J U D G M E N T

Petitioner is a Co-operative society registered under the Kerala Co-operative Societies Act engaged in banking business. Second respondent availed a loan of Rs.70,000/- on 18.5.1998 for non-agricultural purpose. Since 2nd respondent failed to remit the amount as agreed, bank filed A.R.C No.701 of 2001, in which an award has been passed on 23.4.2001, allowing the bank to realize the amount with interest from the assets of the 2nd respondent. Bank thereafter initiated execution proceeding for executing the award. Second respondent paid an amount of Rs.25,000/- on 8.12.2001. Thereafter 2nd respondent approached the bank to repay the balance amount due. At that time, the only scheme available for One Time Settlement is Circular No.35/2001. As per clause 4 of the Scheme, 2nd respondent is entitled for the waiver of penal interest only. Thus the bank waived the penal interest and loan account was closed. The entire amount was remitted by the 2nd respondent on 25.3.2003. Thereafter, 2nd respondent submitted an application to the bank requesting to pay some amount towards excess payment alleging that, bank ought to have closed the loan account charging 12% interest only on