in 30 installments but he has failed to do so. However, in terms of the installments fixed by the Bank, excess amount was deposited towards as installments by July 2005. It was to be adjusted in future installments. A wrong statement has been made on behalf of the petitioner that he has deposited an amount excess to his loan by July 2005. The emphasis which has been made by the petitioner that account of the petitioner has been rescheduled on 20.9.2006 and has been placed in different criteria whereas the letter clearly contains that since Rs. 4,54,546.00 was charged towards collection charges, as such by rescheduling the amount the aforesaid amount has been credited to him along with interest accrued on the aforesaid amount that is an amount of Rs. 5,06,503.28p has been credited to the petitioner on 20.9.2006. Admittedly, collection charges realized from the petitioner has been reversed along with interest, as such, there is no illegality that the amount has been rescheduled on 20.9.2006. Rs. 16,79,403.60p is due upon the petitioner as on 20.9.2006. 17. But the submission made on behalf of the petitioner that vide order dated 1.8.2005, this Hon’ble Court has directed not to charge any interest on the ground after 31.3.2004, is not correct. The only direction was not to realize the recovery charges from the petitioner. Rs. 16,79,403.60p is due upon the petitioner as on 20.9.2006. 17. But the submission made on behalf of the petitioner that vide order dated 1.8.2005, this Hon’ble Court has directed not to charge any interest on the ground after 31.3.2004, is not correct. The only direction was not to realize the recovery charges from the petitioner. Regarding the charging of interest the learned counsel for the respondents has submitted that the system of interest in the bank is only arrived after three months as such, interest levied on 30th June, 30th September, 31st December and 31st March, as such in the amount due against the petitioner as on 31.3.2004, the interest up to 31st December, 2003 was added and obviously, the interest was calculated and added by September and subsequently which the petitioner has never submitted that he has paid the interest and it is being recharged from him. It is absolutely incorrect to state that the respondents by charging interest by debiting account against the petitioner after passing order dated 1.8.2005 is committing any mistake. There is no mention in the order dated 1.8.2005 that no interest is payable by the petitioner. 18. We have heard Sri Ashwani K. Misra, learned counsel for the petitioner assisted by Sri D.V. Singh Advocate and Sri K.N. Mishra, learned counsel for the respondent-Bank and have perused the record. 19. From the record, it is clear that a cash credit facility was given to the petitioner and there was a default by the petitioner and on the request made by the petitioner, a resolution was considered by the Board and by letter dated 11.5.2004, the request of the petitioner was accepted and that amount be deposited in 30 monthly installments. Impliedly this was an agreement for payment of the total amount due against the petitioner. From the record it is also clear that the settlement had arrived between the parties on 11.5.2004 has never been revoked. When the petitioner was not able to pay some installment a recovery was issued to the petitioner to Rs. 79,01,345.00. By order dated 2.3.2005 this Court had passed an order that petitioner will produce the bank draft drawn in favour of the respondent No. 4 on the date fixed and the writ petition was ordered to be listed on 17.3.2005. When the petitioner was not able to pay some installment a recovery was issued to the petitioner to Rs. 79,01,345.00. By order dated 2.3.2005 this Court had passed an order that petitioner will produce the bank draft drawn in favour of the respondent No. 4 on the date fixed and the writ petition was ordered to be listed on 17.3.2005. On 18.3.2005 this Court had passed an order that on the basis of undertaking given by the petitioner, in para 4 of the supplementary affidavit the first installment of 25 lacs will be deposited by the petitioner by 30th April, 2005 and the second installment of Rs. 25 lacs will be deposited by 30th May, 2005 and the last installment for the remaining balance amount will be paid by 30.6.2005. In compliance with the aforesaid order, the petitioner has deposited 50 lacs on 29.3.2005, 29.4.2005 and 5.5.2005 respectively. The order dated 25.7.2005 clearly indicates that the learned counsel for the respondent-Bank was directed to inform whether any negotiations were going on between the petitioner and the bank. It was also left open to the petitioner to approach for the purposes of negotiation to deposit the balance amount. It is also clear from the letter dated 30.7.2005 issued by the Bank that an excess amount of Rs. 7,59,755.00 has been deposited by the petitioner which was due to the petitioner to be deposited in installments and after disposal of the Writ Petition No. 12561 of 2005 by order dated 1.8.2005, the petitioner has fulfilled the terms, conditions and direction of this Court. It was directed in the said order that a copy of the letter dated 30.7.2005 issued by the Bank clearly indicates that some excess amount has been deposited by the petitioner. It clearly goes to show that bank will have no objection in case the petitioner proceeds and continues to make regular payment of the installment with effect from August 2005 onwards as per resolution dated 7.5.2004. It has further been directed in the said order that in case the petitioner abides by the terms and conditions referred to hereinabove according to letter dated 30.7.2005 the respondents shall not proceed to initiate any further recovery proceedings against the petitioner. Meaning thereby in case the petitioner fulfils the compliance of the order dated 1.8.2005 according to the letter of the Bank dated 30.7.2005 there will be no further recovery. 20. Meaning thereby in case the petitioner fulfils the compliance of the order dated 1.8.2005 according to the letter of the Bank dated 30.7.2005 there will be no further recovery. 20. From the perusal of the letter dated 30.7.2005, there is a clear presumption that interest up to 30th July, 2005 must have been calculated. There is nothing on record to show that the letter dated 7.5.2005 issued by the bank anywhere it whispers that any further amount will be payable by the petitioner. It has clearly been mentioned that the petitioner can pay the rest of the amount in 30 installments. The letter dated 11.5.2004 mention that including interest, therefore, the presumption will be that the amount which has been demanded from the petitioner or due to the petitioner, the amount must have been included with interest. There cannot be any presumption as submitted by the respondents that the aforesaid amount or facility has been given to the petitioner subject to condition that interest accrued will be charged from the petitioner subsequently. From the record, it is clear that the bank has agreed to accept the total amount due against the petitioner in installments. If an agreement has already taken place between the parties, in our view, the respondents have no authority or jurisdiction to back out from the same. The Apex Court has clearly held that if any order is passed in contravention of the order of the Court, cannot be given effect to. It remains unenforceable and inexecutable. From the order dated 1.8.2005, it clearly goes to show that this Court has clearly directed “that respondents shall not proceed to initiate any further recovery proceeding against the petitioner provided the petitioner abides by the terms and conditions referred to here-in-above in the letter dated 30.7.2005.” It clearly goes to show the intention of the Court that there will not be any further liability upon the petitioner and the respondents themselves indicated this fact in the letter dated 30.7.2005 that in case the petitioner complies the order, there will be no further recovery. This was a type of facility with the consent of the parties, therefore, the question will be that if some agreement or compromise has arrived between the parties, whether one of the party in spite of the compliance of the compromise order can revoke that. This was a type of facility with the consent of the parties, therefore, the question will be that if some agreement or compromise has arrived between the parties, whether one of the party in spite of the compliance of the compromise order can revoke that. The Apex Court in N.K. Rajgarhia (supra) has clearly held that if there was any compromise or consent order and the same has been fulfilled though there is some delay but one of the party has got no right or to content that he is entitled to other benefits also. 21. In view of the aforesaid fact, we are of the view that the order impugned dated 20.9.2006 (Annexure 1 to the writ petition) issued by the respondent No. 4 cannot be sustained and the respondents cannot raise any further demand against the petitioner. The order dated 20.9.2006 (Annexure 1 to the writ petition) issued by the respondent No. 4 is hereby quashed. 22. The writ petition is allowed. 23. There shall be no order as to costs. ———