- (1.) The petitioner on 26.9.1995 availed car loan, amounting to Rs. 1,25,000/- from the respondent department where he was serving. According to sanction letter, dated 26.9.1995 (P-1), the rate of interest stipulated was 10% per annum. However, it was made clear that if the loan amount was mis-utilised then penal interest at the rate of 4% per annum over and above normal rate of interest of 10% per annum was to be charged from the date of withdrawal of the loan till the principal amount would have been recovered. The aforementioned position is amply clear from Clause 6 of the sanction letter dated 26.9.1995 (P-1) and the same reads as under :- "6. His attention is also invited to the instructions in the Pb. Govt. Finance Deptt. letter No. FD-Loan-81 (136)/604, dated the 5th May 1961 and 49/83- WM(5), dated 30.11.83 according to which in case of misutilization of the loan and penal interest at the rate of 4% per annum over and above normal rate of interest shall be charged from the date of drawal of the loan for the purchase of car till the principle (principal ?) amount has been recovered as such as employee shall be debarred from all kinds of loans from Government in future." It is admitted position that the petitioner has mis-utilised the loan amount and, therefore, has rendered himself liable to pay 4% more interest according to the stipulation made in the sanction letter, dated 26.9.1995 (P-1).
(2.) However, the grievance made by the petitioner is that the interest amount of Rs. 52,615/- @ 10% per annum has been calculated and an equal amount of Rs. 52,615/- as penal interest at the rate of 10% per annum is also sought to be recovered. According to the learned counsel for the petitioner, the rate of penal interest could not exceed 4% per annum as stipulated in Clause 6 of the sanction letter dated 26.9.1995 (P-1), which has already been reproduced in the foregoing para.
(3.) The respondents have taken the stand that the instructions dated 30.11.1983 (P-7), which stipulates penal rate of interest at the rate of 4% were modified vide instructions dated 23.8.1993 (P-6) and the penal rate of interest was raised to 10% in case of mis-utilisation of loan amount. Therefore, charge of penal rate of interest at the rate of 10% is sought to be justified. Reliance has also been placed on Rule 10.15 of the Punjab Financial Rules, Volume-I, Part-I, which reads as under :- "10.15 The interest on advances shall be charged at such rate as may be fixed by the Government from time to time.";