1. The present appeal has been preferred by the defendants against the judgment and decree, dated 28.02.2002 passed by the II Additional Senior Civil Judge, Warangal (for short "the trial Court") in O.S.No.253 of 1999. The said suit was filed for recovery of amount of Rs.1,45,000/- along with consequential interest and costs.

2. For the sake of convenience, the parties will be referred to, as they were arrayed before the trial Court.

3. The brief facts of the case are that, the husband of the plaintiff, namely, Sri Bandaru Rosaiah, worked as an Assistant Engineer in the office of the Inchampalli Project, Investigation Division No.1 at Warangal. The said Mr. Rosaiah filed an application on 19.03.1991 for sanction of House Building loan of Rs.1,50,000/- for purchasing a ready built house, and he entered into an agreement with one Smt. Ch.Venkatamma to purchase the house and settled the terms of the sale with her and was waiting for sanction of the loan. It is, however, stated that the Department did not sanction the loan in time, and as the vendor was not ready to wait any further, as time was running, Mr. Rosaiah borrowed the money and purchased the house and got the sale deed registered in the name of the plaintiff. Thereafter, the house was mortgaged by the plaintiff's husband to the defendants and the deed of mortgage was executed, which was also countersigned by the plaintiff, and thereafter, the Department sanctioned the loan to the plaintiff's husband.

4. It is further stated that, the plaintiff's husband died while in service on 31.10.1995, and as per the revised order of the Government vide G.O.Ms.No.401, Finance and Planning Department, dated 14.11.1990, the remaining loan amount availed by Mr. Rosaiah was entitled to be waived under the said G.O. The defendants deducted the balance loan amount from the retirement benefits payable to him, stating that the plaintiff and her husband played fraud and misrepresentation and even before the sanction of loan, the sale deed was obtained in the name of the plaintiff. Further, it is contended that, several applications filed by the plaintiffs for release of deducted amount were rejected by the defendant-Department without any valid and justifiable reasons. Therefore, the plaintiff filed a suit for recovering a sum of Rs.1,45,000/- towards reimbursement along with interest @ 12% per annum.

5. The defendant No.1 filed Written Statement before the trial Court, inter alia, stating that the application dated 09.03.1991 was filed by the plaintiff’s husband for purchase of ready-built house from Chenni Venkamma and an advance of Rs.1,00,000/- was sanctioned by the Engineer-in-Chief on 16.10.1992, which was paid to the husband of the plaintiff on 21.10.1992. Thereafter, Mr. Rosaiah applied for sanction of an additional advance of Rs.50,000/- vide his representations, dated 26.10.1992, 23.12.1992 and 10.06.1993 and the said amount was sanctioned on 24.02.1994 and paid to him on 04.03.1994. Further, the said Mr. Rosaiah was directed to purchase the said property in his name and mortgaged it to the Government. It is further stated that, in April, 1994, Mr. Rosaiah submitted the copy of the sale deed registered in the name of his wife by paying consideration of Rs.1,75,000/-. It is further contended that, the sale deed revealed that the plaintiff and Mr. Rosaiah had already paid Rs.1,75,000/- to Venkamma and got the sale deed registered one year and three months before the sanction of the loan and thereafter, on 14.07.1992, Mr. Rosaiah made a representation, requesting for sanction of House Building Advance of Rs.50,000/-, and the document submitted by him shows the sale deed, dated 13.07.1992, where it was stated that only Rs.10,000/- was only paid as sale consideration. Thus, it is submitted that, while applying for the sanction of the loan, Mr. Rosaiah misrepresented the facts and deliberately concealed the fact that the house had already been registered in the name of the plaintiff prior to the sanction of the loan. More so, Mr. Rosaiah died on 31.10.1995, while he was in service. It is further stated that out of sanctioned loan of Rs.1,50,000/- to the said Rosaiah, an amount of Rs.61,200/- was deducted from his salary while in service, and the balance amount of Rs.88,800/- and the accrued interest thereon is adjusted and recovered from the retirement benefits.

6. The defendant No.1 further submitted that the plaintiff in pursuance of G.O.Ms.No.401, dated 14.11.1990, filed an application for waiving of balance amount from House Building loan, and the defendant No.1 refused to waive the loan amount since the house was purchased even before the sanction of the loan under misrepresentation and fraud. Therefore, the defendants have decided to recover the balance amount together with interest from the retirement benefits of the loanee i.e., Mr. Rosaiah. It is contended that the suit is devoid of merits and the plaintiff is not entitled for the relief claimed and prayed to dismiss the suit.

7. Basing on the above pleadings the trial Court framed the following issues:

               i. Whether Rosaiah (the plaintiff's husband) misrepresented the facts in obtaining loan?

               ii. Whether the defendants are stopped from challenging any illegality or irregularity in obtaining loan?

               iii. Whether the defendants are justified in stopping the payment?

               iv. Whether the plaintiff is entitled to recover the amount with interest?

               v. To what relief?

8. On behalf of the plaintiff, P.Ws.1 and 2 were examined and Exs.A1 to A15 were marked, and on behalf of the defendants, D.W.1 was examined and Exs.B1 to B3 were marked.

9. The trial Court, after considering the oral and documentary evidence placed on record, decreed the suit in favour of the plaintiff. The learned trial Court held that no fair chance was provided to the plaintiff to explain the circumstances under which the property was purchased, therefore the defendants have acted unilaterally and deducted the amount without any valid and justifiable reasons, though the plaintiff is entitled to waiver of balance loan amount in lieu of G.O.Ms.No.401, dated 14.11.1990. It was further held that. Mr. Roasaih has not misrepresented any fact and learned trial Court by placing reliance upon judgment of a Division Bench of erstwhile High Court of Andhra Pradesh in Y.Tatachary v. Acharya N.G.Ranga Agricultural University, Hyderabad ((2000) 2 ALT 210), held that the plaintiff is entitled for the suit amount with an interest @12% from the date of suit till the date of realization.

10. Heard Mr. A.Thirupathi Reddy, learned Government Pleader for Appeals appearing for the appellants/defendants and Mr. Jithender Rao Veeramalla, learned counsel for the respondent/plaintiff, and having given earnest consideration to their submissions, perused the material on record.

11. The learned Government Pleader for appellants would contend that the learned trial Court has not appreciated the facts in a proper perspective, and without any justifiable reasons and findings, erroneously decreed the underlying suit. It is further contended that the plaintiff and her husband misrepresented the facts and by playing fraud on the Department, they have obtained the loan, as such, they are not entitled for the benefits of G.O.Ms.No.401, dated 14.11.1990, and thus, contended that the judgment and decree is liable to be set aside.

12. Per contra, the learned counsel for plaintiff/respondent submitted that judgment and decree passed by the trial Court is proper and valid, and does not want any interference by the Court and prayed to dismiss the present appeal.

13. After hearing the submissions made by the learned counsel for either side, the following points arise for consideration of this Court:

               a) Whether the trial Court was justified in directing the defendants to refund the balance amount of loan deducted from the retirement benefits of the plaintiff’s husband?

               b) Whether there was any misrepresentation or fraud played by the plaintiff’s husband in obtaining the loan?

               c) Whether the trail Court was justified in awarding 12% of interest over the amount payable?

14. On perusal of the pleadings and evidence on record, it is an admitted fact that Mr. Rosaiah applied for sanction of loan for an amount of Rs.1,00,000/- on 09.03.1991 for purchase of a readybuilt house from Smt. Ch. Venkamma, and the said loan was sanctioned on 16.10.1992, and disbursed to him on 21.10.1992 and later, he applied for an additional advance of Rs.50,000/- by making representations on 26.10.1992, 23.12.1992 and 10.06.1993, which was sanctioned on 24.02.1994 and disbursed to him on 04.03.1994. However, due to the delay in sanctioning the loan, Mr. Rosaiah purchased the said property under a registered sale deed, dated 12.07.1991, executed by the said Venkamma in favor of the plaintiff, prior to the disbursement of the loan amount. Further, it is an admitted fact that the said property was mortgaged by the plaintiff’s husband to the Government by submitting the required documents, which were also counter-signed by the plaintiff.

15. Taking into consideration of the documents submitted by the plaintiff’s husband, which specifically substantiates that the defendants were aware that the property has already been purchased in the name of the plaintiff even before the loan was sanctioned as the same was mortgaged in favour of the defendants for securing its repayment. Further, all through the life of Mr. Rosaiah, the defendants have not raised any objection. More so, he was in service in the defendant’s office and was entitled to be sanctioned loan, only upon his entitlement, he was sanctioned the loan. Further, it is only when the plaintiff filed an application for waiving the loan, after the death of Mr. Rosaiah, the ground of misrepresentation and fraud was raised by the defendants. It is not the case of the defendants that the said amount is misused and the property is not mortgaged with the Department. The learned trial Court considering the said factual matrix, has categorically held that there was no fraud or misrepresentation played by Mr. Rosaiah and his wife. More so, the loan of Rs.1,00,000/- was sanctioned only after a lapse of nearly six months. Since time was essence of the agreement, the contention that the plaintiff proceeded to get the sale deed registered prior to the sanction of the loan, by taking hand loan appears to be germane and valid. Therefore, in the considered view of this court, it cannot be said that the plaintiff and her husband misrepresented any facts or committed any fraud on the Government so as to disentitle them from claiming the benefits under the said G.O.Ms.No.401 dated 14.11.1990.

16. On perusal of G.O.Ms.No.401, dated 14.11.1990, marked as Ex.A13, was issued by the Government for the benefit of the family member of the deceased Government employee. It stipulated that the outstanding loan amount payable by any Government employee shall be waived on his death while in service. The said relevant portion is extracted herein for better understanding of the case:

               “The outstanding balance of House Building Advance sanctioned including additional loan sanctioned for completion of the house still under construction the orders of G.O. 6th read above and interest due thereon from the Government Servant dying while in service shall be written off in order to give relief to the family of the deceased employee provided the loan sanctioning authority is satisfied that either the loan amount was utilized for the purpose for which it was sanctioned or that substantial effort was made by the loanee to utilize the loan amount for the purpose for which it was sanctioned.”

17. In the present case, since the employee-Mr. Rosaiah died while in service, the plaintiff claimed the benefit of the said G.O., seeking waiver of the outstanding loan amount. However, the defendants deducted the same from his retirement benefits payable to the plaintiff. Further, vide the G.O.Ms.No.401, dated 14.11.1990 (Ex.A13), the employee is entitled to claim wavier if he expires in service thus, rejecting such claim without any notice and reasonable opportunity of filing reply is also violative of principles of natural justice and fair play. Thus, in the considered view of this Court, the trial Court rightly observed that the said property, which was registered in the name of the plaintiff, was purchased by her husband i.e., Mr. Rosaiah only as no other source of income was shown for plaintiff independent to the salary of her husband. The ground asserted by the plaintiff and her husband that they have purchased the property prior to the sanction of the loan, as time was the essence of the agreement, appears to be germane and valid. Thus, the defendants were not justified in deducting the said amount from the retirement benefits accrued, payable to the plaintiff, consequent upon the death of Mr. Rosaiah, and the plaintiff is entitled for the said amount in lieu of G.O.Ms.No.401, dated 14.11.1990. Thus, in the considered view of this Court, the learned trail Court was justified in decreeing the suit, and as such, the Appeal is devoid of merits and liable to be dismissed.

18. So far as the interest rate is concerned, the trial Court granted interest @ 12% per annum. However, under Section 34 of the Civil Procedure Code, 1908, the plaintiff is only entitled for 6% p.a., from the date of decree till the date of realization, and further pending suit a reasonable interest @ 7.5% is valid, and granting of 12% is untenable and requires modification to that extent.

19. In view of the foregoing discussion, the judgment and decree passed in O.S. No.253 of 1999 on the file of II Additional Senior Civil Judge, Warangal, is confirmed. However, imposing interest @ 12% p.a. from the date of suit to till realization appears to be exorbitant. Thus, the defendants shall pay the interest @ 7.5% per annum on the principal amount from the date of the suit till the date of decree, and thereafter @ 6% per annum on the principal amount from the date of decree till the date of realization. Accordingly, the judgment and decree of the trial Court stands modified to the aforesaid extent.

20. Accordingly, the Appeal is partly-allowed. There shall be no order as to costs.

Miscellaneous applications, pending if any, shall stand closed.