Unique Butyle Tube Industries Pvt. Ltd. Vs. U.P. Financial Corporation &
Ors  Insc 576 (20
Shah Mohammed Quadri & Arijit Pasayat.Arijit Pasayat, J.
Special Leave Petition (civil) 10315 of 2001
only question that falls for determination in this case is whether the
proceedings for recovery initiated by U.P. Financial Corporation (hereinafter
referred to as 'the Corporation') under the Uttar Pradesh Public Monies
(Recovery of Dues) Act, 1972 (in short 'the U.P. Act') on 6.1.2001 are
maintainable in view of Section 34 (2) of the Recovery of Debts Due to Bank and
Financial Institutions Act, 1993 (in short 'the Act').
position sans unnecessary details is as follows:
was issued under the U.P. Act for recovery of certain dues from the appellant
for its alleged failure to comply with the terms and conditions of loan granted
to it; similar failure was alleged by three Directors and three guarantors. On
14.2.2001 Citation for recovery was issued by the Tehsildar, Varanasi, for recovery of the alleged dues
as arrears of land revenue. Appellant challenged the said action before the Allahabad
High Court in CMWP No.13738 of 2001 on the ground that after the enactment of
the Act, the proceedings were not maintainable.
was placed on the provisions contained under Section 32(G) of the State
Financial Corporation Act, 1951 (in short 'the Financial Act') to contend that
no other proceeding is permissible to be taken under the Act.
was made to Sections 17 and 34 of the Act to substantiate his stand. Stand of
the Corporation before the High Court was that alternative modes of recovery
were prescribed under different statutes and one cannot stand on the way of the
other mode. Choice was left upon to the Corporation to act either under the Act
or under the modes permissible under the Financial Act. Proceedings initiated
under the U.P. Act were covered by the said Act. A Division Bench of the High
Court on consideration of the rival submissions held that the language of
Section 34(2) of the Act placed the position beyond controversy and concluded
choice is clearly left open to the Financial Corporation which may proceed
under the D.R.T. Act or may proceed under the other modes of recovering the
debts as are permissible under the S.F.C. Act, i.e. it can proceed under the
provisions of the U.P. Public Money (Recovery of Dues) Act." Judgment of
the High Court dated 27.4.2001 is under challenge.
support of the appeal learned counsel for the appellant submitted that the
field of operation so far as the Act is concerned, has been clearly delineated
in Allahabad Bank vs. Canara Bank and Anr. (2000 (4) SCC 406).
34 of the Act confers overriding effect vis--vis others statutes. The only
exceptions to such overriding effect are enumerated in sub-section (2) thereof.
under the U.P. Act are not encompassed by the exceptions. On the contrary, the
action permissible so far as Financial Act is concerned, can be spelt out from
Section 32 (G) of the said Act.
response, learned counsel for the Corporation submitted that Allahabad Bank's
case (supra) has no application to the facts of the case. Under the U.P. Act,
there is no question of any adjudication of dues payable and once there is
default, there is statutory empowerment to issue a certificate in terms of
Section 3 of the said Act.
reference to the decision of this Court in Director of Industries, U.P. and
Ors. vs. Deep Chand Agarwal (1980 (2) SCC 332), it was submitted that validity
of the said provisions has been upheld by this Court and the procedure adopted
in the present case has been held to be legally permissible. The authorized
functionary can take action, the moment there is default and no adjudicatory
process is involved. The procedure is not in conflict with any proceeding that
can be taken under the Act. The statutory intention for enactment of the Act
was to do away with the cumbersome procedures involved for recovery and
provisions are not inconsistent with any provision of the U.P. Act, which in
terms of Section 3(3) prohibits institution of a case for recovery of the sums
due. Therefore, the High Court was justified in its conclusion. In any event,
according to him, the procedures under the Act are in pari material with those
which can be taken under the Financial Act. So such a prescription has to be
read into sub-section (2) of Section 34 of the Act by application of the
principle known as casus omissus and the deficiency, if any, can be reconciled
by purposive interpretation by reading the said statute as a whole, and finding
out the true legislative intent.
order to appreciate the rival submissions a few provisions throwing light on
the controversy need to be noted.
Act to have over-riding effect-
Save as otherwise provided in sub-section (2), the provisions of this Act shall
have effect notwithstanding anything inconsistent therewith contained in any
other law for the time being in force or in any instrument having effect by
virtue of any law other than this Act.
The provisions of this Act or the rules made thereunder shall be in addition
to, and not in derogation of, the Industrial Finance Corporation Act, 1948(15
of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit
Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of
India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special
Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of
India Act, 1989(39 of 1989).
Recovery of amounts due to the Financial Corporation as an arrear of land
revenue. Where any amount is due to the Financial Corporation in respect of any
accommodation granted by it to any industrial concern, the Financial Corporation
or any person authorized by it in writing in this behalf, may, without
prejudice to any other mode of recovery, make an application to the State
Government for the recovery of the amount due to it, and if the State
Government or such authority, as that Government may specific in this behalf,
is satisfied, after following such procedure as may be prescribed, that any
amount is so due, it may issue a certificate for that amount to the Collector,
and the Collector shall proceed to recover that amount in the same manner as an
arrear of land revenue.] U.P. Public Moneys (Recovery of Dues) Act, 1972:
Recovery of certain dues as arrears of land revenue (1) Where any person is
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
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
any default in repayment of the loan or advance or any instalment thereof; or
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 .................
The Collector on receiving the certificate shall proceed to recover the amount
stated therein as an arrear of land revenue.
suit for the recovery of any sum due as aforesaid shall lie in the civil court
against any person referred to in sub-section (1).
the case of any agreement referred to in sub-section (1) between any person
referred to in that sub-section and the State Government or the Corporation, no
arbitration proceedings shall lie at the instance of either party for recovery
of any sum claimed to be due under the said sub-section or for disputing the
correctness of such claim:
that whenever proceedings are taken against any person for the recovery of any
such sum he may pay the amount claimed under protest to the officer taking such
proceedings and upon such payment the proceedings shall be stayed and the
person against whom such proceedings were taken may make a reference under or
otherwise enforce an arbitration agreement in respect of the amount so paid,
and the provisions of Section 183 of the Uttar Pradesh Land Revenue Act, 1901,
or Section 287-A, of the Uttar Pradesh Zamindari Abolition and Land Reforms
Act, 1950, as the case may be, shall mutatis mutandis apply in relation to such
reference or endorsement as they apply in relation to any suit in the civil
court." Allahabad Bank's case (supra) did not specifically deal with
Section 34(2) of the Act. However, certain observations made in the said
judgment are of relevance:
We shall refer to Sections 17 and 18 in Chapter III of the RDB Act which deal
with adjudication of the debt:
Jurisdiction, powers and authority of Tribunals (1) A Tribunal shall exercise,
on and from the appointed day, the jurisdiction, powers and authority to
entertain and decide applications from the banks and financial institutions for
recovery of debts due to such banks and financial institutions.
Appellate Tribunal shall exercise, on and from the appointed day, the
jurisdiction, powers and authority to entertain appeals against any order made,
or deemed to have been made, by a Tribunal under this Act.
Bar of jurisdiction On and from the appointed day, no court or other authority
shall have, or be entitled to exercise, any jurisdiction, powers or authority
(except the Supreme Court, and a High Court exercising jurisdiction under
Article 226 and 227 of the Constitution) in relation to the matters specified
in Section 17." It is clear from Section 17 of the Act that the Tribunal
is to decide the applications of the banks and financial institutions for
recovery of debts due to them. We have already referred to the definition of
"debt" in Section 2(g) as amended by Ordinance 1 of 2000. It includes
"claims" by banks and financial institutions and includes the
liability incurred and also liability under a decree or otherwise. In this
context Section 31 of the Act is also relevant. That section deals with
transfer of pending suits or proceedings to the Tribunal. In our view, the word
"proceedings" in Section 31 includes "execution
proceedings" pending before a civil court before the commencement of the
Act. The suits and proceedings so pending on the date of the Act stand
transferred to the Tribunal and have to be disposed of "in the same
manner" as applications under Section 19.
our opinion, the jurisdiction of the Tribunal in regard to adjudication is
exclusive. The RDB Act requires the Tribunal alone to decide applications for
recovery of debts due to banks or financial institutions.
the Tribunal passes an order that the debt is due, the Tribunal has to issue a
certificate under Section 19(22) formerly under Section 19(7) to the Recovery
Officer for recovery of the debt specified in the certificate. The question
arises as to the meaning of the word "recovery" in Section 17 of the
Act. It appears to us that basically the Tribunal is to adjudicate the
liability of the defendant and then it has to issue a certificate under Section
Section 18, the jurisdiction of any other court or authority which would
otherwise have had jurisdiction but for the provisions of the Act, is ousted
and the power to adjudicate upon the liability is exclusively vested in the
Tribunal. This exclusion does not however apply to the jurisdiction of the
Supreme Court or of a High Court exercising power under Articles 226 or 227 of
the Constitution). This is the effect of Sections 17 and 18 of the Act.
34 of the Act consists of two parts. Sub- section (1) deals with the
over-riding effect of the Act notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or in any instrument
having effect by virtue of any law other than the Act. Sub-section (1) itself
makes an exception as regards matters covered by sub-section (2). The U.P. Act
is not mentioned therein. The mode of recovery of debt under the U.P. Act is
not saved under the said provision i.e. sub- section (2) which is of
considerable importance so far as the present case is concerned. Even a bare
reading therein makes it clear that it is intended to be in addition to and not
in derogation of certain statutes; one of which is the Financial Act. In other
words, a Bank or Financial institution has the option or choice to proceed
either under the Act or under the modes of recovery permissible under the
Financial Act. To that extent, the High Court's conclusions quoted above were
correct. Where the High Court went wrong is by holding that proceedings under
the U.P. Act were permissible. U.P. Act deals with separate modes of recovery
and such proceedings are not relatable to proceedings under the Financial Act.
a plea of casus omissus for purposes of interpretation was urged, we think it
necessary to deal with that plea also.
well settled principle in law that the Court cannot read anything into a
statutory provision which is plain and unambiguous. A statute is an edict of
the legislature. The language employed in a statute is the determinative factor
of legislative intent. The first and primary rule of construction is that the
intention of the Legislation must be found in the words used by the Legislature
itself. The question is not what may be supposed and has been intended but what
has been said. "Statutes should be construed not as theorems of
Euclid". Judge Learned Hand said, "but words must be construed with
some imagination of the purposes which lie behind them". (See Lenigh
Valley Coal Co. v. Yensavage 218 FR 547). The view was re-iterated in Union of
India and Ors. v. Filip Tiago De Gama of Vedem Vasco De Gama (AIR 1990 SC 981).
Venkatchalam and Ors. etc. vs. Dy. Transport Commissioner and Ors. etc. (AIR
1977 SC 842) it was observed that Courts must avoid the danger of apriori
determination of the meaning of a provision based on their own pre- conceived
notions of ideological structure or scheme into which the provision to be
interpreted is somewhat fitted.
are not entitled to usurp legislative function under the disguise of
interpreting a provision the Court only interprets the law and cannot legislate
it. If a provision of law is misused and subjected to the abuse of process of
law, it is for the legislature to amend, modify or repeal it, if deemed
necessary. [See Rishabh Agro Industries Ltd. vs. P.N.B. Capital Services Ltd.
(2000 (5) SCC 515)]. `The legislative casus omissus cannot be supplied by
judicial interpretative process. Language of Section 6(1) is plain and
unambiguous. There is no scope for reading something into it, as was done in N.Narasimhaiah
and Ors. v. State of Karnataka and Ors. etc. (1996 (3) SCC 88). In
State of Karnataka and Ors. v. Nanjudaiah and Ors.
(1996 (10) SCC 619) the period was further stretched to have the time period
run from date of service of High Court's order. Such a view cannot be
reconciled with the language of Section 6(1). If the view is accepted it would
mean that a case can be covered by not only clauses (i) and/or (ii) of the
proviso to Section 6(1), but also by a non-prescribed period. Same can never be
the legislative intent.
principles of construction one relating to casus omissus and the other in
regard to reading the statute as a whole appear to be well settled. Under the
first principle a casus omissus cannot be supplied by the Court except in the
case of clear necessity and when reason for it is found in the four corners of
the statute itself but at the same time a casus omissus should not be readily
inferred and for that purpose all the parts of a statute or section must be
construed together and every clause of a section should be construed with
reference to the context and other clauses thereof so that the construction to
be put on a particular provision makes a consistent enactment of the whole
statute. This would be more so if literal construction of a particular clause
leads to manifestly absurd or anomalous results which could not have been
intended by the Legislature. "An intention to produce an unreasonable
result", said Danckwerts, L.J., in Artemiou v. Procopiou (1966 1 QB 878),
"is not to be imputed to a statute if there is some other construction
available". Where to apply words literally would "defeat the obvious
intention of the legislation and produce a wholly unreasonable result" we
must "do some violence to the words" and so achieve that obvious
intention and produce a rational construction. [Per Lord Reid in Luke v. I.R.C.
(1966 AC 557) where at p. 577 he also observed: "this is not a new
problem, though our standard of drafting is such that it rarely emerges".]
Therefore, the High Court's conclusions holding proceedings under the U.P. Act
to be in order are indefensible.
notice here that to strengthen his arguments, learned counsel for the appellant
referred to the decision of this Court in S.K. Bhargava vs. Collector, Chandigarh and Ors. (1998 (5) SCC 170). The
said case related to Haryana Public Moneys (Recovery of Dues) Act, 1979 (in
short 'Haryana Act'). With reference to certain observations in paragraph 8 of
the said judgment, it was submitted that a process of adjudication is inbuilt,
even when the Managing Director of the Corporation takes action. We notice that
Section 3 of the Haryana Act is couched differently from Section 3 of the U.P.
Act. Reference was made in the said case to Director of Industries's case
(supra), and held that while upholding the validity of Section 3 of the U.P.
Act, the Court was not called upon to deal with the question as to whether the
principles of natural justice were implicit in the said Section. We also do not
think it necessary to go into that question.
impugned order is set aside and the proceedings under the U.P. Act are quashed.
It shall be, however, open to the Corporation to take such action under the Act
or the Financial Act as is legally available to it. The appeal is allowed without