DEONATH SINGH Vs. STATE OF U P

JUDGEMENT

(1.) SHEONATH Singh, respondent No. 5, was sanctioned a loan of Rs. 35,000 under the Small Loan Guarantee Scheme, 1971 by Union Bank of India, Chetganj Branch Ha thuwa Market, Varanasi, respondent No. 4, for business of whole-sale timber. The amount of the loan was repayable in instalments as per paragraph 12 of the Scheme (Annexure 3 to the writ petition). The petitioner stood as a guarantor to the loan. The recovery proceedings were initiated against the petitioner and also respondent No. 5 as arrears of land revenue. By this writ petition, the petitioner has claimed a writ, order or directions in the nature of certiorari quashing the notice of demand dated 5th February, 1992 sent by the Tehsildar, Varanasi to recover Rs. 48,088.70 and also interest, recovery charges and the cost of the notice and also the Recovery Certificate dated 2nd July, 1990, sent by the Manager, Union Bank of India, respondent No. 4 to Collector, Varanasi to recover the amount of Rs. 43,717 towards the principal and Rs. 4,371.70 towards interest. A further prayer is made for a writ of mandamus, order or direction in the nature of mandamus directing the respondents not to arrest the petitioner and also not to attach and sell his property for the recovery of the loan which was not actually taken by him.

(2.) SRI Sankatha Rai, learned counsel for the petitioner, has submitted that the Bank has not made any attempt to recover the principal from the debtor, respondent No. 5, that interest is sought to be recovered at the rate of Rs. 16.5% per annum whereas under the scheme interest could be recovered at a rate of not more than 11% per annum and that the loan was advanced for 5 years but the recovery proceedings have been initiated before the expiry of that period.

(3.) AS regards the submission that the loan is sought to be recovered before the expiry of 5 years within which the amount was to be paid, the relevant clause in the Scheme is contained in paragraph 12 of the Scheme (Annexure 3), which states :