Allahabad High Court
Smt. Indira Nigam vs State Of U.P. And Others on 5 October, 2013
Bench: Ashok Bhushan, Vipin Sinha
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on 12.9.2013 Delivered on 5.10.2013 Case :- WRIT - C No. - 7748 of 2006 Petitioners :- Smt. Indira Nigam and another Respondent :- State Of U.P. And Others Counsel for Petitioner :- Dev Brat Mukherjee Counsel for Respondent :- C.S.C.,C.S.Singh Hon'ble Ashok Bhushan,J.
Hon'ble Vipin Sinha,J.
(Delivered by Hon'ble Ashok Bhushan, J.) The petitioners, partners of M/s Modern Printing Press has come up in this writ petition praying for quashing the recovery certificate dated 1.9.2005, issued by the respondent no. 5, National Small Industry Corporation Ltd. to the Collector for recovery of Rs. 5,34,994/- as arrears of land revenue.
Affidavits having been exchanged between the parties, with the consent of learned counsel for the parties, the writ petition is being finally decided.
Brief facts of the case, which emerged from the pleadings of the parties are; an application dated 2.8.1984 was submitted by M/s Modern Printing Press with petitioners and two other persons being its partners to the respondent no. 5 for purchasing an automatic Stop Cylinder Letter Press machine under hire purchase scheme. The respondent no. 5 (hereinafter referred as Corporation) sanctioned the project and an agreement dated 9.1.1985 was entered between the firm and the Corporation for hiring the machine on hire purchase price of Rs. 1,94,894/-. The amount was repayable in six monthly instalments extending to seven and half years. The hire purchase amount was paid by the Corporation directly to the manufacturer. The machine was sent to the petitioner's premises on 4.6.1985. There was some delay in installation of machine by the petitioner. The machine was installed on 7.12.1986. On complaint submitted by the petitioner that machine is not functioning well an inspection was carried out on 28.8.1987 whereafter machine become operational. The petitioner again submitted complaint that machine was not functioning well. Certain correspondences took place between the Corporation and the Firm. The machine was taken back by the Corporation on 26.9.1995 due to non payment of instalments by the firm. A letter dated 6.10.1995 was issued to the petitioner by the Corporation that outstanding amount of Rs. 3,57,215/- be paid within ten days from the receipt of the letter failing which the machine shall be sold of and consideration shall be adjusted. The Corporation sent recovery certificate dated 1.9.2005 to the Collector for recovery of amount of Rs. 5,34,994/- as arrears of land revenue. This writ petition was filed by the petitioner on 6.2.2006 challenging the aforesaid recovery certificate. On 8.2.2006, the writ petition was entertained and an interim order was passed staying the recovery till 20.3.2006. The interim order was continued thereafter.
We have heard Sri Dev Brat Mukherjee, learned Counsel for the petitioner and Sri Chandra Shekhar Singh, learned counsel appearing for the respondents no. 4 and 5 as well as learned Standing Counsel representing the respondents no. 1,2 and 3.
Learned Counsel for the petitioner in support of the writ petition submitted that the recovery proceedings initiated by the respondent no. 5 by recovery certificate dated 1.9.2005 is barred by time. As per the agreement between the parties, the entire amount was to be repaid upto 1992. Learned Counsel for the petitioner submits that limitation for recovering the dues was only three years as per Indian Limitation Act, 1963 and the recovery proceedings has been initiated after more than 13 years from the date when the amount become due hence, it is barred in law and cannot be enforced against the petitioner. It is further submitted by Learned Counsel for the petitioner that the agreement was entered between the petitioner and the Corporation on 9.1.1985 on which date the Corporation was not covered by U.P. Public Moneys (Recovery of Dues) Act, 1972 (hereinafter referred to as '1972 Act)' hence, the Corporation cannot take recourse to the provisions of 1972 Act and the recovery proceeding is without jurisdiction. It is further submitted by learned Counsel for the petitioner that the hire purchase agreement under which payment was made by the Corporation for purchase of machine was not under any State sponsored scheme hence, recovery cannot be made under 1972 Act. It is further submitted by learned Counsel for the petitioner that the respondents having taken back the possession of the machine in the year 1995, the recovery proceedings initiated after ten years from taking back the machine is arbitrary and unreasonable exercise of power by the Corporation hence, it deserves to be set aside.
Sri Chandra Shekhar Singh, learned Counsel for the respondents no. 4 and 5 refuting the submissions of learned Counsel for the petitioner contended that the recovery proceeding initiated by the Corporation is not barred by time. He submits that Corporation being controlled and managed by the State, the limitation for taking steps for recovery of dues as per Article 112 of the Limitation Act, 1963 is 30 years. It is submitted that the money advanced by the Corporation is a public money, which can be recovered within 30 years. It is further submitted that Corporation having been notified vide notification dated 4.2.1992 under clause (a) of Section 2 of U.P. Public Moneys (Recovery of Dues) Act, 1992, any money due to the Corporation can very well be recovered under the 1972 Act. It is further submitted that the machine, which was taken possession by the Corporation, could be sold by the Corporation only in July, 2006. The petitioner did not make repayment of the money inspite of several opportunities given to them. The petitioners have already filed a complaint being consumer complaint No. 22 of 1997 before the State Consumer Dispute Redressal Commission for payment of Rs. 12 lacs as business loss along with compensation which complaint has already been dismissed. It is further stated that a suit was also filed before the Civil Judge (Senior Division) by the petitioners, which was dismissed on 15.12.2003.
Learned Counsel for the parties have placed reliance on various judgements of the apex Court as well as of this Court and other High Courts, which shall be referred to while considering the submissions in detail.
From the pleadings of the parties and submissions made by learned Counsel for the parties, following are the issues which arise for consideration in this writ petition.
1.Whether the recovery proceedings initiated by the Corporation against the petitioner for recovery of dues vide recovery certificate dated 1.9.2005 is barred by limitation?
2.Whether the limitation for recovery of dues of the Corporation shall be governed by Article 112 of the Limitation Act, 1963 giving 30 years time to the Corporation to recover the dues?
3.Whether the Corporation has rightly taken recourse to the proceedings under the U.P. Public Moneys (Recovery of Dues) Act, 1972 sending recovery certificate for recovery as arrears of land revenue?
4.To what reliefs, the petitioners are entitled?
The issues No. 1 and 2 being interconnected are taken together. Agreement dated 9.1.1985 entered between the parties is on record as Annexure-4 to the writ petition. The petitioner was to make payment of Rs. 27,588/- on 1.12.1986 as first instalment thereafter instalments of Rs. 12,569/- was to be paid in month of June and December beginning from 1.6.1987. Total repayment of the amount was to be made in seven and half years. Thus, as per agreement, the entire amount was to be repaid upto 1992. There is no dispute that the petitioner did not make payment of instalments except making the initial payment and the default was committed by the petitioner in the year 1987 itself. In any view of the matter the entire amount became due in the year 1992. The Corporation took possession of the machine which was given to the petitioner under hire purchase scheme on 26.9.1995 on account of default committed by the petitioner in payment of instalments. According to own case of the respondent no. 5, the said machine was sold by the Corporation on 5.4.2006, as has been mentioned in paragraph 8 of the counter affidavit. The Corporation has initiated recovery proceedings by issuing citation dated 1.9.2005 under the 1972 Act for the first time. Whether the dues of the Corporation became time barred on 1.9.2005 when the Corporation issued the recovery certificate is the question to be answered.
Whether a Corporation by resorting to Public Money Recovery provisions can recover a dues which is barred by time has already been settled by the apex Court in 1999 A.C.J 1164 State of Kerala and others Vs. V.R. Kalliyanikutty and another. The apex Court held in the said case that the debts which are barred by the limitation on the date of issuance of requisition are not "amounts due" and cannot be recovered. In the aforesaid case, recovery proceedings were initiated under Kerala Revenue Recovery Act, 1968 for recovery of dues. It is useful to quote paragraphs 8,14 and 18 of the judgement:
"8. Looking to the object of Section 71 we have to examine whether time-barred claims of the State Financial Corporation and the banks can be recovered under it. Is the object only speed of recovery or is it also enlargement of the right to recover? The respondent-institutions rely on the words "amount due" in Section 71 as encompassing time-barred claims also. Now, what is meant by the words "amounts due" used in Section 71 of the Kerala Revenue Recovery Act as also in the notifications issued under Section 71? Do these words refer to the amounts repayable under the terms of the loan agreements executed between the debtor and the creditor irrespective of whether the claim of the creditor has become time-barred or not? Or do these words refer only to those claims of the creditor which are legally recoverable? An amount "due" normally refers to an amount which the creditor has a right to recover. Wharton in Law Lexicon defines "due" as anything owing; that which one contracts to pay to another. In Black's Law Dictionary, 6th Edn. at page 499 the following comment appears against the word "due".
"The word "due" always imports a fixed and settled obligation or liability; but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context. It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at sometime in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived. But commonly and in the absence of any qualifying expressions, the word "due" is restricted to the first of these meanings, the second being expressed by the term "overdue" and the third by the word "payable"."
There is no reference in these definitions to a time-barred debt. In every case the exact meaning of the word "due" will depend upon the context in which that word appears.
14.In our view if such a wide interpretation is put on the words "amount due" under the Kerala Revenue Recovery Act, there is every likelihood of the provisions of Article 14 being attracted. This Court in the case The Director of Industries, U.P. and Ors. v. Deep Chand Agarwal (Supra) justified the special procedure for recovery of certain debts under the U.P. Public Moneys (Recovery of Dues) Act, 1965 on the ground that the amounts which were advanced by the State. or by the financial institutions were for the economic betterment of the people of that State. Speedy recovery of these amounts was necessary so that these amounts could be re-utilised for the same public purpose. It is doubtful if this public purpose would extend to granting exemption to these claims from the statute of limitation. The law of limitation itself rests on the foundations of public interest. The courts have expressed at least three reasons for supporting the existence of statutes of limitation;
(1) that long dormant claims have more of cruelty than justice in them;
(2) that a defendant might have lost the evidence to disprove a stale claim; and (3) that persons with good causes of action should pursue them with reasonable diligence.
(See Halsbury 4th Edn. Vol. 28 paragraph 605).
In Nav Rattanmal and Ors. v. State of Rajasthan (AIR 1961 SC 1704), the Statutes of Limitation have been considered as Statutes of Repose and Statutes of Peace. The generally accepted basis for such statutes is that they are designed to effectuate a beneficent public purpose. Whether public purpose of speedy recovery would outweigh public purpose behind a statute of limitation is a moot point. But we need not examine this aspect any further in view of our interpretation of the words "amounts due" in Section 71.
18. In the premises under Section 71 of the Kerala Revenue Recovery Act claims which are time-barred on the date when a requisition is issued under Section 69(2) of the said Act are not "amounts due" under Section 71 and cannot be recovered under the said Act. Our conclusion is based on the interpretation of Section 71 in the light of the provisions of the Kerala Revenue Recovery Act."
It is thus clear that under U.P. Public Moneys (Recovery of Dues) Act, 1972, recovery of dues of Corporation can only be resorted when the Corporation has right to recover the dues i.e. in another words when the amount due has not become barred by time. Learned Counsel for the respondents no. 4 and 5 to meet the above submissions of learned Counsel for the petitioner has relied on Article 112 of Limitation Act, 1963 and he submits that Corporation has a period of 30 years for recovering the amount due to it. Article 112 of the Limitation Act, 1963 is as follows:
112. Any suit (except a suit before the Supreme Court in the exercise of its original jurisdiction) by or on behalf of the Central Government, or any State Government including the Government of the State of Jammu and Kashmir.
Thirty years When the period of limitation would begin to run under this Act against a like suit by a private person.
On the other hand, Sri Dev Brat Mukherjee, learned Counsel for the petitioner submitted that the period of limitation for recovery of dues by the Corporation shall be only three years as per Limitation Act either Article 19 or Article 21. Sri Mukherjee further submits that Article 112 shall not be applicable in the present case since action has not been taken by the State Government rather recovery certificate has been issued by the Corporation. It is submitted that the benefit of Article 112 cannot be extended to the Corporation and the said Article is applicable only with regard to Central Government or any State Government. Whether Article 112 of the Limitation Act can be taken recourse by the Corporation in the facts of the present case, is the moot question to be answered. A particular period of limitation for filing a suit by the Central Government or State Government has been provided for in the Statute of Limitation for a purpose and object. The challenge to Article 149 of the Limitation Act, 1908 which was pari-materia to Article 113 of the 1963 Act, was considered and repelled by the apex Court in AIR 1961 SC 1704 Nav Rattanmal and others Vs. State of Rajasthan. While noticing the purpose and object of Article 149 of the Limitation Act, apex Court laid down following in paragraph 10:
"10. ......It is with this background that the question of the special provision contained in art. 149 of the Act has to be viewed. First, we have the fact that in the case of the Government, if a claim becomes barred by limitation, the loss falls on the public, i.e., on the community in general and to the benefit of the private individual who derives advantage by the lapse of time. This itself would appear to indicate a sufficient ground for differentiating between the claims of an individual and the claims of the community at large. Next, it may be mentioned that in the case of governmental machinery, it is a known fact that it does not move as quickly as in the case of individuals. Apart from the delay occurring in the proper officers ascertaining that a cause of action has accrued-Government being an impersonal body, before a claim is launched there has to be inter- departmental correspondence, consultations, sanctions obtained according to the rules. These necessarily take time and it is because of these features which are sometimes characterised as red-tape that there is delay in the functioning of government offices..........."
The words "Central Government" or "State Government" have not been defined in the Limitation Act, 1963. "The Government" has been defined in Section 3 (23) of the General Clauses Act 1897 in following words:
"(23) "Government" or "the Government" shall include both the Central Government and any State Government;"
The submission of Chandra Shekhar Singh is that in the words "Central Government or "any State Government" used under Article 112, the Corporations owned and controlled by the Central Government or State Government have also to be read.
The word "State" has been defined under Article 12 of the Constitution of India. Definition of word the 'State' under Article 12 is inclusive definition which includes the Government, Parliament of India and the Government and Legislature of each States and all local or other authorities within the territory of India or under the control of the Government of India. The definition of the word "the State" as contained in part II of the Constitution of India is for purpose of part III and Part IV of the Constitution of India. Article 12 itself indicates that the word "the State" is a word of wider definition and it encompasses in it other authorities under the control of the Government of India. The Corporation, respondent no. 5 may be an authority within the meaning of Article 12 but the question is as to whether the words "Central Government" and " State Government" used in Article 112 of the Limitation Act, 1963 should be read as the word "State". When the Limitation Act, 1963 was enacted the Parliament was well aware of the concept of Central Government, State Government and concept of "State". The Limitation Act, 1963 itself indicates that the word "Local Authority" is not included within the meaning of Central Government or State Government which is apparent from the fact that a separate limitation period has been provided for local authority in the Limitation Act under Article 111 Article, which is quoted below:
111. By or on behalf of any local authority for possession of any public street or road or any part thereof from which it has been dispossessed or of which it has discontinued the possession.
Thirty years The date of the dispossession or discontinuance.
Had the Legislature intended to include local authority within the meaning of State Government or Central Government under Article 112, there was no occasion to provide for separate limitation period for local authority. It is thus, clear that local authority was never intended by the Legislature to be included in words 'Central Government' or 'State Government' although the local authority is covered within the definition of 'State' under Article 12 of the Constitution of India. Thus, any authority/Corporation which may be State within the meaning of Article 12 does not ipso facto become entitled to be treated as Central Government or State Government within the meaning of Article 12 of the Constitution of India .
The Madras High Court in an earlier judgment reported in AIR 1940 (Madras) 916 M.L.N. Mahalingam Chettiar v. Raja Srimathu Muthu Vijia Raghunatha Doraisingam has held that the definition of 'Government' as provided under Section 3 (21) of the General Clauses Act does not include local authority. Following was laid down by the Madras High Court in the said judgment:
"Mr. Narsimhachariar has asked the Court to hold that the word "Government" should be interpreted as including the District Board. To do so would, in my opinion, be to distort true meaning of the word. Moreover, Section 3(21), General Clauses Act, 1897, says that "Government" or "the Government" shall include the local Government" as well as the Government of India. No reference is made to local authorities."
Vindhya Pradesh High Court, while considering Article 149 of the Limitation Act, 1908 (pari-materia to Article 112) in Bank of Baghelkhand Vs. Dr. Ram Prasad and others AIR 1954 V.P.1 (Vol. 41, C.N.1, has laid down that a suit filed by the Bank for recovery of money advanced by it cannot be treated to be a suit on or behalf of Government of Vindhya Pradesh. Following was laid down in paragraphs 22,23 and 24:
"(22). One has only to compare this with what happens in the nationalisation of a Bank or a Railway. On a particular date they became the exclusive property and business of the State, by the acquisition and the purchase of the shares from the shareholders. No doubt, a suit such as the one reported in - 'B. N. W. RIy. Co. v. Janki Prasad', MANU/BH/0064/1935 : AIR 1936 Pat 362 (C), either by the railway or by its licensee for the recovery of the State Railway property would be governed by Art. 149 because the State Railway is wholly the property of the Government. At the same time, we have, all over the country, various businesses & corporations where the Government takes certain shares, nominates certain directors and exercises varying degrees & control. These corporations may be called "State businesses" in a loose sense, in that they do the business of the State, or are specially controlled by the State. But a suit by these corporations, which properly speaking are "State aided'1 or "State controlled", or "state patronised", would not be governed by Art. 149. The Bank of Baghelkhand belongs to this category. The test is whether the property or the benefit sought in the suit belongs wholly and solely to the State. One cannot at all say that the monies advanced by the Bank of Baghelkhand to its debtors is State property.
(23) The foregoing discussion would show that the words "State Bank" cannot be understood co imply that the Bank is the sole property of the State and its business is the sole business of the State. On the contrary there was no time from 1934 till today when the State of Rewa, or its successor the State of V. P., took over the bank from its shareholders, just as the Government of India has taken over the Reserve Bank or the various railway companies. There was no time when the shareholders went out, or the Bank was manned by full time State servants.
(24) Thus the argument that the Bank is entitled to the benefit of Art. 149 cannot be accepted."
A Division Bench of this Court in 1991 ALJ 287 U.P. State Electricity Board Vs. The Collector, Customs & Central Excise Allahabad and others has held that although the State Electricity Board constituted under the Electricity (Supply) Act, 1948 is State within the meaning of Article 12 but every authority under Article 12 does not necessarily mean that it is a Department or a part of the Government. Following was laid down in paragraph 4:
"4. ........The contention of the learned counsel for the petitioner is that the Board is a Department and part of the State Govt. of U.P. and as such goods manufactured by it in its unit have been exempted from payment of excise duty and in this connection he has relied on the definition of the "State" contained in Article 12 of the Constitution of India. Under this article not only the Government (the Government and Parliament of India and the Governments and Legislatures of States) but all local and other authorities within the territory of India or under the control of the Government of India have been included in the definition of the word "State". This definition includes within its ambit all constitutional and other authorities on whom powers are conferred by law. State Electricity Board constituted under the Electricity (Supply) Act, 1948 has been held to be a "State" within the meaning of Article 12 of the Constitution of India by the Supreme Court in Electricity Board v. Mohan Lal - MANU/SC/0360/1967. But every authority which is a State within the meaning contained in Article 12 of the Constitution of India does not necessarily mean that it is a Department or part of the Government. Corporations and statutory authorities are different from Government even if they are controlled and financed wholly or partly by the Government and it is on this basis that the employees of the corporations and statutory bodies were excluded from the benefit of the protection conferred by Article 311 of the Constitution..........."
Another judgment of the apex Court reported in AIR 2006 SC 918 SC 918 Srikant Vs. Vasantrao & Ors also throws considerable light on the issue, which has come up for consideration in this writ petition. The apex Court had occasion to consider Section 9A of the Representation of People Act. In the aforesaid case, the elected candidate had subsisting contract with Godawari Marathwada Irrigation Development Corporation as well as Maharashtra Jeevan Pradhikaran. The election petition was filed challenging the election of the candidate on the ground that he was disqualified by virtue of Section 9A of the Representation of People Act. The High Court allowed the election petition and declared the election of appellant as void. It was held that Godawari Marathwada Irrigation Development Corporation and Maharashtra Jeevan Pradhikaran were statutory Corporations wholly controlled by the State Government and therefore, fell within the expression "State" as defined within the meaning of Article 12. It is useful to quote paragraph 5 of the judgment which is to the following effect:
"5. After considering the provisions of MGMIDC Act and MJA Act, the High Court allowed the election petition by order dated 31.8.2004 and declared the election of Appellant as void. It held that GMIDC and MJP were statutory corporations wholly controlled by the State Government and therefore, fell within the expression 'State' as defined in Article 12 by applying the principles laid down by this Court in Ramana Dayaram Shetty vs. The International Airport Authority of India [AIR 1979 SC 1628]; Ajay Hasia Vs. Khalid Mujib Sehravardi [1981 (1) SCC 722]; The Mysore Paper Mills Ltd. Vs. The Mysore Paper Mills Officers Association & Anr. [2002 (2) SCC 167]; and Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology & Ors. [2002 (5) SCC 111]. The High Court also held that GMIDC and MJP being 'State' under Article 12, they are the same as being 'State Government' and therefore, GMIDC and MJP can be termed as 'appropriate Government'. Consequently, the High Court held that the Appellant had subsisting contracts with the appropriate government and therefore, incurred disqualification under section 9-A of the Act."
Section 9A of the Representation of People Act, 1951, which fell for consideration was as follows:
"9A. Disqualification for Government contracts, etc. --A person shall be disqualified if, and for so long as, there subsists a contract entered into by him in the course of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by, that Government."
In the above context, the apex Court examined as to whether contract with the Corporation shall be treated as contract with the State Government so as to disqualify the appellant. Reversing the judgment of the High Court, the apex Court laid down that although the term "State" may include a State Government as also statutory or other authorities for the purposes of part-III (or Part- IV) of the Constitution, the term "State Government" in its ordinary sense does not encompass in its fold either a local or statutory authority. It is useful to quote paragraph 17:
"17.........Thus the very decisions relied on by the High Court make it clear that 'instrumentalities of State' are different from 'State Government', though both may answer the definition of 'State' under Article 12 for the limited purpose of Part-III of the Constitution. Further, the very inclusive definition of 'State' under Article 12 by referring to Government of India, the Government of each of the States and the local and other authorities, makes it clear that a 'State Government' and a local or other authorities, are different and that they fall under a common definition only for the purpose of Part-III of the Constitution. This Court has consistently refused to apply the enlarged definition of 'State' given in Part-III (and Part-IV) of the Constitution, for interpreting the words 'State' or 'State Government' occurring in other parts of the Constitution. While the term "State" may include a State Government as also statutory or other authorities for the purposes of part-III (or Part- IV) of the Constitution, the term "State Government" in its ordinary sense does not encompass in its fold either a local or statutory authority. It follows, therefore, that though GMIDC and MJP may fall within the scope of 'State' for purposes of Part-III of the Constitution, they are not "State Government" for the purposes of section 9-A (read with section 7) of the Act."
From the above discussions, we are of the view that the words "Central Government or "State Government" occurring in Article 112 cannot be read to include Corporation owned or controlled by the State Government.
Learned Counsel for the respondents has placed reliance on a judgment of this Court reported in 1978 ALJ 280 Roop Kishore Seth Vs. State of U.P. In the above case, a suit was filed by the State of U.P. for recovery of the loan advanced by one Shanti Swaroop. A pronote was executed by Roop Kishore Seth in favour of Shanti Swaroop and Roop Kishore Seth further took a loan. Shanti Swaroop died on 16.1.1960. He was not survived by any heir to succeed and by virtue of provisions of Section 29 of Hindu Succession Act his property was devolved on the State Government. The State of U.P. filed a suit thereafter for recovery. In the said case, Article 112 was relied by the State Government for the limitation to file suit. The trial court and appellate court had held that the suit was well within time which was challenged by Roop Kishore Seth. This Court laid down following in paragraph 6:
"6. Both the suits were filed for recovery of loans and were based on two pronotes in question. Had Shanti Swarup filed the said suits Article 35 would undoubtedly have applied and the period of limitation for such suits would have been three years. The suits were, however, not filed by Shanti Swarup, the creditor. He had died on 16th January, 1960, a few months before the expiry of three years calculated from the dates of the advancement of the loans. He died without leaving any heir qualified to succeed to his property in accordance with the provisions of the Hindu Succession Act. It seems that before the courts below it was urged that Shanti Swarup was not governed by the provisions of Hindu Succession Act. But this contention did not find favour with the courts below. The learned Counsel for the Appellant in both the appeals did not press before me this point. It is thus no more in dispute that Shanti Swarup was governed by the Hindu Succession Act, 1956. Section 29 of that Act provides that "If an intestate has left no heir qualified to succeed to his or her property in accordance with the provisions of this Act, such property shall devolve on the Government; and the Government shall take the property subject to all the obligations and liabilities to which an heir would have been subject". Shanti Swarup having died without being survived by any heir qualified to succeed his property in accordance with the provisions of the Hindu Succession Act, 1956 his property accordingly devolved on the Government. The State of U.P., therefore, became entitled to recover the debts advanced by Shanti Swarup. The State Government also, therefore, became entitled to file suits for recovery of those debts within the period of limitation prescribed by the Limitation Act. The recovery of the two loans in question by instituting suits had not become barred by time on 16th January, 1960 when Shanti Swarup had died. The remedy to recover the said loans was, in other words, not barred by limitation on 16th January, 1960 when the said loans devolved on the State Government. The State Government then became entitled to recover the debts from Roop Kishore Seth. Admittedly the suits were not filed within a period of three years from the date of the advancement of the loan. Could the suit be filed within a period of thirty years from the date of the advancement of the loan under Article 112 of the Limitation Act? In my view if the right of the deceased private person has, before the escheat to the Government, been extinguished by the operation of limitation the escheat cannot revive it. Where the claim of a private person was barred by time on the date of his death the devolution of his property on the Government, i.e. escheat to the Government shall not enable, the Government to take resort to Article 112 to make the suit within limitation. Where, however, the period of limitation had not expired on the date of the demise of the private person that is on the date of the devolution of his property by escheat on the Government under Section 29 of the Hindu Succession Act, 1956, the Government, in my view, will be entitled to avail itself of the provisions of Article 112 of the Limitation Act. Different considerations arise in the case of the State and there is a distinction between claims by the Government and those of private individuals. Article 112 governs any suit, (except the suit before the Supreme Court in exercise of its original jurisdiction), filed by or on behalf of the Central Government or any State Government, and the period of limitation for a suit filed by or on behalf of the Central Government or any State Government, and the period of limitation would begin to run against a like suit by a private person. The period of limitation for a suit based on pronote by a private person begins to run from the date of the pronote. So the period of thirty years would commence from the date of the pronote under Article 112 of the Limitation Act. It was not in dispute that both the suits were filed within the period of thirty years. They were, therefore, rightly held to be within limitation."
The above case arose out of a suit filed by the State and the issue raised in the said case was different as to whether after escheat of the State, the State shall become entitle to recover the loan and limitation of Article 112 shall apply. The said case does not help the respondents in the present case.
In view of the foregoing discussions, we are of the view that the respondents no. 4 and 5 were not entitled to take recourse to Article 112 and the proceedings initiated by them for recovery of loan by issuing citation dated 1.9.1995 was clearly barred by time. The limitation for recovery of loan in the facts of present case, at the instance of the respondents no. 4 and 5 was only three years.
Next submission pressed by learned counsel for the petitioner is that recovery cannot be held as arrears of land revenue under the U.P. Public Moneys (Recovery of Dues) Act, 1972. Two grounds have been raised by the learned counsel for petitioner to attack the recovery under the 1972 Act. Firstly; he submits that the agreement was entered between the parties on 9.1.1985 i.e. before the date when the respondent Corporation has been notified under the 1972 Act hence, the recovery of dues as per agreement dated 9.1.1985 cannot be made under the 1972 Act. Secondly; he submits that the financial assistance given by the Corporation was under not any State Sponsored Scheme hence, the recovery cannot be made under the 1972 Act.
The respondent no. 5 was notified under the 1972 Act by notification dated 4.1.1992. Section 3 of the 1972 Act provide for recovery of certain dues as arrears of land revenue. Section 3(1) which is relevant for the present case is quoted below:
"3. Recovery of certain dues as arrears of land revenue.- (1) Where any person is party,-
(a) to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of, or relating to hire-purchase of goods, sold to him by the State Government or the Corporation, by way of financial assistance; or
(b) to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of, or relating to hire-purchase of goods sold to him, by a banking company or a Government company, as the case may be, under a State sponsored scheme; or
(c) to any agreement relating to a guarantee given by the State Government or the Corporation in respect of a loan raised by an industrial concern; or
(d) to any agreement providing that any money payable thereunder to the State Government or the corporation shall be recoverable as arrears of land revenue; and such person-
(i) makes any default in repayment of the loan or advance or any instalment thereof; or
(ii) having become liable under the conditions of the grant to refund the grant or any portion thereof, makes any default in the refund of such grant or portion or any instalment thereof; or
(iii) otherwise fails to comply with the terms of the agreement; then then, in the case of the State Government, such officer as may be authorised in that behalf by the State Government by notification in the official Gazette, and in the case of the corporation or a Government Company the Managing Director or where there is no Managing Director then the Chairman of the Corporation, by whatever name called or such officer of the Corporation or Government Company as may be authorised in that behalf by the Managing Director or the Chairman thereof, and in the case of a banking company, the local agent, thereof, by whatever name called, may send a certificate to the Collector, mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue."
Section 3 of the 1972 Act does not contemplate any distinction with regard to loan given prior to the Corporation being covered by 1972 Act or loan given after the Corporation was notified under the 1972 Act. On the date when recovery has been initiated by the Corporation, the Corporation was already notified under the 1972 Act. When notification has been issued on 4.2.1992 and the amount having been due thereafter there was no illegality in the Corporation to invoke the provisions of Section 3 of 1972 Act. Merely on the ground that the agreement was entered on 9.1.1985, no distinction can be shown with regard to loan or financial assistance advanced by a Corporation. Thus, there is no substance in the above ground. The next ground of challenge is that the financial assistance granted by Corporation was not under any State sponsored scheme.
Learned Counsel for the petitioner has relied on several judgments in support of his submission that recovery as arrears of land revenue cannot be effected unless the financial assistance was given under any State sponsored scheme. He placed reliance on (1998) 9 SCC 163 Califf India Chambers and others Vs. Syndicate Bank, Kalamassery and others, (2006) 2 SCC 241 Iqbal Naseer Usmani Vs. Central Bank of India and others, 1999 (1) AWC 237 Anupam Sari Centre and others Vs. Collector, Padrauna and others, 2007 (4) AWC, 3513 Govind Printing Works and another Vs. U.P. State Handloom Corporation and others.
Section 3(1) has four clauses (a), (b), (c) and (d). The phrase state sponsored scheme occurs in clause (b) only. Clause (a) is applicable when a person is a party to any agreement relating to a loan, advanced or grant given by the State Government or the Corporation whereas clause (b) is attracted when an agreement is by a banking company or a Government company. Thus, requirement of loan, advance or grant under the State sponsored scheme is attracted only when the agreement is by a banking company or a Government Company. The judgment of the apex Court in Iqbal Iqbal Naseer Usmani Vs. Central Bank of India and others (supra), Califf India Chambers and others Vs. Syndicate Bank, Kalamassery and others (Supra), Anupam Sari Centre and others Vs. Collector, Padrauna and others (Supra) were the cases where the agreement was entered with the bank hence, clause 3 (1) (b) of 1972 Act was attracted and recovery under the 1972 Act can be made only when the the loan, advance or grant was under a State sponsored scheme. There cannot be any dispute to the proposition laid down in above cases to the effect that the provisions of Section 3(1)(b) of the 1972 Act can be resorted only when the loan, advance or grant was under state sponsored scheme. It is useful to quote paragraph 6 of the judgment in Iqbal Naseer Usmani Vs. Central Bank of India and others (supra) case which is to the following effect:
"6. There is no doubt that the first respondent is a banking company within the meaning of Section 2(f) of the Act. Section 3(b) of the Act provides that where any person is party "to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of or relating to hire-purchase of goods sold to him, by a banking company or a Government company, as the case may be, under a State-sponsored scheme" and such person makes any default in the repayment of the loan or advance or any instalment thereof, on a certificate as to default along with a request from the concerned company to the Collector, the Collector shall proceed to recover the amount stated therein as arrears of land revenue. While there is no doubt that the appellant had obtained a loan from the first respondent-banking company and defaulted in repayment thereof there is no evidence to suggest that the loan was relating to hire-purchase of goods sold to him under a "State-Sponsored scheme." The learned Counsel for the respondent frankly conceded that the loan was not under any such "State-sponsored scheme." In our view, the provisions of the Act are not intended to supplant the machinery for execution of all decrees under the provisions of the Code of Civil Procedure. They can only be utilised for recovery of sums due in the special cases enumerated in Section 3(1) of the Act."
In Govind Printing Works and another Vs. U.P. State Handloom Corporation and others (supra), the case of was that the respondent no. 1 was a Government Company hence section 3(1)(b) of 1972 Act was applicable. It is useful to quote paragraph 6 of the judgment which is to the following effect:
"6. From the perusal of the aforesaid section it clearly goes to show that the amount can be recovered by the Banking Company or a Government company if it is a loan, advance or grant or credit under the State Sponsored Scheme, as the petitioner has not been given any loan, advance or grant or credit under the State Sponsored Scheme. In fact the petitioners and respondents have entered Into the business transaction, therefore, the aforesaid act of the respondents are against the law"
As observed above, the present is a case where the hire purchase agreement has been entered between the petitioner and the respondent no. 5. The respondent no. 5 is a Corporation hence, section 3(1)(b) is not attracted for a loan advance or grant given by a Corporation. There is no such condition that such loan, advance or grant should be under a state sponsored scheme as is required under section 3(1) (b) of the 1972 Act. Thus, the submission of the petitioner that financial assistance granted to the petitioner was not under a State sponsored scheme does not help the petitioner in the present case.
Thus, in view of the foregoing discussions, the submission of learned Counsel for the petitioner that the provisions of 1972 Act are not attracted,cannot be accepted. However, as observed above, the 1972 Act applies to only those dues which are recoverable by Corporation and have not become barred by any law of limitation.
The learned Counsel for the respondent has referred to a complaint case filed by the petitioner for business loss and compensation as well as a suit filed by firm. The dismissal of complaint for the above purpose cannot preclude the petitioner from challenging the recovery proceedings under the 1972 Act. Further, the suit filed by the petitioner was dismissed on 15.12.2003 which can have no effect in entertaining the challenge of the petitioner to the recovery proceedings initiated vide recovery certificate dated 1.9.2005.
We having already held that recovery initiated by the respondent no. 5 by recovery certificate dated 1.9.2005 has become barred by time, the recovery proceedings in pursuance of the citation dated 1.9.2005 cannot be allowed to proceed. The petitioner is entitled for the relief as prayed for in the writ petition.
In the result, the writ petition is allowed. The recovery certificate dated 1.9.2005 issued by the respondent no. 5 and consequential proceedings in pursuance of the same are quashed.
Parties shall bear their own costs.
Order Date :- 5.10.2013 LA/-