JUDGMENT
R.S. Sodhi, J.
1. R.F.A. 712 of 1999 is directed against the judgment and order dated 25.8.1999 of the learned Additional District Judge in Suit No. 600/1996 whereby the Bank of India-plaintiff sought to recover a sum of Rs. 1,66,844.81 from the appellants-defendants 1 and 2 on account of grant of loan of Rs. 2,00,000/- for purchase of a commercial vehicle.
2. The facts of the case, as have been noted by the learned Additional District Judge, are as follows :
“This suit has been filed for recovery of Rs. 1,61,844.81 by the plaintiff bank against the defendants. It is the case of the plaintiff bank that the defendant 1 and 2 approached the plaintiff bank for grant of loan of Rs. 2 lac for purchase of Tata truck and plaintiff bank accepted their request and sanctioned loan of Rs. 2 lac under the category of term loan. Defendant No. 1 and 2 executed loan documents on 11.02.86, namely, Promissory Note for sum of Rs. 2 lac, carrying interest @ 2.5% above Reserve Bank rate with minimum of Rs. 12.5% per annum with quarterly rests. Defendants also executed Hypothecation Agreement hypothecating the vehicle with the bank. Defendant NO. 3 and 4 stood guarantors for defendants No. 1 and 2 and executed guarantee bond. Defendant No. 3 created an equitable mortgage of his property No. 916/3D Gali No. 18, Kailash Nagar, Gandhi Nagar by depositing title deeds of the suit property with the plaintiff bank. It is stated that defendants No. 1 and 2 had agreed to repay the loan amount with interest in 45 equated monthly installments of Rs. 4,445/-. The first installment was to fall due after three months of the disbursement of the loan. It is submitted that defendants NO. 1 and 2 got the disbursement of loan and purchased Tata truck bearing registration No. DIL-178. The plaintiff has given in the plaint details of the equitable mortgate created by defendant No. 3.
2. The defendants No. 1 and 2, after availing loan, failed to repay the monthly installments as agreed and made default in payments. Defendant No. 1 confirmed the outstanding balance and signed on balance confirmation letter dated 30.06.86. At that time, the outstanding balance was Rs. 1,97,133.6. Plaintiff bank sent various letters to the defendants asking them to regularise the account and to make the payment but with no effect. Then, plaintiff bank sent a demand notice dated 30.05.88. After receipt of the notice, defendant No. 1 admitted the liability to pay the amount on 07.06.88 and promised to liquidate the over due amount very soon but defendants failed to pay the amount as promised. The plaintiff bank again served a legal notice on 20.10.88 but the defendant still failed to pay the due amount. It is stated that the plaintiff bank has been maintaining regular account books in respect of the loan given to defendants No. 1 and 2. As per the statement of accounts, the defendants made last part payment of the loan on 08.01.90 and, thereafter, they did not pay at all the amount. This suit has been filed for the reason that defendants failed to discharge the liability despite notices. Plaintiff bank prayed for passing a decree of Rs. 1,61,844.81 along with interest @ 12.5% per annum till realisation and also for foreclosure of the equitable mortgage and giving permission to the plaintiff bank for sale of the mortgaged property, if the decree is not satisfied. Plaintiff bank has also prayed for seizure of vehicle No. DIL-178 and for sale of the same by public auction.”
3. On the basis of pleadings by the parties, the following issues were framed :
1. To what amount plaintiff is entitled to recover?
2. Whether the defendant is entitled to any reduced rate of interest or slashing of interest on the alleged amount, that the loan was sanctioned as a riot case?
3. Relief.
4. Since appellants No. 1 and 2 had admitted the taking of loan but had pleaded that the same was granted to them as riot victims, being covered by the Central Interest Subsidy Scheme (Revised) for November, 1984 Riot Victim Borrowers (for short ‘the Scheme’), they were not liable to pay interest as claimed by the plaintiff-Bank. Further that they had already paid a substantial amount of approximately Rs. 2,25,000/-.
5. In order to prove Issue No. 2, appellants herein examined, Mr. Suresh Kumar, an official from the Relief Branch, Rehabilitation Department of Delhi Administration who proved the documents, Exs. DW-1/1 to DW-1/13. These Exhibits depict that the appellants were victim of the 1984 riots that erupted on the death of Mrs. Indira Gandhi, the then Prime Minister. Ex. DW-1/11 is a letter dated January 2, 1989 written by Mr. B.K. Bubna, Regional Manager, Union Bank of India, to the Executive Magistrate, Collector of Stamps, Tis Hazari Courts, Delhi, which reads as follows :
"No. RO:DEL:CR:104/89 January 2, 1989" The Executive Magistrate, Collector of Stamps, Tis Hazari Court, Delhi Dear Sir, Financial assistance given to Smt. Swarn Kaur.
This is to inform you that Term Loan for Rs. 2.00 lac for purchase of Tata Model 1210 SE-42 was sanctioned to Smt. Swarn Kaur and Mr. Manjeet Singh under the scheme for rehabilitation to riot affected persons on 30.1.1986. The loan was repayable in 45 monthly installments. At present the account is running irregular and the o/s in the account is reported Rs. 1,40,790.10 as on 16.6.1988.
We understand that the case for settlement of claim is pending with you. It is requested that the claim amount settled in their favor be routed through us.
Thanking you,
Yours sincerely,
sd/-
(B.K. BUBNA)
Regional Manager”
6. The learned trial court in its order dated 25.8.1999 returned a finding that the appellants-defendants were riot victims and appellant No. 1, Smt. Swarn Kaur, had received a sum of Rs. 30,000/- as compensation on account of the damages suffered during the riot, but while dealing with Ex. DW-1/11, held that –
“Ex. DW-1/11 is the letter written by bank to Executive Magistrate informing the Executive Magistrate that a loan of Rs. 2 lac was sanctioned in favor of Swarn Kaur for purchase of a Tata model 1210 SE 42 for rehabilitation of riot affected person on 30.01.86. The loan was repayable in 45 installments and the account was running irregular and a sum of Rs. 1,40,790/- was due against defendant Swarn Kaur on 16.06.88.”
He further held that –
“In all those cases where riot victims were given loan by the bank under the scheme of rehabilitation, the banks were granted subsidy by the Government for giving to persons who had taken loan from the bank. This subsidy was in the form of remission of the loan where the loan was below Rs. 50,000/-. In case where the loan was taken more than Rs. 50,000/- a subsidy in interest was given and the Government had given this amount to the banks in the form of subsidy. No bank had given subsidy from its own account to the riot victims. In case this loan had been given to the defendant in the category of a riot victim, the plaintiff bank would have definitely claimed the subsidy from the Government.”
The learned Judge thereby proceeded to decree the suit with 12.5 per cent interest per annum directing the appellants-defendants to make payment within a period of six months failing which the Bank would be entitled to sell property No. 916/3D, Gali No. 18, Kailash Nagar, Gandhi Nagar, and realise the amount. Being aggrieved of the judgment and decree, learned counsel submited that the learned trial Judge has not appreciated the Subsidy Scheme providing relief to the riot victims framed pursuant to directions by the Supreme Court.
7. Learned counsel drew our attention to the judgment of the Supreme Court in Harjit Singh etc. vs. Union of India and ors (Writ Petition Nos. 457/1989 etc.) dated 7.11.1989 where the Court passed the following order :
“Learned Attorney General has made the following statement in respect of the recovery of loans advanced to riot victims of 1984 following the assassination of Mrs. Indira Gandhi:
“The banks will be advised to consider the case of each loanee on its merits and to give such relief as may be considered just, fair and reasonable based on the facts of each case. Reserve Bank of India is requested to advise the banks accordingly.”
In view of the above statement we direct the banks not to have recourse to recovery proceedings until the banks decide the case of each individual concerned in accordance with the advise of the Reserve Bank of India. This order does not concern those persons who are not victims of the aforesaid riots. The order of stay of recovery made by us relates only to the aforesaid category of persons. This does not prevent any bank from instituting a suit in Court if it is felt that the suit is about to be barred by time. Even if any such suit is filed it shall be kept pending until the relief to be granted is determined by the banks as per the advise of the Reserve Bank of India. This order applies to the entire class of riot affected victims referred to above whether they have filed a petition in this Court or not. All these cases are disposed of.
Liberty to mention.”
8. Pursuant to the orders of the Supreme Court, the Government of India, Ministry of Finance, framed a Scheme called “Debt Relief Scheme for November 1984 Riot Victim Borrowers”. The aforesaid Scheme was revised by the Reserve Bank of India called “Central Interest Subsidy Scheme (Revised) for 1984 Riots Affected Borrowers”. The Scheme was self-contained and formed part of the trial court record. It enjoins upon the Banks in clause 3 as under :
“3. (a) A bank shall in deserving cases, charge the borrowers interest at one per cent (simple) per annum on all eligible loans outstanding as on the effective date for the period from 1 November 1984, if the loan is granted on or before 1 November, 1984, or from the date of grant of the loan, if granted subsequently, to the effective date. The difference between the interest calculated at simple rates charged as per Reserve Bank of India instructions or Interest Rate Directives on Advances or at 16 per cent, whichever is lower, on the eligible loans and interest at one per cent per annum (simple) now to be charged, will be reimbursed by Government of India to the banks as interest subsidy through the Reserve Bank of India/National Bank for Agriculture and Rural Development.”
9. The appellants’ case all along has been that they are riot affected borrowers to whom the aforesaid Scheme was applicable. That the loan given by the plaintiff-Bank was on the basis that they were riot victims and treated as such under the then existing Rehabilitation Scheme. It was submitted that letter dated 1.2.1989, Ex.DW-1/11 leaves no manner of doubt that the plaintiff-Bank has set up a dishonest claim and instead of giving relief applicable to victims of the 1984 riots has gone on to multiple their anguish for many years, forcing them to expend their valuable resource under the pain of having to lose even their home. To compound the misery, a further amount of Rs. 25,000/- was made to be deposited in compliance with the order of this court dated 10.3.2000 while entertaining the appeal even though at the time a sum of approximately Rs. 2,25,000/- had already been paid by the appellants.
10. We have heard learned counsel for the parties and examined the record of the case.
11. PW-1, Mr. Ashok Gupta, has deposed that Ex. PW-1/2 is the statement of account which bears signature of the appellants-defendants. In his cross-examination, this witness has stated that he does not remember if any correspondence had taken place about the defendants’ being riot victims.
12. PW-2, Mr. S.C. Chaturvedi, an Officer Scale-II of the plaintiff-Bank has deposed that a loan of Rs. 2,00,000/- was taken by the appellants-defendants during his tenure as Manager at Chander Nagar Branch. He has also deposed to the execution of guarantee bonds etc., but has denied that the appellants/defendants were persuaded to take loan from the plaintiff-Bank as there was a Scheme for riot victims. He has admitted that the appellants-defendants made an application as riot victim for loan for repair of a damaged truck. He has admitted that at the time of applying for loan, the appellant-defendants had attached a certificate from Section Officer regarding her being riot affected person. He has also denied having given any assurance that the defendants would be treated as riot victim person.
13. DW-1, Mr. Suresh Kumar, from the Relief Branch, Rehabilitation Department of Delhi Administration produced the record from the office of Delhi Administration, Exs. DW-1/1 to DW-1/13, pertaining to the case of riot victims. He, however, had no knowledge whether the plaintiff-Bank gave loan in a particular category or not.
14. DW-2, Mrs. Swaran Kaur, has elaborately stated the manner in which she came about to apply for a loan from the plaintiff-Bank and also the assurance given by the plaintiff-Bank to her.
15. Analysing the documents as also the statement of witnesses, it appears that the Bank was aware of the Central Interest Subsidy Scheme framed by the Reserve Bank of India pursuant to orders of the Supreme Court in Harjit Singh etc. vs. Union of India and ors case (supra). The Bank was aware that the appellants were entitled to be considered as riot victims and afforded benefits of the Central Interest Subsidy Scheme. From letter dated 1.2.1989, Ex.PW-1/11, written to the Executive Magistrate who was implementing an existing Rehabilitation Scheme of the riot victims, it was made clear that the application of the applicants was treated as one from riot victim under that Rehabilitation Scheme. The Central Interest Subsidy Scheme which came later on took care of loans advanced to such borrowers by the Bank. The Reserve Bank had advised all Banks of this Scheme and emphasized that interest “write off” would be made good by the Government.
16. The learned trial Judge while dealing with this aspect of the matter mis-directed himself while reading Ex.DW-1/11 to mean that it was merely an intimation of a term loan granted in favor of Smt. Swaran Kaur for a Tata truck. According to us, Ex. DW-1/11 is an intimation to the Executive Magistrate dealing with rehabilitation work that loan had been granted under the scheme for rehabilitation to riot affected persons. The learned trial Judge while adverting to the judgment of the Supreme Court in Harjit Singh’s case (supra) did not appreciate that pursuant thereto a Debt Relief Scheme for November, 1984 Riot Affected Borrowers had been framed by the Government of India, Ministry of Finance, which Scheme was thereafter revised by the Reserve Bank of India called “Central Interest Subsidy Scheme (Revised) for November, 1984 Riot Affected Borrowers. The Central Subsidy Scheme was self-contained and took care of loans advanced to borrowers, who were riot affected, before or after the November, 1984 riots. In such cases benefit of “complete write off” or interest thereon, as the case may be, was to be given. There is no scope for the Bank to have mis-understood the import of the Scheme framed by the Reserve Bank of India to rehabilitate the riot victims of 1984. Having treated the appellants’ as riot victim borrowers under a Rehabilitation Scheme, there was no justification of not treating the appellants’ case as one covered under the Central Interest Subsidy Scheme and demanding of them, interest at a rate greater than permissible under the Central Scheme. The suit filed was an attempt to cover up the plaintiff-Bank’s own defaults of not having claimed the subsidy in accordance with the Scheme. In any event of the matter, whether the plaintiff-Bank claims the subsidy or not is its internal matter and has got nothing to do with its claim against the appellants-defendants. This is a case where the effort of the Government to ameliorate the miserable lot of the riot victims of 1984 has been deliberately subverted by the Bank. The profound agony of the appellants magnified and prolonged for nearly 18 years.
17. In the totality of the circumstances, we direct respondent to treat the appellants’ as a deserving case under the Central Interest Subsidy Scheme, process the case in accordance with that Scheme and put the appellants to notice accordingly. If, upon consideration, any amount is payable, the appellants shall pay the same in monthly Installments of Rs. 5,000/- (rupees five thousand).
18. The judgment and decree dated 25.8.1999 passed in Suit No. 600/1986 is set aside. Since the appellants have been deprived of benefits of the Central Interest Subsidy Scheme for nearly 18 years, we impose costs quantified at Rs. 25,000/- (Rupees twenty-five thousand) payable to respondents No. 1 and 2 equally. The appeal is allowed.