Vijaya Kumar v. District Magistrate, Kanpur — 1989 DIGILAW 639 (ALL)

JUDGMENT Dr. R. R Misra, J.- 1. The petitioners were granted a loan of Rs. 83,000/- by the U. P. Financial Corporation, Kanpur in the month of December, 1983 in connection with their business of manufacture of micro rubber sheets. The loan was a Medium Term Loan and was sanctioned to the tune of Rs. 5 lacs and Rs. 1 lac was to be repaid in 10 and 12 instalments respectively. Since there was default in the payment of the aforesaid loan as per terms of the contract, U. P. Financial Corporation (Opposite-party no. 3) issued a registered notice dated 8th August, 1988 calling upon the petitioners to pay all outstanding to the tune of Rs. 4,12,017.65 p within thirty days of the receipt of the said notice. It appears that in the said notice it was also stated that in case the said payment is not made recovery proceedings will be taken against the petitioners. The petitioners have not filed a copy of the said registered notice dated 8th. August, 1988 issued by the U. P. Financial Corporation. They have, however, filed a reply to the said notice dated 9th September, 1988, a copy of which has been filed as Annexure VI to the writ petition A perusal of the said reply notice dated 9th September, 1988, however, shows that in fact a notice dated 8th August, 1988 was issued to the petitioners to deposit all the outstandings as aforesaid within thirty days from the date of the receipt of the notice failing which, it was stated, recovery proceedings will be taken against the petitioners. In the said reply letter dated 9th September, 1988 all that has been said is that certain payments have been made by the petitioners and, therefore, the recovery proceedings be stopped. THEreafter the petitioners wrote another letter dated 10th April 1989 (a copy of which has been filed as Annexure 7 to the writ petition) stating the causes of delay in payment and praying for allowing some more time to make the payment. In the petition a copy of the citation dated 27th July 1989 issued by the Naib Tehsildar (Finance and Revenue), Kanpur City for realisation of Rs. 4,54, 319/- has been filed as Annexure 8 to the writ petition. The said amount included the principal amount in the sum of Rs. In the petition a copy of the citation dated 27th July 1989 issued by the Naib Tehsildar (Finance and Revenue), Kanpur City for realisation of Rs. 4,54, 319/- has been filed as Annexure 8 to the writ petition. The said amount included the principal amount in the sum of Rs. 3,52,830/- and interest and collection charges in pursuance of the said agreement between the parties. It is stated that the recovery in question is sought to be made against the petitioners under Section 3 of the Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972 (hereinafter referred to as the Recovery Act). 2. At the time of hearing, the only submission pressed by Sri Rakesh Dwivedi, learned counsel for the petitioners, was that resort to recover the amount under the provisions of the Recovery Act is harsher than the provisions of Section 32-G of the State Financial Corporation Act, 1951 (hereinafter referred to as the Financial Corporation Act). As such the said proceeding of recovery followed by the U. P. Financial Corporation is violative of Article 14 of the Constitution of India. To examine the said submission, the relevant provisions of the two Acts are reproduced below : Section 3 of the Recovery Act reads as follows : "3. Recovery of certain dues as arrears of land revenue- (1) Where any person is party,- (a)............ (b)............... (c)............ (d) to any agreement providing that any money payble thereunder to the State Government (or the Corporation) shall be recoverable as arrears of land revenue ; and such person- (1) makes any default in repayment of the loan or advance or instalment thereof ; or (ii) having become liable under the condition of the grant of 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...........................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) thereof............... 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. 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. (2) The Collector on receiving the certificates shall proceed to recover the amount stated therein as an arrear of land revenue." The provisions of Section 32-G of the Financial Corporation Act are as follows :- 32-G. 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 authorised 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 specify 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." (emphasis supplied) 3. From a perusal of the aforesaid two sections in the relevent two Acts, it is clear that Section 32-G of the Financial Corporations Act saves power of the Corporation to resort to any other mode of recovery. 4. It has been recently held by a Full Bench of this Court in Civil Mics. Writ No. 20818 of 1988 M/s. Krishna Utensils v. State Financial Corporation D/- 10th July, 1989-See 1989 AWC 971 -that the remedy of recovery under the Recovery Act is not lost to the Financial Corporations by the insertion of section 32-G in the Financial Corporations Act. The question involved in the aforesaid Full Bench was slightly different than in the present case inasmuch as in the Full Bench case the question that arose for consideration was as to whether because of the insertion of Section 32-G in the Financial Corporations Act, the aforesaid provisions under the Recovery Act has been rendered void and inoperative qua the dues of the Financial Corporations. The Full Bench answered the said question in the negative. Further the vires of Recovery Act were also unsuccessfully challenged before the Full Bench. The Full Bench answered the said question in the negative. Further the vires of Recovery Act were also unsuccessfully challenged before the Full Bench. The Full Bench has ultimately held that Section 3 of the Recovery Act continues to be valid notwithstanding the insertion of Section 32-G in the Financial Corporations Act. Because of the decision of the aforesaid Full Bench, the contention of Sri Rakesh Dwivedi now is that the recovery which is sought to be made under the provisions of the Recovery Act is hit by Article 14 of the Constitution of India because in case the said recovery if it is made under the provisions of Section 32-G of the Financial Corporations Act, it would have involved a lesser onerous procedure. He also states that no guidelines have been set out in the procedure for recovery under the Recovery Act whereas under Section 32-G of the Financial Corporations Act the Corporation may 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 specify 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. The emphasis laid by Sri Dwivedi in his submission is that before taking recourse to Section 32-G of the Financial Corporations Act, a safeguard has been provided for making an application to the State Government to satisfy itself regarding the proposed recovery and it is only after that satisfaction is there that a recovery certificate of the amount so found due against a debtor can be issued to the Collector. The suggestion is that this safeguard is wholly absent under the provisions of the Recovery Act. His contention is that for recording the satisfaction of the State Government, an opportunity has got to be given to the petitioners and then only a satisfaction has got to be recorded. In support of his submission, learned counsel for the petitioners also strongly relied upon a decision of the Supreme Court in the case of Maganlal Chhaganlal (P.) Ltd. v. Municipal Corporation of Greater Bombay, AIR 1974 SC 2009 . 5. In support of his submission, learned counsel for the petitioners also strongly relied upon a decision of the Supreme Court in the case of Maganlal Chhaganlal (P.) Ltd. v. Municipal Corporation of Greater Bombay, AIR 1974 SC 2009 . 5. Taking up the aforesaid case of Maganlal Chhaganlal (P.) Ltd. cited by the learned counsel for the petitioners, we find that the dispute in that case related to the legality of certain proceedings taken under Chapter V-A of the Bombay Municipal Corporation Act and the Bombay Government Premises (Eviction) Act, 1955. By the said Chapter under the Bombay Municipal Corporation Act, according to Section 105A and 105B the Commissioner in relation to premises belonging to or vesting in, or taken on lease by the Corporation and the General Manager of the Bombay Electric Supply and Transport Undertaking in relation to the premises of the Corporation which vest in it for the purposes of that undertaking were granted certain powers of eviction in respect of unauthorised occupation of any corporation premises. Under Section 105B, the Commissioner by notice served on the person in authorised occupation, could ask him to vacate if he had not paid for a period of more than two months the rent or taxes lawfully due from him in respect of such premises etc. Before making such an order the Commissioner should issue a notice calling upon the person concerned to show cause why an order of eviction should not be made and specify the grounds on which the order of eviction is proposed to be made. The provisions of the Bombay Government Premises (Eviction; Act are more or less Similar except that they relate to Government premises and the power to order eviction is given to the competent authority not lower in rank than that of a Deputy Collector or an Executive Engineer appointed by the State Government. The only other matter in respect of which the provisions of this Act differ from the provisions of the Bombay Municipal Corporation Act, is that Section 8-A of the Bombay Municipal Corporation Act provides that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of the eviction of any person from any Government premises. The only other matter in respect of which the provisions of this Act differ from the provisions of the Bombay Municipal Corporation Act, is that Section 8-A of the Bombay Municipal Corporation Act provides that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of the eviction of any person from any Government premises. The submission in this case of Maganlal Chhaganlal (supra) was a much more limited one, as in the present case, and that is that as there are two procedures available to the Corporation and the State Government, one by way of a suit under the ordinary law and the other under either of the two Acts, which is harsher and more onerous than the procedure under the ordinary law, the latter is hit by Article 14 of the Constitution of India in the absence of any guidelines as to which procedure may be adopted. 6. Learned counsel for the petitioners has relied upon paragraph 15 of the report in the case of Maganlal Chhaganlal (P.) Ltd. (supra) which is a summary discussion made by the Supreme Court of the legal position of the preceding paragraphs. No doubt it has been stated in paragraph 15 of the judgment that where a statute providing for a more drastic procedure different from the ordinary procedure covers the whole field covered by the ordinary procedure without any guidelines as to the class of cases in which either procedure is to be resorted to, the status will be hit by Article 14. But in the latter part of this paragraph the position has been amplified by the Supreme Court thus :- "The fact that in such cases the executive will choose which cases are to be tried under the special procedure will not affect the validity of the statute. Therefore, the contention that the mere availability of two procedures will vitiate one of them that is the special procedure, is not supported by reason of authority." In paragraph 16 the Supreme Court has stated thus :- "The statute itself in the two Classes of cases before us clearly lays down the purpose behind them, that is that 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 guidence for the authorities on whom the power has been conferred. This is a sufficient guidence for the authorities on whom the power has been conferred. With such an indication clearly given in the statute 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 prolonged one, to resort to the latter. Administrative officers, no 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 Court 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. 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 therefor is a clear guidance for the authorities charged with the duty of evicting unauthorised occupants." The other case of The State of Orissa v. Dhirendranath Das, AIR 1961 SC 1715 relied upon by the learned counsel for the petitioners holding that if two sets of Rules were in operation at the material time when the enquiry was directed under a Rule which is "more drastic" and prejudicial to the interests of a person, a clear case of discrimination arises under Article 14 of the Constitution, does not in our opinion, run counter to the view taken by the Supreme Court in the case of Maganlal Chhaganlal (P.) Ltd. (supra) which has been decided by a larger Bench of the Supreme Court. This authority, therefore, in our opinion, is of no assistance to the learned counsel for the petitioners. 7. We also find that in the case of Commissioner of Sales Tax, Madhya Pradesh v. Radhakrishan, AIR 1979 SC 1588 , different procedures were prescribed for collection of tax and the Commissioner took drastic step to prosecute the assessee in criminal court. While deciding this case, reliance had been placed on its earlier decision in the case of Maganlal Chhanganlal (supra) which held that the mere possibility of resort to the civil court should make invalid a procedure which would otherwise be valid. It was also held in that case that as long as a procedure itself does not violate either Article 19 or Article 14 and is thus constitutionally valid, the fact that the procedure is more onerous and harsher than the procedure in the ordinary civil courts, should not make that procedure void merely because the authority competent to take action can resort to that procedure in the case of some and ordinary civil court procedure in the case of others. 8. 8. In the said case of Commissioner of Sales Tax (supra) the Supreme Court has further relied upon a decision of the Privy Council in the case of Province of Bombay v. Bombay Municipal Corporation, AIR 1947 PC 34, and held that guidance will have to be inferred from the policy of the law itself, that is, if on particular facts of a case the Commissioner who is an officer of high standing in exercise of His discretion comes to the conclusion that more drastic remedy should be taken, the exercise of that option cannot be termed as unconstitutional In our case Sri Rakesh Dwivedi, learned counsel for the petitioners, has not challenged the validity of the procedure of recovery under either the aforesaid Recovery Act or the U. P. Financial Corporation Act In this situation, therefore, the mere possibility of following a procedure which may be more onerous will not invalidate the said procedure. 9. There are various other cases of the Supreme Court which throw light on the controversy involved in the present case. The same may now be taken up. 10. In the case of State of Kerala v. C. M. Francis and Co., AIR 1961 SC 617 , two remedies were open, one by collection of the amount as arrear of land revenue and the other by resorting to prosecution before the criminal court. It was held that if two remedies are open, both can be resorted to at the option of the authorities recovering the amount as neither of the remedies for recovery is destructive of the other or unless the statute in express words lays down that one remedy is to the exclusion of the other. Further, the Supreme Court in the case of Shanti Prasad Jain v. Director of Enforcement, AIR 1962 SC 1764 , has held that the discretion left to the executive to choose between two preliminary procedures was not discriminatory. 11. Further, the Supreme Court in the case of Shanti Prasad Jain v. Director of Enforcement, AIR 1962 SC 1764 , has held that the discretion left to the executive to choose between two preliminary procedures was not discriminatory. 11. In the case of Ram Sarup v. Union of India, AIR 1965 SC 247 , the Supreme Court in paragraph 14 of the judgment has stated as follows :- "The court held that the choice as to which court should try the accused is left to the responsible military officers under whom the accused is serving and these officers were to be guided by consideration of the exigencies of the service, maintenance of discipline in the army, speedier trial, the nature of the offence and the person against whom the offence is committed. When power is conferred on high and responsible officers they are expected to act with caution and impartiality while discharging their duties and the circumstances under which they will choose either of the remedies available should be left to them. The vesting of discretionary power in the State or public authorities or an officer of high standing is treated as a guarantee that the power will be used fairly and with a sense of responsibility." 12. In the case of R. S. Joshi v. Ajit Mills Ltd., AIR 1977 SC 2279 , the validity of provisions of the Act which gave the authority a discretion either to proceed under section 37 or section 63 (1) of the Bombay Sales Tax Act without specific guidelines was considered. It was pointed out that section 37 provided for levy of penalty and forfeiture while under section 63 (1) (h) the person becomes liable to be criminally prosecuted for contravening the provisions of section 46 without reasonable excuse and held that there is no contravention of Article 14. In a later case of the Supreme Court in The Director of Industries, U. P. v. Deep Chand Agarwal, AIR 1980 SC 801 , it was held that section 3 of the Recovery Act providing speedier remedy for recovery of Government dues is not violave of Article 14 inasmuch as there is a nexus with the object to be achieved. 13. 13. Lastly in the case of D. K. Trivedi and sons v. State of Gujarat, AIR 1986 SC 1323 -1986 (Supplement) Supreme Court Cases 20, it had been held in paragraph 50 of the report as follows :- "Where a statute confers discretionary powers upon the executive or an administrative authority, the validity or constitutionality of such power cannot be judged on the assumption that the executive or such authority will act in an arbitrary manner in the exercise of the discretion conferred upon it, if the executive or the administrative authority acts in an arbitrary manner, its action would be bad in law and liable to be struck down by the courts but the possibility of abuse of power or arbitrary exercise of power cannot invalidate the statute conferring the power or the power which has been conferred by it." emphasis supplied) 14. Further, we also find that according to a decision of the Division Bench of this court in the case of Ratan Sons Industries v. U. P. Financial Corporation, Kanpur, 1984 AWC (Supplement) 6 the process of recovery under the Recovery Act of 1972 is not harsher than that provided under section 31 of the Financial Corporations Act which provides for relief to the corporation against the debtor for sale of the property pledged, mortgaged, or assigned and for enforcing the liability against any surety and other matters. Applying the above principles as laid down in the case law noticed above and after giving our anxious consideration to the controversy raised by the learned counsel for the petitioners, we find that the sole argument advanced by him is not sound In our opinion, having regard to the object of the Act with which the financial corporations are formed by the Government to give loans to the various industries and to recover the same in the case of defaulters, the policy of the law itself is that a high ranking officer of the status of the Managing Director of the financial corporation will resort to such speedy remedy for the recovery of its dues under a procedure which on the facts of the case he thinks fit. This speedy recovery enables the Corporation to, do further lending of money so collected. This speedy recovery enables the Corporation to, do further lending of money so collected. The vesting of such power in the Managing Director under Section 3 of the Recovery Act and on the State Government under Section 32-G of the Financial Corporations Act is itself a guidance to be inferred from the policy of the law that each of such authority will exercise his/its discretion properly on the facts of each case. Thus vesting of such discretion on such an authority to proceed under one of the two procedures available to him cannot be termed to be unconstitutional because such high and responsible officers/authorities are expected to act with caution and ability while discharging their duties. We are clear in our mind that some possibility of abuse of power or arbitrary exercise of power cannot invalidate the power so conferred on such a high ranking authority. This is more particularly when in the present case (1) the petitioners have not challenged the validity of the provisions of the two procedures laid down under the Recovery Act and under the Financial Corporations Act, (2) the petitioners have failed to point out as to how, on the facts of the present case, the issue of recovery certificate under the Recovery Act amounts to abuse of power or is arbitrary, (3) under the agreement there was a provision that the amount due against the petitioners could be recovered under the Recovery Act and (4) as has been rightly submitted by Sri Rakesh Dwivedi that except that a satisfaction of the State Government for recovery of the amount due has also got to be arrived at under Section 32-G of the Financial Corporations Act, the procedure for recovery by the issue of certificate to the Collector for recovering the amount as arrear under the two Acts is the same and there is no other difference. Thus, in our opinion were vesting of such power by itself is not violative of Article 14 of the Constitution of India. 15. The only point that remains to be considered is the amount for which the recovery certificate is to be issued. Thus, in our opinion were vesting of such power by itself is not violative of Article 14 of the Constitution of India. 15. The only point that remains to be considered is the amount for which the recovery certificate is to be issued. If on the report of the Financial Corporation, the State Government is prima facie satisfied that a case of default has been made out the State Government will record its satisfaction accordingly and issue a recovery certificate On receipt of the recovery certificate issued either by the State Government under Section 32-G of the Financial Corporation Act or under Section 3 of the Recovery Act, i. e. to say in either event the Collector proceeds to recover the amount. Accordingly in furtherance thereof a citation is issued to the defaulter specifying the amount so arrived at by the Financial Corporations or the State Government, as the case may be and calling upon the defaulter to pay the aforesaid amount and also stating that in case some amount has already been paid by the defaulter which is covered by the amount sought to be recovered, the defaulter may furnish proof in regard to the said payment. This is what exactly has been done in the impugned citation dated 27th July 1989 Annexure 8 to the writ petition which has been issued to the petitioners by the Naib Tahsildar concerned. The said citation does specify a particular figure and gives an opportunity to the petitioners to show as to whether they have paid the said amount or any part thereof and furnish proof thereof. It is for that purpose that 2nd August 1989 was the date fixed by the said authority. It is always open to the petitioners to avail of this opportunity and satisfy the authority recovering dues that there are no outstandings. Next comes the subsequent stage that if after consideration of proof of payment furnished by a defaulter if the authority recovering the amount is satisfied that some amount is still due, it will proceed to recover the same in accordance with law. 16. Next comes the subsequent stage that if after consideration of proof of payment furnished by a defaulter if the authority recovering the amount is satisfied that some amount is still due, it will proceed to recover the same in accordance with law. 16. Further, on the facts of the present case we also find that what to say of an opportunity being given by the Recovering authority under the said citation as stated in an earlier paragraph of the judgment, the Financial Corporation itself had by its registered letter dated 8th August 1988 also provided an opportunity to the petitioners before issuing the recovery certificate. In view of the above discussion, we find no me it in the submission of the learned counsel for the petitioners that resort to the procedure under the Recovery Act is more onerous than the procedure under Section 32 G of the Financial Corporations Act. 17. In our opinion this writ petition has got no merits and is accordingly dismissed summarily. Petition dismissed.