Yogesh Jain & Anr. vs Central Bank Of India
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 07.04.2026
Date of decision: 30.07.2026
+ W.P.(C) 1205/2026
YOGESH JAIN & ANR ......Petitioners
Through: Mr. Avadh Bihari Kaushik, Adv.
along with Petitioner No.1 in person.
versus
CENTRAL BANK OF INDIA .....Respondent
Through: Mr. Yogesh Pachauri, Adv.
CORAM:
HON’BLE MR. JUSTICE VIVEK CHAUDHARY
HON’BLE MS. JUSTICE RENU BHATNAGAR
J U D G M E N T
1. The present petition assails common order dated 14.10.2025
(“impugned order”) passed by the learned Debt Recovery Appellate Tribunal
(“DRAT”) in Misc. Appeal No. 415/2018 and Misc. Appeal No. 499/2018,
whereby order dated 26.06.2018 arising out of OA 254/2010 before the
learned Debt Recovery Tribunal–III, Delhi (“DRT”) was challenged. By way
of the impugned order, the appeal of the petitioner was allowed, and the
appeal of the respondent-bank was dismissed with the direction that the
respondent bank is liable to refund to the petitioner a sum of Rs.30,832 . 27/-
with interest at the rate of 6% per annum simple from 11.03.2014 till the date
of realization.
2. The brief facts giving rise to the present petition are that petitioner no.1,
along with his son, approached the respondent-bank for grant of an
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educational loan of Rs.15,00,000/- under the Education Loan Scheme, for
pursuing a four-year undergraduate course at Indiana University,
Bloomington, USA. By sanction letter dated 13.09.2002, the respondent-bank
sanctioned the said educational loan, secured by the personal guarantees of
Ms. Preeti Jain and Ms. Savitri Jain, along with a re-charge on the property
already mortgaged with the respondent-bank in the account of M/s Rishabh
Electricals Pvt. Ltd., belonging to Ms. Savitri Jain. Pursuant thereto, an
Agreement for Educational Loan dated 24.09.2002 was executed between the
parties. Under the terms of the sanction, the loan was to be repaid in 84
monthly instalments commencing twelve months after completion of the
course or six months after the student secured employment, whichever was
earlier. During the moratorium period, only simple interest was to be charged
and, thereafter, compound interest was payable, with penal interest of 2%
being payable only on overdue amounts. As per the respondent-bank, the loan
amount of Rs.15,00,000/- was to be disbursed in four instalments of
Rs.3,75,000/- each, as and when demanded by the university.
3. Out of the sanctioned loan amount of Rs.15,00,000/-, the
respondent-bank disbursed only three instalments of Rs.3,75,000/- each on
01.10.2002, 25.07.2003 and 23.04.2004, aggregating to Rs.11,25,000/-. The
fourth and final instalment of Rs.3,75,000/- was withheld by the
respondent-bank for want of adequate security, despite repeated requests
made by petitioner no.1 for release of the same for payment of the tuition fee
required for completion of his son's course. The petitioners also did not repay
the loan amount disbursed by the respondent-bank, claiming that fourth and
final instalment was not received and the repayment had to start after they had
received the full education loan amount during the course . According to the
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petitioners, the respondent-bank unjustifiably insisted upon furnishing
additional collateral security, although the sanction letter did not stipulate any
such condition and the security was already accepted by the respondent-bank.
Thereafter, alleging default in repayment, the respondent-bank instituted
O.A. No.254/2010 before the DRT seeking recovery of Rs.24,93,511/-
together with further interest. During the pendency of the recovery
proceedings, in order to protect their property from attachment and coercive
recovery proceedings, the petitioners furnished Fixed Deposit Receipts
(“FDR”) aggregating to Rs.35.11 lakhs before the DRT as security.
Thereafter, upon the O.A. being allowed by final order dated 21.02.2014, the
respondent-bank encashed and appropriated the said FDR amount on
10.03.2014 towards the alleged outstanding dues. The petitioners preferred
Appeal No.353/2014 before the DRAT, Delhi which came to be dismissed on
03.02.2015.Aggrieved thereby, the petitioners approached this Court by filing
W.P. (C) No.4454/2015. By judgment dated 31.03.2016, this Court set aside
the orders passed by the DRT and the DRAT, and remanded the matter to the
DRT with directions to ensure that the respondent-bank produced complete
and legible statements of account, grant an opportunity to the petitioners to
examine and object to the debit entries relating to interest and overdue
interest, quantify the amount actually due and also give due adjustment of the
amount appropriated by the respondent-bank from the FDR amounting to
Rs.35.11 lakhs, with consequential refund, if any, found payable. Pursuant to
the remand, the respondent-bank filed affidavits stating that the statements of
account prior to the year 2006 could not be produced as the accounts had
originally been maintained on a stand-alone computer system at the
Daryaganj Branch, which was subsequently migrated to the Core Banking
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System in the year 2006, rendering the earlier data unavailable despite efforts
to retrieve the same.
4. By order dated 26.06.2018, the DRT held that the respondent-bank had
disbursed only three instalments and unjustifiably withheld the fourth and
final instalment of the educational loan, which has adversely affected the
education of the student. Having regard to the peculiar facts and
circumstances of the case, the DRT exercised its discretion while balancing
equity between the parties and directed that the liability be recomputed by
applying simple interest throughout. However, it has been pointed out during
the course of arguments that there is an apparent computation error by the
DRT. After adjusting the amount appropriated by the respondent-bank from
the FDRs, the DRT directed refund of the balance amount found payable to
the petitioners. Aggrieved thereby and calculations therein, both the
petitioners and the respondent-bank preferred appeals before the DRAT.
5. By the impugned common order dated 14.10.2025, the DRAT held that
the Tribunal is empowered to reduce pendente lite and future interest
depending upon the facts and circumstances of each case and to award such
rate of interest as would meet the ends of justice. The DRAT further affirmed
that only simple interest was chargeable during the moratorium period.
However, while also affirming the finding of the DRT that the
respondent-bank had withheld the fourth and final instalment of the
educational loan and that the same has caused hardship to the student, the
DRAT exercised the aforesaid discretion and set aside the computation made
by the DRT by directing that, after expiry of the moratorium period, the
liability be computed in terms of the contractual stipulations, including
compound as well as penal interest, while restricting the pendente lite interest
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from the date of filing of the O.A. till appropriation of the FDR to 6% per
annum simple. Aggrieved by the interference with the exercise of discretion
by the DRT and the consequent recalculation of liability, the petitioners have
preferred the present writ petition.
6. Learned counsel for the petitioners submits that the respondent-bank
itself committed breach of the sanctioned loan arrangement by withholding
the fourth and final instalment of the educational loan of Rs.15,00,000/-,
despite requests made by the petitioners and despite the loan having been
sanctioned under the educational loan scheme for enabling completion of the
student's course abroad. It is submitted that the respondent-bank unjustifiably
insisted upon furnishing additional collateral security, although the sanction
letter itself accepted the existing security by way of re-charge of the property
already mortgaged with the respondent-bank along with personal guarantees,
and no condition requiring any further security formed part of the sanction
terms. It is further submitted that despite directions issued by the DRT and
this Court in the earlier round of litigation, the respondent-bank failed to
produce complete and legible statements of account for the period prior to
2006. It is lastly submitted that, although the DRAT has allowed the appeal
preferred by the petitioners, it has, in effect, failed to grant them any
meaningful or effective relief.
7. Per contra, learned counsel for the respondent-bank submits that the
statements of account prior to 2006 could not be produced due to migration
from the stand-alone banking system to the Core Banking System and despite
efforts, the data could not be retrieved. It is further submitted that such
non-availability caused no prejudice to the petitioners as repayment of
education loan was to commence after the moratorium period and only simple
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interest was chargeable during same, and contractual compound interest as
well as penal interest became applicable thereafter. Reliance is also placed
upon petitioner no.1's letter dated 22.12.2005 acknowledging receipt of the
three disbursements.
8. This Court has considered the submissions advanced by the learned
counsel for the parties and perused the material placed on record.
9. It is not in dispute that the respondent-bank sanctioned an educational
loan of Rs.15,00,000/- for enabling the son of petitioner no.1 to pursue
education abroad but disbursed only Rs.11,25,000/- by releasing only three
instalments and withheld the fourth and final instalment of Rs.3,75,000/-. The
petitioner also did not start its repayment when it fell due. The matter
thereafter travelled before the DRT, the DRAT and this Court, culminating in
the remand by judgment dated 31.03.2016 of this Court. Upon remand, the
respondent-bank expressed its inability to produce the statements of account
for the period prior to 2006 and the DRT and DRAT proceeded to determine
the liability after recalculating the interest. The controversy in the present
petition, therefore, is confined to the correctness of the exercise of discretion
by the DRT and the DRAT in computing the liability and interest payable in
the peculiar facts of the present case.
10. It is also not in dispute that the respondent-bank had accepted the
collateral security at the time of sanction and had released three instalments
on that basis. Having sanctioned the loan for the entire course, the
respondent-bank ought to have released the fourth and final instalment during
the subsistence of the course, particularly when the loan was sanctioned to
enable completion of the student's education. While the respondent-bank was
always at liberty to recover its dues in accordance with law upon default,
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withholding the final instalment defeated the very object of the educational
loan and caused hardship to the student. It is in the backdrop of these peculiar
facts that the exercise of discretion by the DRT and its interference by the
DRAT is required to be examined.
11. Before dealing with the principal issue, the grievance of the petitioners
regarding non-production of the complete statements of account requires
consideration. Though this Court, while remanding the matter in W.P. (C)
No.4454/2015, had directed the respondent-bank to produce complete and
legible statements of account, the respondent-bank has explained in its
affidavits dated 12.07.2017 and 19.06.2018 that the statements for the period
from 2002 to 2006 could not be produced due to migration from the
stand-alone banking system to the Core Banking System and despite efforts,
the earlier data could not be retrieved. It has further stated that during the said
period, the loan was under the moratorium and only simple interest was
chargeable. In the absence of any material to show that the explanation is
untenable, this Court is inclined to accept the explanation regarding the
non-availability of the records, though such inability cannot be regarded as an
ideal state of affairs expected from a nationalised bank.
12. On perusal of the order dated 26.06.2018 passed by the DRT, we find
that the DRT, while determining the liability of the petitioners, has taken into
consideration the peculiar facts and circumstances of the case, including the
fact that the loan in question was an educational loan sanctioned for enabling
the son of petitioner no.1 to pursue his undergraduate course abroad, and that
the respondent-bank, despite sanctioning the loan for the entire course, has
withheld the fourth and final instalment of Rs.3,75,000/-. The DRT has also
held that such withholding of the final instalment has adversely affected the
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education of the student. It is in the aforesaid circumstances, that the DRT
exercised its discretion and directed that the liability be computed by applying
simple interest throughout. The DRT thus sought to balance the equities
between the parties by requiring the petitioners to repay the amount actually
disbursed with simple interest while denying the respondent-bank the benefit
of compound and penal interest. This Court is of the view that the aforesaid
exercise of discretion by the DRT cannot be said to be arbitrary, unreasonable
or perverse.
13. In Wander Ltd. v. Antox India (P) Ltd ., 1990 Supp SCC 727, the
Supreme Court held: -
“14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals,
the appellate court will not interfere with the exercise of
discretion of the court of first instance and substitute its own
discretion except where the discretion has been shown to
have been exercised arbitrarily, or capriciously or
perversely or where the court had ignored the settled
principles of law regulating grant or refusal of interlocutory
injunctions. An appeal against exercise of discretion is said
to be an appeal on principle. Appellate court will not
reassess the material and seek to reach a conclusion different
from the one reached by the court below if the one reached by
that court was reasonably possible on the material. The
appellate court would normally not be justified in interfering
with the exercise of discretion under appeal solely on the
ground that if it had considered the matter at the trial stage it
would have come to a contrary conclusion. If the discretion
has been exercised by the trial court reasonably and in a
judicial manner the fact that the appellate court would have
taken a different view may not justify interference with the
trial court's exercise of discretion. After referring to these
principles Gajendragadkar, J. in Printers (Mysore) Private
Ltd. v. Pothan Joseph [(1960) 3 SCR 713: AIR 1960 SC
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1156]: (SCR 721)
“... These principles are well established, but as has been
observed by Viscount Simon in Charles Osenton & Co. v.
Jhanaton [1942 AC 130]
„...the law as to the reversal by a court of appeal of an
order made by a judge below in the exercise of his
discretion is well established, and any difficulty that arises
is due only to the application of well settled principles in
an individual case‟.”
The appellate judgment does not seem to defer to this
principle.”
14. The above Wander Ltd. (supra) was followed by the Supreme Court in
Mohd. Mehtab Khan and Ors. v. Khushnuma Ibrahim Khan and Ors. ,
(2013) 9 SCC 221, and also in Ramdev Food Products (P) Ltd. v. Arvindbhai
Rambhai Patel and Ors ., (2006) 8 SCC 726. The relevant paragraph of
Ramdev Food Products: -
“ 126. The grant of an interlocutory injunction is in exercise
of discretionary power and hence, the appellate courts will
usually not interfere with it. However, the appellate courts
will substitute their discretion if they find that discretion has
been exercised arbitrarily, capriciously, perversely, or where
the court has ignored the settled principles of law regulating
the grant or refusal of interlocutory injunctions. This
principle has been stated by this Court time and time again.
[See for example Wander Ltd. v. Antox India (P) Ltd. [1990
Supp SCC 727], Laxmikant V. Patel v. Chetanbhai
Shah [(2002) 3 SCC 65] and Seema Arshad
Zaheer v. Municipal Corpn. of Greater Mumbai [(2006) 5
SCC 282 : (2006) 5 Scale 263] .]”
15. In the impugned order, the DRAT, in the same manner as DRT, found
that the respondent-bank had also illegally withheld the fourth and final
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instalment and, thus, caused hardship to the student. However, it modified the
simple interest granted by the DRT to compound as well as penal interest. The
DRAT states that it has discretion in awarding interest and thus, it has
proceeded to vary the same. The law as laid down in Wander Ltd. (supra)
holds that the discretion exercised by a Court can be varied by the Appellant
Court only when the same is arbitrary, capricious, perverse or contrary to the
settled principles of law. In the present case, the DRAT has not given any
such finding. On the contrary it affirms the reason given by the DRT that
mistake is also on part of the respondent-bank. In the given circumstances, the
DRAT could not have varied the discretion exercised by the DRT. Thus, we
find the order of the DRAT dated 14.10.2025 to be illegal and deserves to be
set aside.
16. However, while the exercise of discretion by the DRT in directing that
simple interest be applied is found to be justified, the actual computation
undertaken by the DRT being faulty cannot be sustained. The DRT has
proceeded to calculate the interest liability by treating the entire amount of
Rs.11,25,000/- as having been disbursed as a lump sum. The record, however,
demonstrates that the said amount was not disbursed to the petitioners in one
go. The respondent-bank had disbursed three separate instalments of
Rs.3,75,000/- each, on 01.10.2002, 25.07.2003 and 23.04.2004.The interest is
required to be calculated separately with reference to each of the three actual
dates of disbursement. The fact that the aggregate amount disbursed was
Rs.11,25,000/- cannot alter the fact that the petitioners received the said
amount in three distinct instalments on three different dates. The computation
of liability must, therefore, necessarily take into account the actual date on
which each instalment was disbursed and the period for which the amount
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remained outstanding.
17. Accordingly, the impugned common order dated 14.10.2025 passed by
the DRAT in Misc. Appeal No.415/2018 and Misc. Appeal No.499/2018 is
hereby set aside. The order dated 26.06.2018 passed by the DRT is required to
be modified only to the limited extent in which the liability is to be computed,
as set out hereinafter.
18. The respondent-bank shall recompute the entire liability of the
petitioners by applying simple interest throughout from the respective dates
of disbursement of each of the three instalments up to 10.03.2014, i.e. the date
on which the FDR was appropriated. The computation shall be undertaken
separately in respect of each instalment of Rs.3,75,000/- disbursed on
01.10.2002, 25.07.2003 and 23.04.2004, respectively, and the aggregate
amount of Rs.11,25,000/- shall not be treated as having been disbursed as a
lump sum on 01.10.2002.
19. For the avoidance of any ambiguity, it is further clarified that, the
respondent-bank shall calculate the liability by applying simple interest for
the respective periods at the applicable rate(s) reflected in the table forming
part of the order dated 26.06.2018 passed by the DRT. The respondent-bank
shall furnish to the petitioners a detailed statement of calculation clearly
showing the principal amount, the applicable rate(s) of interest, the period(s)
for which interest has been calculated, the interest so calculated, the total
amount payable as on 10.03.2014 and the adjustment of the amount
appropriated from the FDR on the said date, along with all consequential
calculations.
20. The entire exercise of recalculation shall be undertaken by the
respondent-bank within a period of four weeks from the date of this judgment.
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If, upon such recalculation and adjustment, any amount is found refundable to
the petitioners, the respondent-bank shall refund the said amount, together
with simple interest at the rate of 7% per annum from 11.03.2014 till the date
of actual realization/payment, within a further period of four weeks from the
date of furnishing of the recalculated statement. Conversely, if upon such
recalculation and adjustment any amount is found payable by the petitioners
to the respondent-bank, the petitioners shall be liable to pay such amount on
same terms.
21. The present writ petition is accordingly allowed in the aforesaid terms.
Pending application(s), if any, shall also stand disposed of.
VIVEK CHAUDHARY
(JUDGE)
RENU BHATNAGAR
(JUDGE)
JULY 30, 2026
nc
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