SHER SINGH Vs. PUNJAB FINANCIAL CORPORATION

JUDGEMENT

(1.) Plaintiff had filed a suit for permanent injunction restraining the defendant from recovering the loan amount along with interest @ 20% per annum.

(2.) The case of the plaintiff, in brief, was that he was a retired Subedar from Army. He had applied for a loan from the defendant to instal a rice husk and rice bran grinding unit on 22.2.1991. A term loan of 6,75,000/-was sanctioned to the plaintiff, which was to be recovered along with interest @ 11.5% per annum. Plaintiff was also allowed the loan to the tune of 1,50,000/- as working capital and the same was to be repaid along with interest @ 14% per annum. Another loan of 1,30,000/- was sanctioned in favour of the plaintiff as soft seed capital assistance along with interest @ 1% per annum. After completion of construction, plaintiff installed machinery in the unit. Plaintiff received 4,05,000/- from the defendant vide various cheques and plaintiff also received a sum of 1,47,000/- on various dates up to 20.12.1993. However, the remaining amount of loan had not been released to the plaintiff. The unit was partly completed in the year 1993. Instead of releasing the remaining loan to the plaintiff, the defendant sent a notice claiming interest @ 20% per annum instead of 11.5% agreed interest. Plaintiff also received letters for recovery of working capital amount which was never released by the defendant. Plaintiff also received a letter qua recovery of soft seed loan amount and the interest @ 20% per annum was charged instead of agreed rate of interest @ 1% per annum. Plaintiff was forced to deposit an amount of 1,40,000/- to get back his unit as the same was locked by the defendant. Plaintiff received another letter dated 17.5.1997, wherein, it was mentioned that the loan to the tune of 1,70,000/- had been cancelled.

(3.) Defendant, in its written statement, admitted the factum of sanction of loan to the plaintiff. It was averred that on the date of execution of mortgage deed dated 2.9.1992, the rate of interest between the parties was fixed @ 20% per annum. Hence, the plaintiff was liable to pay the said rate of interest and only on loan qua soft seed capital assistance, plaintiff was liable to pay interest @ 1% . However, in case of default the interest prevailing on term loan was liable to be charged as mentioned in the mortgage deed. Plaintiff had been released the loan to the extent of 6,55,000/- out of the total loan amount. Plaintiff was advised to advance 25% of the cost of raw material to the suppliers so that loan qua working capital could be released to the plaintiff. Another letter was writtpn to the plaintiff on 11.5.1994 and inspection was conducted on 18.7.1994 but the same could not materialise as no representative of the plaintiff turned up at the spot. Again a reminder was sent to the plaintiff on 26.7.1994 for compliance of formalities required for release of working capital but of no avail. In this situation, the defendant took over the possession of the unit, which was restored to the plaintiff on 31.10.1996. Plaintiff did not approach the Corporation for release of the balance loan nor submitted the requisite documents so the Corporation had to cancel the loan amount.