HONOURBLE SRI JUSTICE A. RAMALINGESWARA RAO WRIT PETITION No. 1420 OF 2007 DATED 27TH AUGUST, 2014.
BETWEEN B.Mohana Vamsi and anr ….Petitioners and Andhra Pradesh State Finance Corporation, Rep. By its Managing Director, Hyderabad, and ors ….Respondents.
HONOURBLE SRI JUSTICE A. RAMALINGESWARA RAO WRIT PETITION No. 1420 of 2007
ORDER:
Heard the learned Counsel for the petitioners and learned Standing Counsel for respondents 1 and 2.
The third respondent availed loan from second respondent in the month of October,2003, to which the petitioners offered collateral security. The entire loan amount is repayable in 36 monthly installments at the rate of Rs.1,29,000/- per month. The third respondent committed default in payment of monthly installments. The second respondent addressed letter dated 23.11.2006 to the petitioners recalling the entire loan amount together with interest thereon. The first petitioner submitted reply on 27.11.2006 informing the second respondent that he would see the loan amount is paid by the borrower at the earliest possible time, failing which he would clear the dues and on the same day, he paid an amount of Rs.2,96,000/- towards arrears of interest. An amount of Rs.1,80,000/- was paid on 08.09.2006 and Rs.70,000/- was paid on 10.10.2006. Thereafter he addressed letter dated 18.12.2006 to the first respondent assuring that he would clear the loan amount at the earliest possible time and also paid an amount of Rs.1,90,000/- towards principal. Thus in all he paid an amount of Rs.7,36,000/- towards loan amount. While so, the petitioners received letter dated 08.01.2007 wherein it was stated that the loan amount has become Non performance Account (NPA) and in view thereof, action under Section 29 of the State Financial Corporations Act (for short ‘SFC Act’) was initiated against collateral security properties offered for the working capital and if entire outstanding loan amount is not paid on or before 27.01.2007, the properties would be put to sale without any further notice. Challenging the same, the present Writ Petition was filed.
This Court by order dated 25.10.2007 granted stay of all further proceedings subject to the condition that the petitioners shall deposit a sum of Rs.10,00,000/- (Rupees ten lakhs only) within four weeks from the date of the said order and continue to deposit Rs.3,00,000/- (Rupees three lakhs only) by the end of each month commencing from March, 2007. In default of any of the installments, the interim stay shall stand automatically vacated and it was kept open for the respondents 1 and 2 to take appropriate action against the petitioners for recovery of the said amount by proceeding against the collateral security properties.
In pursuance of the said order, the petitioners paid an amount of Rs.37,76,721/- during the period from 28.02.2007 to 22.12.2007 and out of the said amount, an amount of Rs.32,22,870/- was adjusted towards the principal amount, an amount of Rs.5,49,074 was adjusted towards interest and an amount of Rs.4,777/- was adjusted towards Other Expenses. It is the case of the respondents that the installments were paid with delay. The respondents stated in the counter affidavit that since Rs.32,22,870/- was adjusted towards principal amount, an amount of Rs.5,53,851/- as on 31.10.2007 was outstanding towards principal.
The petitioners assuming that they paid the entire loan amount did not prosecute the Writ Petition. The Writ Petition was dismissed for default by order dated 24.10.2008. Subsequently the said default order was set aside on the application filed by the petitioners and the Writ Petition was restored to its file by order dated 20.04.2009. While restoring the Writ Petition, stay of all further proceedings was granted subject to the condition of the petitioners paying to the respondents an amount of Rs.3,00,000/- within a period of three weeks from the date of the said order.
It is stated that the petitioners have paid the said amount. Subsequently on the application of the petitioners, Pre-Security Committee meeting was held for One Time Settlement on 20.09.2013. In the said meeting it was stated as follows:
“ After detailed deliberations, the Committee decided to recommend to the Competent Authority the request of Smt. B.Mohan Vamsi, Smt. Prabha Kundana (CS holders) and Sri BSB Prabhakara Rao, the Managing Director of the Company to close the loan account within two months by allowing total Penal Interest waiver of Rs.2.42 lakhs subject to withdrawal of court case.”
However, respondents 1 and 2 issued a letter to the third respondent on 22.10.2013 stating that in the Pre-Security Committee meeting held for One Time Settlement the Committee in principle agreed to waive penal interest of Rs.2.42 lakhs subject to withdrawal of court case for closure of loan account on payment of balance dues. This was followed by another letter dated 16.11.2013. The first and second respondents have initiated action under SARFAESI Act against the collateral security properties offered by the petitioners by withdrawing notices issued under Section 29 of the State Financial Corporations Act. Possession notices were also published in two daily news papers on 13.03.2009. In the said letter it was stated that if the petitioners fail to pay the amount as mentioned in the said letter with further interest within 15 days from the date of receipt of the notice, the reliefs under OTS i.e. waiver of penal interest of Rs.2.42 lakhs would be withdrawn and the Corporation would proceed further under SARFAESI Act against the collateral security properties and recover the total dues out of sale proceeds.
Now it is clear from the above that pursuant to the order of this court dated 25.01.2007 passed in WPMP.No. 1810 of 2007, the petitioners paid an amount of Rs.37,76,721/- and out of the said amount, Rs.32,22,870/- was adjusted towards principal and it was stated that still an amount of Rs.5,85,580/- was outstanding towards principal with future interest thereon up to 31.1.2008. Therearfter, pursuant to the order of this Court dated 25.01.2007 passed in WPMP.No. 1810 of 2007, the petitioners paid Rs.3,00,000/-. On the application of the petitioners, the Pre- Security Committee held OTS meeting on 20.09.2013 and a decision was taken therein for closure of the loan account within two months by allowing total penal interest waiver of Rs.2.42 lakhs subject to withdrawal of court case. However in the said decision, there was no mention with regard to payment of balance amount dues. Thereafter letter dated 22.10.2013 was issued to the third respondent stating that as on 30.09.2013, an amount of Rs.4,92,892/- was due towards principal and an amount of Rs.6,15,567/- was due towards interest. Normally whenever One Time Settlement meeting is conducted, total outstanding due amount would be calculated and a decision would be taken with regard to entire outstanding due amount. In the case on hand, in the OTS meeting conducted on 20.09.2013, a decision was taken only with regard to waiver of penal interest of Rs.2.42 lakhs subject to withdrawal of court case and there was no mention with regard to payment of balance dues. In the meanwhile, within one month thereafter, the first and second respondents addressed the third respondent a demand notice for payment of balance amount of Rs.8,57,459/-, which includes an amount of Rs.4,92,892/- towards principal and an amount of Rs.6,15,567/- toward interest as on 30.09.2013. Now one year is elapsed from the date of the said demand notice. In the circumstances, petitioners are directed to pay an amount of Rs.6,00,000/- (Rupees six lakhs only) towards full and final settlement of the loan amount within a period of one month from the date of receipt of a copy of this order and on receipt of the said amount, the first and second respondents are directed to release the documents in favour of the petitioners.
The Writ Petition is disposed of accordingly. As a sequel thereto, miscellaneous petitions pending consideration if any in the Writ Petition shall stand closed.
JUSTICE A. RAMALINGESWARA RAO Dated 27th August, 2014. Msnro