NAFEES AHMAD Vs. TEHSILDAR MAGISTRATE TEHSIL PATIYALI ETAH

JUDGEMENT

(1.) This petition under Art. 226 of the Constitution has been filed praying that a writ of certiorari be issued for quashing the citation dated 13-3-1997 issued by the Tehsildar directing the petitioner to pay Rs.61,37,076.00 and also a writ of mandamus be issued commanding the respondents to recalculate the amount liable to be repaid by the petitioners on the basis of simple interest at the rate of 13 per cent per annum.

(2.) The case of the petitioners is that they formed a company which was registered under the Companies Act is Nafis Cold Storage Pvt. Limited and the U.P. Financial Corporation (for short UPFC) sanctioned a loan of Rs. 11 lacs in the year 1978 and further a loan of Rs. 4 lacs was sanctioned to the company in the year 1980. Due to certain problems, the financial condition of the company became precarious and it could not repay the entire amount of loan taken from the UPFC. A notice under Section 29 of the State Financial Corporation Act (hereinafter referred to as the Act) was issued on 10-10-1994 and possession of the unit was taken over. The unit was also sold thereafter. The UPFC illegally sent recovery notice for recovering Rs. 61,37,076.00.

(3.) The principal submission of Sri Yogesh Agarwal, learned counsel for the petitioner, is that the loan given to the cold storage was for agricultural purpose and therefore the UPFC cannot charge compound interest. In support of the proposition that a cold storage activity is 'agricultural' in nature reliance has been placedon a Division Bench decision dated 2-9-1993 in Special Appeal No. 166 of 1993 Pawan Cold Storage v. State of U.P. It is further urged that in Bank of India v. Karnam Ranga Rao, AIR 1986 Karnataka 242, it was held that since farmers do not have regular source of income other than the sale proceeds of their crops and receive the sale proceeds annually, they cannot be accepted to have agreed to pay interest with periodical rests and this decision was affirmed by the Supreme Court in Corporation Bank v. D.S. Gowda, 1995 All CJ 746 : (1994 AIR SCW 2721) and therefore, the petitioner is not liable to pay compound interest.