Point of Law: High Court had wrongly applied the principle of “public policy” to restrain recovery of public loan.

JUDGMENT :

A civil suit was filed by respondent No.1 for permanent prohibitory injunction and declaration that right of appellant to recover loan amount due to it from him had become time bared and in the facts of the case, recovery proceedings initiated by the appellant were otherwise also illegal. The civil suit was dismissed by the learned Trial Court. The appeal filed by the plaintiff was allowed by the learned First Appellate Court, giving cause of action to defendant No.1 to institute the present Regular Second Appeal. For convenience, the parties are referred to as per their status before the learned Trial Court.

2. Facts of the case are as under: -

2(i) The plaintiff (respondent No.1) instituted a civil suit for declaration and permanent prohibitory injunction against defendant No.1 (appellant). The case put forth by the plaintiff was that:-

2(i)(a). Defendant No.1 (appellant) had sanctioned and advanced a term loan of Rs.1,71,000/- to the plaintiff on 08.12.1982 for purchase of a truck. The loan amount was to be repaid in 20 quarterly installments commencing from 10.03.1983 and payable by 06.12.1987. The plaintiff defaulted in repaying the loan amount. Vide notice dated 19.03.1988, the plaintiff was called upon to pay the entire loan amount to the tune of Rs.2,31,394/-. The plaintiff, on 12.04.1988, though deposited Rs.80,000/-, however, defendant No.1 instituted civil suit No.115 of 1989 in this Court for recovery of a sum of Rs.2,71,394/- alongwith interest. 2(i)(b). During pendency of the civil suit in this Court, the defendant agreed to receive a sum of Rs.74,699.38/- inclusive of interest up to 17.12.1991. Statement of account to this effect (Ex. DX) was also placed on record. The plaintiff even deposited a sum of Rs.20,000/- on 31.12.1991 with the defendant No.1 vide receipt Ex. DY.

2(i)(c). On account of change in the pecuniary jurisdiction, the civil suit was transferred to the Court of learned District Judge. The parties were directed to appear there on 12.04.1995. The civil suit was assigned to the Court of learned Additional District Judge.

2(i)(d). On 21.12.1995, defendant No.1 moved an application under Order 23 Rule 1, Order 13 Rule 7 read with Section 151 of Code of Civil Procedure for withdrawing the civil suit. The said application was allowed by the learned Court on 15.01.1996 (Ex. PW-2/A) in absence of the plaintiff.

2(i)(e). The defendant No.1 thereafter initiated proceedings under the Himachal Pradesh Public Moneys (Recovery of Dues) Act, 2000 (Act in short) against the plaintiff. Demand Notice was issued to the plaintiff on 22.02.1997, wherein a sum of Rs.4,41,404/- was shown as due and payable by the plaintiff to defendant No.1. The Assistant Collector First Grade also issued notice to the plaintiff for making payment of loan amount.

The plaintiff contended that the act of defendant No.1 initiating the recovery proceedings against him under the Act was illegal, invalid and arbitrary. It was also urged that the defendant No.1 had agreed before this Court to receive a sum of Rs.74,699.38/- in lump sum as full and final settlement of its claim. Plaintiff had even deposited a sum of Rs.20,000/- with defendant No.1. hence, defendant No.1 had no right to recovery any amount from the plaintiff under the Act. Another submission of the plaintiff was that recovery of loan amount had become time barred.

2(ii). Defendant No.1 besides taking preliminary objections qua maintainability, jurisdiction, valuation, estoppel etc. contended that the plaintiff had failed to repay the loan amount necessitating defendant No.1 to institute the civil suit for recovery of outstanding amount to the tune of Rs.2,71,394/- in this Court in the year 1989. Defendant was directed by the Court in that suit to calculate the loan amount by charging simple interest @ 14.5%. The orders were complied with by the defendant. The outstanding amount, as per directions of the Court, was calculated in the sum of Rs.74,699.38/- The defendant denied t