Bombay High Court
M/S Progressive Food Products Pvt. ... vs Sarswat Co-Operative Bank Ltd., ... on 3 May, 2017
Author: Prasanna B.Varale
Bench: Prasanna B.Varale
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 5987 OF 2015
1. M/s Progressive Food Products Pvt.
Ltd., having its registered Office at
12, East High Court Road, Ramdas-
peth, Nagpur.
2. Rajendraprasad Sardarilal Agrawal,
aged about 78 years, present occ.
Nil, Director of Petitioner No.1, R/o
Dharampeth, Zenda Chowk, Nagpur.
3. Smt. Renu w/o Sudhir Agrawal,
aged about 51 years, Occupation
Household, director of Petition No.1,
R/o Zenda Chowk, Dharampeth,
Nagpur.
4. Smt. Kusum w/o Rajendraprasad
Agrawal, aged about 72 years, Occ.
Household, R/o. Zenda Chowk,
Dharampeth, Nagpur. ... PETITIONERS
VERSUS
Saraswat Co-operative Bank Ltd.,
through its Brnch Manager and
Authorised Officer, having its Branch
office at Agrasen Chowk, Nagpur. ... RESPONDENT
....
Shri R.P. Joshi, Advocate for the petitioners.
Shri M.D. Samel, Advocate for the respondent.
....
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CORAM : PRASANNA B.VARALE, J.
DATE OF RESERVING THE JUDGMENT : 25TH OCTOBER, 2016.
DATE OF PRONOUNCING THE JUDGMENT : 03RD MAY, 2017.
JUDGMENT :
By way of present petition, the petitioners are challenging the judgment and award passed by the learned Judge, Cooperative Court, Nagpur in Dispute No. 414 of 1996 dated 18.02.2013 and the judgment and award passed by the learned Member, Maharashtra State Cooperative Appellate Court, Bombay, Bench at Nagpur in Appeal No. 13 of 2013 dated 07.09.2015.
2. The brief facts, which give rise to the filing of the present petition, can be summarized as under :-
The petitioner No.1 is the company and petitioner Nos.2 and 3 are the directors of the said company. The petitioner/company indulged in production of the fruit products. It is the case of the respondent/ Saraswat Cooperative Bank Limited (hereinafter referred to as "The bank"
for the sake of brevity) that the petitioner/company sought financial assistance from the erstwhile bank namely Nagpur Urban Cooperative Bank Limited. As the petitioner/company was engaged in the business of manufacturing and bottling the products, such as fruit and vegetables, fruit pulp, juices, squashes etc. and also manufacturing pickles, jam and ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 :::
3 wp5987.15 other edible articles and had opened a current account in the said bank. To the proposal of the petitioner/company for grant of cash credit limit against the loan, the bank sanctioned the cash credit limit. The petitioner/company deposited Rs.50,000/- with the bank on 04.07.1988 vide Fixed Deposit Receipt (FDR) No. 2132 and additional deposit of Rs.50,000/- on 21.07.1988 vide FDR No. 2160. The bank sanctioned cash credit limit of Rs.85,000/- in the name of petitioner No.1/company. The petitioner Nos.2 and 3 who were the directors of the said company executed promissory notes and agreed to pay interest at the rate of 12 per cent per annum with quarterly rest. The petitioner Nos.1 to 3 submitted to the bank that the sanctioned limit of Rs.85,000/- is inadequate for them and they are in need of enhanced temporary limit for the period of one year. A proposal was submitted to the bank. On scrutinizing the said proposal, the then Chairman of the bank one Chandrabhan Sonarghare sanctioned the enhanced limit of Rs.25,000/- in addition to the existing limit. It is the case of the bank that the petitioners executed fresh demand promissory notes against the enhanced limit of Rs.25,000/- and agreed to pay the interest at the rate of 16.50 per cent per annum with quarterly rest. It is further the case of the bank that the petitioners were permitted to operate the cash credit limit of Rs.1,10,000/-. As per the scrutiny of the bank accounts, the petitioners overdrew from time to time and overdrawing of the petitioners was never within the sanctioned limit.
The financial condition of Nagpur Urban Cooperative Bank ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 4 wp5987.15 became extremely weak due to the mismanagement resulting in appointment of an administrator over the bank, superseding sometime in the year 1991. The Reserve Bank of India imposed restrictions on the banking operation of the Nagpur Urban Cooperative Bank and ultimately vide order dated 03.05.1993, the Commissioner of Cooperation, Pune, the Nagpur Urban Cooperative Bank was amalgamated with the present respondent i.e. Saraswat Cooperative Bank Limited. The amalgamation was confirmed on 07.09.1993 and the entire assets and liabilities of the Nagpur Urban Cooperative Bank were transferred to the present respondent/Saraswat Cooperative Bank Limited . In view of these facts, the respondent/Bank started recovery of the amounts due. Accordingly, the petitioners were also approached and were called upon to liquidate the amount of Rs. 2,75,551.70 found due inclusive of interest up to 30.09.1993. The petitioners expressed their inability to liquidate the amount sought for to be recovered from the respondent/Bank in lumpsum and informed the respondent/Bank that the amount of proceeds of FDRs be adjusted to cash credit account to reduce the dues. The respondent/Bank accordingly on 14.01.1994 adjusted the FDRs to the cash credit accounts and the dues were reduced to Rs.1,67,134.50. The respondent/Bank then asked the petitioners to liquidate the due amount or Rs. 1,67,134.50, but the petitioners failed to do so. The respondent/Bank was constrained to issue the notice through its Counsel calling upon the petitioners to pay the amount of Rs.1,67,134.50 jointly and severally with an unapplied interest ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 5 wp5987.15 of Rs.41,266.75. Thus, totaling the amount of Rs.2,08,402.25 along with the notice charges of Rs.400/- within stipulated period of ten days. In spite of the notice issued to the petitioners, the petitioners failed to pay the dues and forwarded their reply through the Counsel on 06.04.1995 denying the claim of the respondent/Bank. The bank left with no choice but to file the dispute before the learned Cooperative Court, Nagpur.
The learned Judge of the Cooperative Court by judgment and order dated 18.02.2013 partly allowed the dispute and directed the petitioners to repay an amount of Rs.1,67,498.60 with future interest at the rate of 16.50 per cent per annum on the balance principal cash credit loan of Rs.1,10,000/- from the date of the filing of dispute till its full realization. Being aggrieved by the said judgment and order passed by the learned Judge, Cooperative Court, the petitioners preferred an appeal before the learned Member of the Maharashtra State Cooperative Appellate Court, Bench at Nagpur. The learned Member partly allowed the appeal. The learned Member of the appellate Court though maintained the order of allowing the dispute, modified the order of the learned Judge of the Cooperative Court to the extent of the interest. The learned Member, appellate Court directed the petitioners to pay the outstanding amount of Rs.1,67,498.60 with interest at the rate of Rs.12 per cent per annum from the date of dispute till its full realization.
3. Shri Joshi, the learned Counsel for the petitioners vehemently ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 6 wp5987.15 submits that the orders challenged in the present petition namely the judgment and award passed by the learned Judge of the Cooperative Court and the judgment and order passed by the learned Member of the Cooperative Court are unsustainable on more than one ground. Shri Joshi, the learned Counsel submits that both the Courts below grossly erred in appreciating the material placed before the Courts below in proper perspective and only on assumption and presumption, the orders are passed. The learned Counsel for the petitioners then vehemently submits that both the Courts below failed to appreciate the oral evidence of the witness of the respondent/Bank who in clear and unambiguous terms, submitted before the Court that there was no material with the respondent/Bank to show that the petitioners have availed any loan from the bank or the bank provided any financial assistance to the petitioners. Shri Joshi, the learned Counsel submits that on the contrary, it was the consistent stand of the petitioners before the Courts below that the petitioners availed the facility of the cash credit against the FDRs and this fact was admitted by the witness of the bank. The learned Counsel for the petitioner then submits that it was also the consistent stand of the petitioners that the respondent/bank relied on the certain documents namely the promissory notes executed by the petitioners; whereas the petitioners submitted that no such promissory notes were executed by the petitioners nor the petitioners submitted any document in the nature of personal guarantee by the directors of the petitioner/company and it was ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 7 wp5987.15 specific stand of the petitioners that certain blank papers signed by the petitioners were obtained by the bank and these documents were misutilized to suit the purpose.
4. Shri Joshi, the learned Counsel also submits that though the petitioners raised the point namely as there was no relationship between the petitioners and the erstwhile bank namely Nagpur Urban Cooperative Bank and as such the dispute itself was not tenable. The Courts below on an erroneous assumption recorded the finding against the petitioners. The learned Counsel then submits that both the Courts below also failed to appreciate that the petitioners availed the cash credit facility against the FDRs which were for a stipulated period and the petitioners offered the encashment of these FDRs against the outstanding amount. The respondent/Bank failed to encash the FDRs and on the contrary fixed the exorbitant rate of interest for recovery of an alleged due against the petitioners. Shri Joshi, the learned Counsel then submits that both the Courts also failed to appreciate the factual aspect namely the petitioner No.4 was neither a party to the transaction between the petitioner Nos.1 to 3 and the Nagpur Urban Cooperative Bank nor had any concern with the cash credit facility availed against the FDRs even though the petitioner No.4 was fastened with the liability and on this aspect itself. Hence, the judgments and orders passed by both the Courts below are clearly unsustainable. It is also the submission of Shri Joshi, the learned Counsel ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 8 wp5987.15 for the petitioners that there was absolutely no transaction by the petitioners with the respondent/Bank after 21.07.1989 and in spite of these facts, the dispute was filed fastening the liability on the petitioners for alleged due amount on 30.09.1993. Shri Joshi also submits that the respondent/Bank sought for the recovery of the amount from the petitioners by applying varied rate of interest i.e. at some point of time, it was 12 per cent and at some point of time it was 16 per cent. The learned Counsel submits that such a fanciful rate of interest claimed by the respondent/bank at its whims and wishes itself is an act of arbitrariness. As such, it needs to be struck down.
5. Shri Joshi, the learned Counsel then submits that both the Courts below also failed to consider that when the petitioners submitted before the Courts below that there was no transaction with the respondent/Bank after the year 1989 and the respondent/Bank failed to produce any such material before the Courts below to show that there was a transaction after the year 1989, the dispute thus was filed at a belated stage and only to show that the cause of action arose to file the dispute on 04.01.1995, it was alleged that the bank was entitled to make the claim on 25.09.1993 and 14.01.1994 and the cause of action arose on 04.01.1995, the dispute ought not to have been entertained being a time barred dispute. The learned Counsel for the petitioner also places heavy reliance on the Rule 45A of the Maharashtra Cooperative Societies Rules, 1961 to submit ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 9 wp5987.15 that the respondent/bank could not have clubbed the two accounts and could not have sought recovery against the petitioner on an alleged loan account against the FDRs of the petitioners. Shri Joshi, the learned Counsel further submits that even the Courts below found that the clubbing of the accounts by the bank was not proper, the Courts below committed an error in allowing the dispute. Shri Joshi, the leaned Counsel has invited my attention to the order passed by this Court on July 19, 2016, which reads thus :-
"After hearing respective Counsel for the parties for some time, the facts on record indicate that the petitioners had invested Rs.50m,000/- in two separate fixed deposits and were issued two fixed deposit receipts. The said receipts were dated 4-7-1988 and 21-7-1988. The said fixed deposit receipts were to earn interest @ 10% per annum. In the reply filed on behalf of the respondent, it has been stated that as per the account statement at Exhibit-39, the proceeds of the aforesaid fixed deposit receipts were adjusted by crediting an amount of Rs.54,210.35 and Rs.54,213.85 on 30th September, 1993. Prima facie, the amount credited towards the realization of the aforesaid fixed deposit receipts appears to be on a lower side.
Time of two weeks is granted to the learned Counsel for the respondent to explain the manner in which the amount of interest has been calculated and credited."
Shri Joshi, the learned Counsel for the petitioners, in support of his ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 10 wp5987.15 submission places heavy reliance on the judgments of the Apex Court in the cases of State of U.P. .v. Jogendra Singh (reported in AIR 1963 SC, 1618); Akalakunnam Village Service Cooperative Bank Limited and another .v. Binu N. and others (reported in 2014(9) SCC, 294); Tulip Star Hotels Limited .v. Special director of Enforcement (reported in 2014(5) SCC, 162); Ishwar Dass Jain (dead) through LRs .v. Sohan Lal (dead) by LRs (reported in AIR 2000 SC, 426); and the judgment of Gauhati High Court in the case of Dharam Chand Joshi .v. Satya Narayan Bazaz (reported in AIR 1993 Gauhati, 35).
6. Per contra, Shri Samel, the learned Counsel for the respondent/Bank supports the judgments and orders impugned in the present petition. He submits that there are concurrent findings recorded on appreciation of the material by both the Courts below. As such, this Court, while exercising the writ jurisdiction would be slow in appreciating the evidence. The learned Counsel for the respondent/bank then submits that the petitioners admitted that an amount was due against the petitioners. Shri Samel, the learned Counsel then submits that the petitioner No.2 tendered his evidence before the Courts below and admitted the documents. As such, the petitioners now cannot challenge this document before this Court. He further submits that though the learned Judge of the Cooperative Court granted interest at the rate of 16 per cent per annum, the appellate Court reduced it to 12 per cent per ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 11 wp5987.15 annum. As such, the petitioners cannot take a stand of an exorbitant interest awarded by the bank. Shri Samel, the learned Counsel then submits that the petitioner No.2 himself submitted before the bank that he is in need of enhancement in the cash credit limit and executed promissory note against such an enhancement sought for and as such the petitioners now cannot raise the ground of wrongful clubbing of the accounts. He also submits that merely there were some statements in the evidence of the bank employee, the same would not adversely affect the case of the respondent/bank as the respondent/bank has placed on record the photocopies of the ledgers. The learned Counsel for the respondent/ bank submits that this material was in the form of the reliable evidence and a photocopy of the ledger is a reliable evidence than a certified copy and the only requirement is that there must be a certificate of such photocopy of the ledger and in the present matter, a certificate was issued by the Branch Manager. Thus, the submission of Shri Samel is that the document is placed on record by the respondent/Bank was clearly reliable evidence.
7. Shri Samel, the learned Counsel then submits that in view of the material placed on record, the petitioners could not have raised any challenge to the recovery and at the most though not admitted but assumed that the dispute could have been only on the aspect of the rate of interest for the period from 1989 to 1994. Shri Samel, the learned Counsel ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 12 wp5987.15 then submits that accepting the submission of the petitioners would lead to absolving the petitioners from the liability of the payment of the interest over the amount due and payable from the petitioners and such a result cannot be accepted as it would defeat the object of the banking business. The learned Counsel further submits that after merger of the erstwhile Nagpur Urban Cooperative Bank in the respondent/Bank, the respondent/ Bank called upon all the borrowers sought recovery of the amount due and payable from the borrowers. Shri Samel, the learned Counsel then submits that an erroneous reliance placed on the Rule 45A of the Maharashtra Cooperative Societies Rules, 1961 as the same would not apply in the case of the petitioners as the petitioners themselves permitted to club the accounts. Thus, the learned Counsel for the respondent/bank prays for dismissal of the petition. Shri Samel, the learned Counsel for the respondent/bank, in support of his submission, places heavy reliance on the judgments of the apex Court in the cases of Central Bank of India .v. Ravindra and others (reported in 2002(1) SCC, 367); Krishnanand (dead) through LRs and others .v. Deputy Director of Consolidation and others (reported in 2015(1) SCC, 553) and the judgment of this Court in the case of Central Bank of India, Bombay .v. Sion Bakers and Confectioners Private Ltd., Bombay and others (reported in 2008(5) Mh.L.J., 772) and the judgment of the Delhi High Court in the case of State Bank of India .v. Krishna Embfastners (Pvt) Ltd. and others (reported in AIR 1998 Delhi,
6).
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8. Heard Shri R.P. Joshi, the learned Counsel appearing on behalf of the petitioners and Shri M.D. Samel, the learned Counsel appearing on behalf of the respondent/bank at length.
9. I have gone through the records of the lower Courts called for. Though it is the submission of the learned Counsel for the respondent/ bank that as there are concurrent findings by both the Courts below, this Court would be slow in exercising the writ jurisdiction. The ground raised by the petitioners is of the failure of appreciation of the material and evidence of the Courts below. This Court while exercising the writ jurisdiction, may reappreicate the material and the evidence. Shri Joshi, the learned Counsel for the petitioners was justified in placing reliance on the judgment of the apex Court in the matter of Tulip Star Hotels Limited .v. Special Director of Enforcement (cited supra). It would be useful to refer the relevant observations of the apex Court, as under :-
"18. ... we have held that the original authority, the Appellate Tribunal as well as the Division Bench of the High Court failed to appreciate the issue in the proper perspective while holding the appellant guilty of the violation alleged. Therefore, none of the judgments relied upon by the respondents for the proposition that concurrent findings of fact should not be interfered with does not apply to the facts of this case."::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 :::
14 wp5987.15 On the backdrop of the observations of the apex Court and in view of the submissions of Shri Joshi, the learned Counsel for the petitioners that both the Courts below failed to appreciate the matter in its proper perspective, it may be necessary to refer certain material facts and evidence.
9. The respondent/bank filed the dispute before the learned Judge of the Cooperative Court submitting that the petitioners had approached the bank for financial assistance in the nature of loan and submitted an application for grant of cash credit limit to the extent of Rs.1,50,000/- for the period of one year and the bank offered to give finance against security of fixed deposits and not against the finished and semi finished goods produced by the opponents and the bank sanctioned cash credit limit of Rs.85,000/-. The petitioners in their written statements before the learned Judge of the Cooperative Court specifically submitted before this Court that they were not the members of the said Nagpur Urban Cooperative Bank and nor applied for any loan but the petitioners only sought for assistance by way of cash credit limits against their FDRs. It would be necessary to refer to the evidence of the witness of the respondent/bank namely Shri Narsingh Yadav.
10. Perusal of the cross examination of this witness shows that in the cross-examination the witness admits that all the proceeding books are ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 15 wp5987.15 not available with the respondent/Bank. This witness further admits that to become a member and to obtain the loan being a member, the borrower has to submit a form. This witness then admits that no such form of membership is filed in the proceedings. He then states in the cross- examination that the proceeding books were seized by Crime Investigation Department (CID) and the seizure panchnama of the documents is not placed on record. Then he admits that the petitioner/company had two fixed deposits of Rs.50,000/- each and he could have availed 85 per cent loan against these FDRs. The witness then clearly admits that as per the Rules, the amount of loan must not exceed the amount of the fixed deposit receipts. He also admits that the date of repayment of loan must be earlier to the maturity date of the FDRs. This witness then admits that the Exh.32 i.e. the security pledge form is a printed form and the concerned officer signs the form. He then states in the cross-examination that the form is not signed by the concerned officer in his presence. This witness then admits that at the relevant time the bank official used to obtain the signatures on blank papers or blank forms. He also admits that as per the prevailing Rules, if the opponent fails to repay the loan amount, the amount could have been adjusted from his FDRs and after such an adjustment, the loan account ought to have been closed. This witness then admits that the petitioners by application dated 30.11.1988 sought the enhanced overdraw of Rs.30,000/- and the respondent/bank sanctioned the enhanced cash credit limit to the tune of Rs.25,000/- for one month. ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 :::
16 wp5987.15 The sanction was dated 02.12.1988 and the petitioners were to repay the said amount of 01.01.1989. This witness also admits that the petitioners on 23.01.1989 deposited Rs.5,000/- and Rs.10,000/- i.e. in total Rs.15,000/- and on the very date i.e. 23.01.1989 the petitioners again deposited Rs.10,000/-. Thus Rs.25,000/- were deposited on 23.01.1989. This witness then admits that the petitioner No.3 was added party to the proceedings as opponent No.3 being Director of the petitioner No.1/company. He admits that the petitioner No.3 has not signed any of the documents and the respondent/bank without obtaining consent from the petitioners, clubbed the FDRs with the loan account. This witness then further admits that on the loan accounts, the rate of interest varies i.e. some time it is 19 per cent, 20 per cent and 23 per cent. He then admits that the Nagpur Urban Cooperative Bank closed its business in the year 1991 and it had stopped the transactions from the year 1991.
11. Now, though these are the relevant admissions reflected in the cross-examination of the witness, both the Courts below failed to consider these admissions on an assumption that the petitioners have admitted the documents. It may be also useful to refer the evidence of petitioner No.2. Perusal of the evidence of the petitioner No.2 on an affidavit reveals that the petitioner No.2 has stated that the opponent No.4 (i.e. petitioner No.4 herein Smt. Kusum Agrawal) has no relation with the company. The opponent No.4 is not the shareholder. Then he states that the Manager of ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 17 wp5987.15 the erstwhile bank asked the petitioner Nos.2 and 3 to sign some blank forms. Then he denies the statement in the dispute that the petitioners were the members of the erstwhile bank. It is also stated that the bank has not filed on record the statement of account operated by the petitioners up to 16.03.1989 and the petitioners after obtaining those documents filed the same on record. Further perusal of the evidence of the petitioner No.2 shows that the petitioner No.2 admits that he had submitted an application before the bank on 25.07.2001. Then the documents are referred namely Exhs. 34 and 45. He states that these documents are in relation to the enhancement of the cash credit limit of Rs.25,000/- granted by the bank in response to his application. This witness then admits the signatures on the enhancement of the cash credit limit to the extent of Rs.25,000/- and the documents being signed by himself and his daughter i.e. petitioner No.3. The document namely Exh.31 named and styled as "Promissory Note" is in respect of an amount of Rs.25,000/- carrying the interest at the rate of 16.50 per cent. Exh.32 is the document under the title "Continuing Security Letter" referring to promissory note of Rs.25,000/- against hypothecation. Exh.33 is a printed format application. Exh.41 is a document titled as "Hypothecation of Goods to Secure a Demand Cash Credit". The amount is referred to as Rs.25,000/-, the date is referred to as 2nd day of December, 1988, the rate of interest is referred to as 16.50 per cent per annum, the notice issued by the respondent/bank through their Counsel dated 04.01.1995 is Exh.40 and the reply by the petitioners ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 18 wp5987.15 through their Counsel is at Exh.41.
12. As stated above, both the Courts below placed reliance on these documents. By assuming the admission of the petitioners, it was a specific stand of the petitioners that the petitioners had sought for enhancement in the cash credit limit against the FDRs. It is the submission of the bank that though the petitioners offered hypothecation of the products as security, the bank refused the proposal. The said documents thus are not properly appreciated by the Courts below and thus the documents as well as the oral evidence of the witnesses is not properly appreciated by the Courts below and the Courts below erred in appreciation of this material documents and the evidence.
13. In view of this fact, I am unable to accept the submission of Shri Samel, the learned Counsel for the respondent that as there are concurrent findings of both the Courts below, this Court may not reappreciate the consideration by the Courts below. On going through the record, I find that Exh.30 is the application submitted by the petitioners. It is stated that by way of the application, the petitioners sought the loan against the fixed deposit receipts. These FDRs are of Rs.50,000/- each. The FDRs bear Nos.2132 and 2160, the date of issuance is 04.07.1988 and 21.07.1988, the due date is 04.07.1988 and 21.07.1989 and the amount is Rs.50,000/- each and rate of interest is ten per cent. Perusal of the said ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 19 wp5987.15 document further shows that the later part of the document reads for office use only. Further it reveals that the loan of Rs.85,000/- against the security of FDR rupees one lakh on 20.07.1988 at the rate of interest 12 per cent. The next document Exh.40 again refers to the FDR Nos.2132 and 2160. The amount is referred to as rupees one lakh then it refers to the amount allowable Rs.85,000/-, then it refers to the limit of Rs.85,000/- at the rate of 12 per cent till 30.06.1989 recommended for sanction. Exh.32 is a printed format. It only refers to place Nagpur dated 05.07.1988 and signature and stamp. Rest of the print format referring to number, name, address etc. is blank. Exh.34 is the application. Perusal of the said document shows that it is an application submitted through Shri R.P. Agrawal, Manager of the Nagpur Urban Cooperative Bank Limited. It is stated in the said communication/letter/application that the company is having the current account with the bank and the FDR for Rs.1,02,000/- against which the petitioners are availing overdraw facility up to Rs.85,000/- because of some immediate requirement, the petitioners are in need of Rs.30,000/- temporarily for the period of one month. The petitioners then requested for grant of sanction. The note of the officer of the bank reads that Rs.25,000/- for the period of one month i.e. up to 31.12.1988 be granted as enhanced limit. Perusal of the record further shows that the notice was issued to produce documents and the endorsement reads that the original application for becoming the member of Nagpur Urban Cooperative Bank is not found in the record. ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 :::
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14. As stated above, subsequently it seems that the petitioners had filed certain documents. Perusal of the material further shows that the petitioners filed an application on 23.12.1994. It is stated that on inspection of the accounts, the petitioners found that an exorbitant rate of interest is calculated and it is further stated that the outstanding amount shows against the petitioners ought to have been adjusted against the fixed deposits as the FDRs were matured. The petitioners then prayed for recalculation and revised statement of accounts. Exh.62 is the copy of statement of account. Thus perusal of the above referred material clearly shows that both the Courts below clearly failed to appreciate the material in its proper perspective. Shri Joshi, the learned Counsel for the petitioners has placed heavy reliance on Rule 45A of the Maharashtra Cooperative societies rules, 1961 to submit that the respondent/bank erroneously clubbed the accounts and as per sub Rule (2) of Rule 45A, in case the depositor fails to repay the loan within the period for which it is granted, the respondent/bank ought to have adjusted the fixed deposit amount towards the repayment of the loan amount and the interest thereon.
"45A. Limits on loans against fixed deposits
(1) When a society makes a loan to a depositor on the
security of his fixed deposit with the society, the amount ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 21 wp5987.15 of loan shall not exceed 90 per cent of the deposit amount and the period for which the loan is granted shall not extent beyond the date of maturity of the fixed deposit.
(2) If the depositor does not repay the loan within the period for whichit is granted, the fixed deposit amount may be adjusted towards the repayment of the loan amount nd the interest thereon, and only the balance, if any, shall be paid by the society to the depositor on the date of maturity."
15. Though Shri Samel, the learned Counsel for the respondent/ bank makes an attempt to submit that the said Rule is of no help to the petitioners as the petitioners were granted a term loan and the petitioners are referring to this term loan as cash credit facility, I am unable to accept the submission of Shri Samel for the reason that the respondent/bank itself had filed a dispute before the learned Judge of the Cooperative Court. Thus, invoking the provisions of the Maharashtra Cooperative Societies Act, it is not in dispute that the erstwhile bank i.e. Nagpur Urban Bank was a cooperative society. It was also the stand of the respondent/bank that the petitioner/company was a member of the said society. Though the respondent/bank could not place any material on record to that effect, in such a situation, it cannot be expected that the Rule 45A of the Maharashtra Cooperative Societies Rules is of no help to the petitioners. Shri Joshi, the learned Counsel for the petitioners was justified in placing ::: Uploaded on - 03/05/2017 ::: Downloaded on - 04/05/2017 00:43:30 ::: 22 wp5987.15 reliance on the said Rules and more particularly sub Rule (2) of Rule 45A.
16. Considering the material placed on record and considering the evidence in the form of the documents and oral evidence, I find considerable merit in the submission of Shri Joshi, the learned Counsel for the petitioners. Both the Courts below erred in appreciating the material and evidence and proceeded only on assumption and presumption. The judgment and order passed by the learned Judge, Cooperative Court, Nagpur as well as the judgment and order passed by the learned appellate Court are clearly unsustainable.
17. In the result, the judgments and awards passed by the learned Judge, Cooperative Court and the appellate Court are quashed and set aside. Though the petitioners have prayed in the petition seeking direction to refund the amount of Rs.14,800/- to the petitioners with interest at the rate of 12 per cent per annum with annual compounding from August, 1989, in my opinion, such a prayer cannot be granted in the present petition exercising the writ jurisdiction under Article 226 and 227 of the Constitution of India. The petitioners may avail the other alternate remedy, if so available to the petitioners for claim of such amount.
JUDGE *rrg.
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