JUDGMENT
1. This judgment will dispose of F. A. O. No. 458 of 1979 and C.R. No. 1704 of 1979. Both of them involve the same question of law and in fact arise out of the same subject-matter. The parties arrayed on both the sides are also the same.
2. The facts in brief are that M/s. Haryana Gorva Steel Rerolling Mills of which respondents Nos. 2 to 4 are partners raised a ban from the Haryana Financial Corporation (for short ‘the Corporation’) and created a charge on its moveable and immovable assets for repayment of the said loan. The respondents failed to repay the loan. The Corporation, therefor, filed an application under S. 31(1) of the State Financial Corporation Act for the recovery of Rs. 1,75,089.86 with future interest at the rate of 81/2% in terms of the mortgage deed executed by the respondents in favour of the Corporation. When this application was pending m the Court of the Additional District Judge, Narnaul a compromise was arrived at between the parties on 29-1-1977. The ! respondents acknowledged that they owed the said amount with interest with half yearly rests from 5-1-1977. Until realisation besides other miscellaneous incidental expenses which should be debited to their loan account in accordance with the terms and conditions of the mortgage deed. They further agreed that the mortgaged properties should be ordered to be sold by Court suction for realisation of the aforesaid amount but it should be held in abeyance as along as the respondents regularly paid to the Corporation the installments on or before the dates specified below :
Rs. 3,000/- per month from October, 1976 to May, 1977.
Rs. 5,000/- per month from April, 1977 to September, 1977.
Rs. 6,000/- per month from October, 1977 to September, 1978.
Rs. 7,000/- per month from October, l978 to September, 1979.
3. Thus the entire balance amount payable by the respondents to the Corporation was to be cleared by 1-10-1979. The application of the Corporation was allowed in these terms. The respondents after making payment of Rs. 9000/- by installments up to December, 1976 committed default and did not make payment of any further installment from 1-1-1977. As a result, the Corporation filed an application under S. 32(8) of the said Act on 8-12-1978 for the sale of mortgaged and attached properties for the realisation of the amount due along with interest at the rate of 81/2% with half yearly rests until realisation thereof. The learned Additional District Judge vide his order dated 26-2-1979 held that when the respondents had failed to make payment of installments after 31-12-1976 it was incumbent on the Corporation to have moved the Court for the sale of the mortgaged properties immediately. By not doing so, it had forfeited the right to realise interest from the respondents at the agreed rate from the date of the default onwards. He further observed that the compromise deed between the parties was silent on the point whether or not in the case of default in payment by the respondents interest was payable by them to the Corporation. On this score also the Corporation was not entitled to payment of interest from 1-1-1977 onwards. This order has been challenged by the Corporation through C.R. No. 1704 of 1979.
4. Later, the learned Additional District Judge directed the sale of the mortgaged properties. The suction-purchaser deposited the amount of the purchase money amounting to Rs. 1,01,000/- . No objection to the sale was made either by the Corporation or the respondents. The sale was, therefore, confirmed by the learned Additional District Judge, vide his order dated 10-5-1979. However, while directing the issuance of sale certificate to the suction-purchaser the learned Additional District Judge once again. observed that the Corporation is not entitled to payment of interest from the date of default, i.e. 1-11-1977, up to 10-5-1979. This observation in the order once again had been challenged by the Corporation through F.A.O. No. 458 of 1979.
5. The respondents were originally represented by there counsel who has since been elevated to the Bench. Actual date notices were issued to them but no one has appeared on their behalf in response thereto. I have, therefore, no option but to proceed to decide the said revision petition and the appeal.
6. In my view, the learned Additional I District Judge has seriously erred in denying the payment of interest at the agreed rate of 81/2% to the Corporation from the date of default in payment of installments by the respondents in pursuance of the compromise deed. Once the respondents had committed default in payment of installments, the order of sale by Court suction of the mortgaged properties in pursuance of the application under S. 31(1) of the said Act filed by the Corporation had come into force. In terms of the mortgage deed till repayment of the loan, the respondents were liable to make payment of interest at the rate of 81/2% calculated with half yearly rests. The mortgage deed had to be given full effect once the respondents committed breach of the terms of the compromise deed. The mere fact that the Corporation had approached the Court for putting the mortgaged properties to salt somewhat late, i.e. on 8-12-1978 would not put the Corporation to any disadvantage. The agreement for payment of interest in terms of the mortgage deed is nor wiped off. If we go by the logic which has persuaded the learned Additional District Judge to deny the Corporation interest on the ground of delay, it would have serious consequences. For instance, in case in terms of the original agreement and the mortgage deed the respondents did not make repayment of the loan and the Corporation did not immediately rush to the Court to apply for sale of the properties and instead waited for a couple of years to allow opportunity to the respondents to make payment, such a delay on its part would disentitle it to payment of interest. This is not a reasonable view of the law Money payable with interest on t he basis of the agreement or the mortgage deed has to be so paid and the mere fact that a suit or an application under the statute is filed late but well within limitation would not disentitle the lender to the payment of interest on the ground that he has approached the Court with some amount of delay.
7. As a result. I allow F.A.O. No. 458 of 1979 as also the Civil Revision No. 1704 of 1979, set aside the impugned orders insofar as they deny payment of interest at the rate of 81/2% to the Corporation from 1-1-1977 to 26-2-1979. Since the mortgaged properties have already been sold out but the proceeds realised from such sale fell short of the amount due to the Corporation, the respondents shall be personally liable for payment of the balance amount due including interest at the rate of 81/2% per annum till the date of its realisation with half yearly rests as per the terms of the mortgage deed and the agreement between the Corporation and the respondents. Since. however, there is no representation on behalf of the respondents, I shall make no order as to costs.
8. Order accordingly.