Director of Industries, U.P. & Ors
Vs. Deep Chand Aggarwal [1980] INSC 20 (6 February 1980)
VENKATARAMIAH, E.S. (J) VENKATARAMIAH, E.S.
(J) DESAI, D.A.
CITATION: 1980 AIR 801 1980 SCR (2)1015 1980
SCC (2) 332
ACT:
Public Moneys (Recovery of Dues) Act, 1965
(U.P. Act No. XXV of 1965) Section 3-Whether offends Article 14 of the
Constitution.
HEADNOTE:
A sum of Rs. 15000/- was advanced to the
Respondent by the appellant for the purpose of setting up a panel pins and wire
nails industry in Hardoi on the former hypothecating under the mortgage deed
his house by way of security for the loan. The respondent committed default in
repayment of the loan. The State Government was compelled to take coercive
measures to recover the balance of the amount due and payable under the deed as
if it were an arrear of land revenue by resorting to section 3 of the Public
Moneys (Recovery of Dues) Act, 1965 read with sections 279/281 of the U.P.
Zamindari Abolition and Land Reforms Act, 1950. The respondent, therefore,
filed a petition under Article 226 of the Constitution on the file of the High
Court of Allahabad (Lucknow Bench) questioning the competence of the revenue
authorities to recover the balance of the amount due under the deed as if it
were an arrear of land revenue on the ground of violation of Article 14 of the
Constitution.
Following the decision of this Court in
Northern Indian Caterers P. Ltd. and Anr. v. State of Punjab and Anr., [1967] 3
SCR 399 (which held the field at that time and since overruled) the High Court
declared that Section 3 of the Act violated Article 14 of the Constitution and
quashed the recovery proceedings initiated by the revenue authorities.
Allowing the appeal by certificate, the Court
HELD: Section 3 of the Public Moneys
(Recovery of Dues) Act 1965 which enables the State Government to recover the
sums advanced under the circumstances mentioned therein, as if these were
arrears of land revenue cannot be held to be discriminatory and violative of
Article 14 of the Constitution. [1023D-E] (a) Section 3(1)(c) of the Act
provides that where any person is a party to any agreement providing that any
money payable thereunder to the State Government shall be recoverable as arrear
of land revenue and such person makes any default in repayment of the loan or
advance or any installment thereof then the arrear due and payable by him may
be recovered as if it were an arrear of land revenue by issuing a certificate
to the Collector. The remedy of the State Government to recover the amount by
instituting a suit also remains unaffected by the Act. [1019G-H] (b) There is
reasonable basis for the classification made by the statute and that the
classification does have a reasonable relation to the object of the statute.
The Act is passed with the object of providing a speedier remedy to the State
Government to realize the loans advanced by it or by the Uttar Pradesh
Financial Corporation. The State Government while advancing loans does not act
as an ordinary banker with a view to earning interest.
1016 Ordinarily it advances loans in order to
assist the people financially in establishing an industry in the State or for
the development of agriculture, animal husbandry and for such other purposes
which would advance the economic well- being of the people. The amounts so
advanced are repayable in easy installments with interest which would
ordinarily be lower than the rate of interest payable on loans advanced by
banking institutions which are run on commercial lines. The loans are advanced
from out of the funds of the State in which all the people of the State are
vitally interested.
Moneys advanced by the State Government have
got to be recovered expeditiously so that fresh advances may be made to others
who have not yet received financial assistance from the State Government. If
the State Government should resort to a remedy by way of a suit on the mortgage
deeds or bonds executed in its favour, the realization of the amounts due to
the Government is bound to be delayed resulting in non-availability of sufficient
funds in the hands of the State Government for advancing fresh loans. It is
with the object of avoiding the usual delay involved in the disposal of suits
in civil Courts and providing for an expeditious remedy, the Act has been
enacted. In the instant case, the mortgage deed provided that the amount due
there under could be realised as if it were an arrear of land revenue: and
[1020B-G] (c) The mere fact that there is no express provision in the Act
containing guidelines to the authorities concerned regarding the circumstances
under which the amounts could be realized by resorting to the procedure
prescribed for recovering arrears of land revenue, however, in the circumstance
of the case is not sufficient to hold that section 3 of the impugned Act
confers arbitrary power on the State Government and makes a hostile
discrimination. The Act which is passed with the object of providing a speedier
remedy itself provides sufficient guidance to the officer concerned as to when
he should resort to the remedy provided for. [1021A-C] Shri Mannalal and Anr.
v. Collector of Jhalwar and Ors, [1961] 2 SCR 962; Lachhman Das on behalf of
Firm Tilak Ram Bux v. State of Punjab & Ors., [1963] 2 SCR 353 and Maganlal
Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bombay and Ors.,
[1975] 1 SCR 1 followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 576 of 1970.
From the Judgment and Order dated 18-8-1969
of the Allahabad High Court in Writ Petition No. 334 of 1963.
G. N. Dixit and O. P. Rana for the
Appellants.
H. K. Puri for the Respondent.
The Judgment of the Court was delivered by
VENKATARAMIAH, J.-This appeal by certificate involves the question whether
section 3 of the Public Moneys (Recovery of Dues) Act, 1965 (U.P. Act No. XXV
of 1965) (hereinafter referred to as 'the Act') offends Article 14 of the
Constitution and it arises in the following circumstances.
The respondent is a resident of Railwayganj,
Hardoi in the State of Uttar Pradesh. He applied to the Government of Uttar
Pradesh 1017 for a loan of Rs. 15,000/ for the purpose of setting up a panel
pins and wire nails industry in Hardoi. The State Government which was
interested in the industrial development of the State accordingly advanced the
loan of Rs. 15,000 to the respondent under a mortgage deed dated March 10,
1960. The respondent was permitted to repay the loan in ten half-yearly installments
commencing from May 1, 1962 together with interest at the rate of 3 per cent
per annum calculated from March 25, 1960. The mortgage deed provided that the
respondent should spend Rs. 7,000 out of the loan advanced on the purchase of
machineries for manufacturing panel pins and wire nails and the balance of Rs.
8,000 on the construction of a building for the purpose of the said industry
and for no other purpose. The respondent also agreed to observe truly the Uttar
Pradesh Rules for the Advance of Loan for Developing Cottage Industries in the
Rural Area promulgated by the State Government and also to permit the Director
of Industries, U.P. or any official deputed by him to inspect his accounts for
the purpose of verifying whether the amount borrowed had been utilised for the
specified purpose. The respondent hypothecated under the deed his house by way
of security for the loan. Clause (8) of the mortgage deed, however, inter alia
provided that if any of the installments payable by the respondent as mentioned
in the deed was not paid on the stipulated date then the entire amount due
under the deed could be recovered by the State Government as arrears of land
revenue. The mortgage deed was signed by the Director of Industries, U.P. on
behalf of and acting under the authority of the Governor of Uttar Pradesh and
the respondent. The respondent committed default in repayment of the loan. The
State Government was, therefore, compelled to take coercive measures to recover
the balance of the amount due and payable under the deed as if it were an
arrear of land revenue, by resorting to section 3 of the Act read with sections
279/281 of the U.P. Zamindari Abolition and Land Reforms Act, 1950. At the
request of the Director of Industries, U.P., the Collector Hardoi initiated
steps to recover the balance of the amount due under the deed as an arrear of
land revenue. Pursuant to the order of the Collector, the Tahsildar of Hardoi issued
an order of attachment dated March 12, 1968 of the house of the respondent and
also issued a warrant of arrest of the respondent to recover the amount under
the provisions governing the procedure prescribed for realising land revenue.
Immediately thereafter, the respondent filed a petition under Article 226 of
the Constitution on the file of the High Court of Allahabad (Lucknow Bench) in
writ petition No. 334 of 1968 questioning the competence of the revenue
authorities to recover the 1018 the balance of the amount due under the deed as
if it were an arrear of land revenue. In that petition, the respondent
contended that the Act was discriminatory and was, therefore, violative of
Article 14 of the Constitution on the ground that the State Government had two
remedies available to it in law-one by way of a suit for recovery of the
mortgage money and another under the Act which authorised it to recover the
amounts due as if they were arrears of land revenue, that the remedy under the
Act was more onerous than a suit so far as the respondent was concerned and
that there were no guidelines in law as to the circumstances in which the State
Government could resort to the provisions of the Act. The Director of
Industries, U.P.
and the revenue authorities who were
impleaded as respondents in the writ petition contended that the provisions of
the Act did not offend Article 14 of the Constitution.
Following the decision of this Court in
Northern India Caterers Private Ltd., & Anr. v. State of Punjab &
Anr.(1) the High court declared that section 3 of the Act violated Article 14
of the Constitution by providing an additional remedy to the State Government
over and above the remedy by way of a suit, leaving it to the unguided
discretion of the State Government to resort to one or the other and that the
remedy available under the Act was more drastic or prejudicial to the party
concerned than the suit.
Accordingly the High Court quashed the
recovery proceedings initiated by the revenue authorities. Aggrieved by the decision
of the High Court, the Director of Industries, U.P.
and the revenue authorities have come up in
appeal to this Court.
The impugned Act was passed in the year 1965
to provide for speedy recovery of certain classes of dues payable to the State
or to the Uttar Pradesh Financial Corporation. The Act contains three sections.
The first section deals with the title of the Act and extent of its operation.
The second section is the definition clause Section 2 (b) of the Act defines
the expression 'financial assistance' as any financial assistance (i) for
establishing, expanding or running any industrial undertaking; or (ii) for
purposes of vocational training; or (iii) for the development of animal
husbandry; or (iv) for purposes of any other kind of planned development; or
(v) for relief against distress. Section 3 of the Act with which we are now
concerned reads as follows:- "3. Recovery of certain dues as arrears of
land revenue- 1019 (1) Where any person is party- (a) to any agreement relating
to a loan, advance or grant given to him by the State Government or the
Corporation by way of financial assistance, or (b) 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 (c) to any agreement providing that
any money payable there under to the State Government shall be recoverable as
arrears of land revenue, and such person- (i) makes any default in repayment of
the loan or advance or any installment thereof, or (ii) having become liable
under the conditions of the grant to refund the grant or any portion thereof,
makes any default in repayment of such grant or portion or installment thereof,
or (iii) otherwise fails to comply with the terms of the agreement,- then, in
the case of the State Government, such officer as may be authorised in this
behalf by the State Government by notification in the Official Gazette and in
the case of the Corporation, the Managing Director thereof, may, without
prejudice to any other mode of recovery under any other law for the time being
in force, 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.
(2) The Collector on receiving the
certificate shall proceed to recover the amount stated therein as an arrear of
land revenue." It may be seen that section 3(1) (c) of the Act provides
that where any person is a party to any agreement providing that any money
payable there under to the State Government shall be recoverable as arrears of
land revenue and such person makes any default in repayment of the loan or
advance or any installment thereof then the arrears due and payable by him may
be recovered as if it were an arrear of land revenue by issuing a certificate
to the Collector.
The remedy of the State Government to recover
the amount by instituting a suit also remains unaffected by the Act.
1020 At the outset, it has to be stated that
the decision of this Court in Northern India Caterers Private Ltd., & Anr.
(supra) is overruled by this Court in
Maganlal Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bombay &
Ors.(1) The question for determination in this case is whether section 3 of the
impugned Act violates Article 14 of the Constitution. In order to decide this
question, it is necessary to determine the object of the Act and whether the
classification made between the State on the one hand and others who have also
advanced moneys under mortgage deeds bears any reasonable relation to the
object of the statute.
The Act is passed with the object of
providing a speedier remedy to the State Government to realize the loans
advanced by it or by the Uttar Pradesh Financial Corporation. The State Government
while advancing loans does not act as an ordinary banker with a view to earning
interest. Ordinarily it advances loans in order to assist the people
financially in establishing an industry in the State or for the development of
agriculture, animal husbandry and for such other purposes which would advance
the economic well-being of the people. The amounts so advanced are repayable in
easy installments with interest which would ordinarily be lower than the rate
of interest payable on loans advanced by banking institutions which are run on
commercial lines. The loans are advanced from out of the funds of the State in
which all the people of the State are vitally interested.
Moneys advanced by the State Government have
got to be recovered expeditiously so that fresh advances may be made to others
who have not yet received financial assistance from the State Government. If
the State Government should resort to a remedy by way of a suit on the mortgage
deeds or bonds executed in its favour, the realization of the amounts due to
the Government is bound to be delayed resulting in non-availability of
sufficient funds in the hands of the State Government for advancing fresh
loans. It is with the object of avoiding the usual delay involved in the
disposal of suits in civil courts and providing for an expeditious remedy, the
Act has been enacted. In the instant case, the mortgage deed provided that the
amount due there under could be realised as if it were an arrear of land
revenue. It cannot, therefore, be said that there is no reasonable basis for
the classification made by the statute and that the classification does not
have a reasonable relation to the object of the statute.
It is also argued that the impugned Act does
not provide any guidelines to the authorities concerned regarding the
circumstances under which the amounts could be realized by resorting to the procedure
prescribed for recovering arrears of land revenue. It is no doubt true that
there is no express provision in the Act containing such guidelines. That,
however, in the circumstances of the case is not sufficient to hold that
section 3 of the impugned Act confers arbitrary power on the State Government
and makes a hostile discrimination. Under section 3 of the Act, the Collector
can proceed to realize the amount due as arrears of land revenue only on the
basis of a certificate issued by an officer as may be authorised in that behalf
by the State Government mentioning the sum due from any person referred to
therein. Such officer is expected ordinarily to avail himself of the speedier
remedy provided under the statute. We are of the view that the Act which is
passed with the object of providing a speedier remedy itself provides
sufficient guidance to the officer concerned as to when he should resort to the
remedy provided by it. As observed by this Court in Maganlal Chhgganlal (P)
Ltd.'s case (supra), one expects the officer concerned to avail himself of the
procedure prescribed by the Act and not to resort to the dilatory procedure of
the ordinary civil court. In that case, the legality of the provisions of the
Bombay Government Premises (Eviction) Act, 1955 and the provisions contained in
Chapter VA of the Bombay Municipal Corporation Act, 1888 which provided a
speedier remedy to recover possession of premises belonging to the State
Government and the Bombay Municipal Corporation which were in unauthorised
occupation of any person was questioned on the ground that the remedies under
the said provisions were more onerous than the remedy by way of a suit which
was also available to the State Government and the Corporation. While upholding
the above provisions, Alagiriswami, J. who spoke for the majority observed
thus:
"The statute itself in the two classes
of cases before us clearly lays down the purpose behind them, that is premises
belonging to the Corporation and the Government should be subject to speedy
procedure in the matter of evicting unauthorized persons occupying them.
This is a sufficient guidance for the
authorities on whom the power has been conferred. With such an indication
clearly given in the statutes one expects the officers concerned to avail
themselves of the procedures prescribed by the Acts and not resort to the
dilatory procedure of the ordinary Civil Court. Even normally one cannot
imagine an officer having the choice of two procedures, one which enables him
to get possession of the property quickly and the other which would be a
prolonged one, to resort to the latter.
Administrative officers, no 1022 less than
the courts, do not function in a vacuum. It would be extremely unreal to hold
that an administrative officer would in taking proceedings for eviction of
unauthorised occupants of Government property or Municipal property resort to
the procedure prescribed by the two Acts in one case and to the ordinary Civil
Courts in the other. The provisions of these two Acts cannot be struck down on
the fanciful theory that power would be exercised in such an unrealistic
fashion. In considering whether the officers would be discriminating between
one set of persons and another, one has got to take into account normal human
behaviour and not behaviour which is abnormal. It is not every fancied
possibility of discrimination but the real risk of discrimination that we must
take into account. This is not one of those cases where discrimination is writ
large on the face of the statute. Discrimination may be possible but is very
improbable. And if there is discrimination in actual practice this Court is not
powerless. Furthermore, the fact that the Legislature considered that the
ordinary procedure is insufficient or ineffective in evicting unauthorised
occupants of Government and Corporation property and provided a special speedy
procedure there for is a clear guidance for the authorities charged with the
duty of evicting unauthorised occupants. We therefore, find ourselves unable to
agree with the majority in the Northern India Caterers' case.
Certain provisions similar to the Act
impugned in this case enabling a State Government to recover the amounts due to
it by resorting to a speedier remedy have been upheld by this Court in two
cases-Shri Manna Lal & Anr. v. Collector of Jhalawar & Ors.(1) and
Lachhman Das on behalf of firm Tilak Ram Ram Bux v. State of Punjab &
Ors.(2). In the case of Shri Manna Lal & Anr. (supra) the facts were these:
The Jhalawar State Bank was originally a Bank belonging to the princely State
of Jhalawar. Its assets, including moneys due to it, became vested in the
United State of Rajasthan under the convenient executed by the Ruler of
Jhalawar along with other Rulers by which the United State of Rajasthan was
formed. On the promulgation of the Constitution of India, the United State of
Rajasthan became the State of Rajasthan in the Indian Union and all its assets
including the Jhalawar State Bank and its dues vested in the State of
Rajasthan. In that case the question which arose for consideration was whether
1023 moneys which had been advanced by the Jhalawar State Bank could be
recovered by taking proceedings under the Rajasthan Public Demands Recovery
Act. This Court held that the amounts could be recovered by the State of
Rajasthan after the Bank had become vested in it as a public demand under the
Rajasthan Public Demands Recovery Act and that the said Act did not offend
Article 14 of the Constitution even though it provided a special facility to
the Government as a banker for the recovery of the bank's dues for the
Government could legitimately be put in a separate class for this purpose. In
the latter case i.e. the case of Lachhman Das on behalf of Firm Tilak Ram Ram
Bux (supra), the right of Patiala State Bank to recover the amounts due to it
under the provisions of the Patiala Recovery of State Dues Act was questioned.
This Court held that the Bank established by a State had distinctive features
which differentiated it from other Banks and formed a category in itself and
the Act in setting up separate authorities for determination of disputes and in
prescribing a special procedure to be followed by them for the recovery of the
dues by summary process could not be considered to be discriminatory.
We are, therefore, of the view that section 3
of the Act which enables the State Government to recover the sums advanced
under the circumstances mentioned therein as if they were arrears of land
revenue cannot be held to be discriminatory and violative of Article 14 of the
Constitution.
For the foregoing reasons, we allow the
appeal, set aside the order passed by the High Court and dismiss the writ
petition. Since the High Court disposed of the case on the basis of the
decision of this Court in Northern India Caterers Private Ltd. & Anr.
(supra) which has since been overruled, we make no order as to costs.
V.D.K. Appeal allowed.
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