Orissa High Court
Lokanath Rice Mill, Nowrangpur And Ors. vs Orissa State Financial Corporation on 1 September, 1986
Equivalent citations: AIR1987ORI172, AIR 1987 ORISSA 172, (1986) 62 CUT LT 477
JUDGMENT S.C. Mohapatra, J.
1. This is an appeal under Section 32(9) of the State Financial Corporations Act, 1951 against the order of the District Judge under Section 31 of the Act.
2. Without going into the details of the facts few salient features in this case can be taken note of. On 8-11-1972 the appellants applied for loan of Rs. 3,20,000/- to establish a Rice Mill at Nowrangpur. The respondent sanctioned loan of Rs. 2,75,000/- on 14-11-1972 against security hardly six days after the application. Out of the sanctioned amount Rs. 72,000/- have been sanctioned for the building. The said amount has been disbursed on January, 1973 and June, 1973. It was agreed that the loan would be paid back by instalment together with quarterly interest at the rate of 9.5% with a rebate of 1% for timely repayment in annual instalments at fixed rates from 20-1-1975 on which day the appellants were to pay Rs. 35,800/-. When the instalments were not paid in spite of demand, the application under Section 31 of the Act was filed before the District Judge, Joraput, in the year 1977 for recovery of principal amount of Rs. 72,000/- and interest of Rs. 30,244.06 p. and commitment charges of Rs. 2,040.91 p. by attachment and sale of the mortgaged property.
3. The case of the appellants was that the amount of Rs. 72,000/- was insufficient for building the construction and for want of further loan of Rs. 48,000/- to complete the same. Although in March, 1975, it was agreed to advance the amount, the same was not advanced in spite of repeated requests. As a result of which the construction not being constructed the purpose for which the loan was taken is completely frustrated. Accordingly, it is said that the amount of Rs. 72,000/- is also not recoverable.
4. Frustration of an agreement is not a subject matter of consideration in exercise of the statutory power by the District Judge. Once the receipt of the principal amount and the rate of interest is admitted, the District Judge is only to calculate the same and consider that extent of the property would be sufficient for recovery of that amount.
5. It is not disputed before me that such a question was not raised before the District Judge. Therefore, the District Judge was correct in calculating the principal and rate of interest and attachment of property for sale of the same.
6. While considering the question in appeal, Mr. R.K. Patra, the learned counsel for the appellant submitted that there is no dispute that the purpose for which the loan was taken is frustrated and already 14 years have passed in the meantime. The half constructed buildingis yet standing on the land. He was agreeable to pay the principal amount and negotiate with the Corporation for granting relaxation of interest taking into consideration the facts and circumstances of the case inasmuch as the purpose for which the loan was granted has been frustrated. Mr. R.K. Patra submitted before me that the Financial Corporations Act is a benevolent statute for giving economic footing to persons by advancing loans. I am not going into the said question. While considering the appeal on 28-4-1986, when the concrete proposal came, I released a little more 4 acres from attachment directing the continuance of the hypothecation or the mortgage of the same on the assurance given by Mr. Patra that the entire principal amount would be deposited and the appellants would negotiate with the Corporation for relaxation of the interest. Now Mr. Patra has come with another petition that the purchaser has been ready and is agreeable to deposit the principal amount immediately on completion of the sale and granted accommodation for some time the appellants would be negotiating with the Corporation relating to relaxation of interest.
7. The liability having been fixed, the only question for consideration is the extent of property to be sold. Although rate of land has been given to me, the rate of the balance property left out is not known. In such circumstances, my interim Order dt. 28-4-1986 stands and about 2 acres as proposed in the application shall be sold which would be subject to the hypothecation and mortgage. On the sale being completed, the principal amount of Rs. 72,000/- shall be deposited. Only after deposit of the principal amount, the learned District Judge will wait for a few days more to assist the appellants to negotiate relaxation of the interest.
8. In normal circumstances, it would not take a long period for execution and registration of the sale deed. If time is granted till 30th September, 1986 for the purpose it would be adequate. No steps shall be taken for recovery of the amount till 5th October, 1986 when the principal amount of Rs, 72,000/- shall be paid by the appellants. In case of such payment, two months' time shall be granted by the learned District Judge to the appellants for negotiating with the Corporation for relaxation of the interest. Thereafter, the entire amount shall be collected by putting the property sold, although they have been released from attachment.
9. I may make it clear that in case Rs. 72,000/- is not paid by 5th of October, 1986, the learned District Judge will not wait for any further order from this Court and proceed with the realisation of the amount of debt.
10. In the result, subject to the period granted in the previous paragraphs, this appeal is dismissed. There shall be no order as to costs in this appeal.