RAM SINGH Vs. STATE OF HARYANA AND OTHERS

JUDGEMENT

(1.) The petitioner on 26.9.1995 availed car loan, amounting to Rs. 1,25,000/- from the respondent department where he was serving. According to sanction letter, dated 26.9.1995 (P-1), the rate of interest stipulated was 10% per annum. However, it was made clear that if the loan amount was mis-utilised then penal interest at the rate of 4% per annum over and above normal rate of interest of 10% per annum was to be charged from the date of withdrawal of the loan till the principal amount would have been recovered. The aforementioned position is amply clear from Clause 6 of the sanction letter dated 26.9.1995 (P-1) and the same reads as under :-

(2.) However, the grievance made by the petitioner is that the interest amount of Rs. 52,615/- @ 10% per annum has been calculated and an equal amount of Rs. 52,615/- as penal interest at the rate of 10% per annum is also sought to be recovered. According to the learned counsel for the petitioner, the rate of penal interest could not exceed 4% per annum as stipulated in Clause 6 of the sanction letter dated 26.9.1995 (P-1), which has already been reproduced in the foregoing para.

(3.) The respondents have taken the stand that the instructions dated 30.11.1983 (P-7), which stipulates penal rate of interest at the rate of 4% were modified vide instructions dated 23.8.1993 (P-6) and the penal rate of interest was raised to 10% in case of mis-utilisation of loan amount. Therefore, charge of penal rate of interest at the rate of 10% is sought to be justified. Reliance has also been placed on Rule 10.15 of the Punjab Financial Rules, Volume-I, Part-I, which reads as under :-