Research › Search › Judgment

Uttarakhand High Court · body

2015 DIGILAW 4 (UTT)

NIYAZ AHMAD @ NIZAM v. TEHSILDAR, KASHIPUR

2015-01-06

ALOK SINGH

body2015
JUDGMENT Hon’ble Alok Singh, J (Oral) Undisputedly, petitioner was granted cash credit loan facility of Rs. 2,50,000/- for the purpose of poultry farming on 13.01.2006; petitioner has mortgaged his agricultural land being Khasra No. 1059/1 measuring 0.1940 hectare situated in village Sarverkhera, Tehsil Kashipur, District – Udham Singh Nagar with the Bank and has executed a Mortgage Deed to the above effect; petitioner /borrower failed to pay the outstanding amount, consequently, a notice dated 07.05.2006 was issued requesting the petitioner to repay the total outstanding amount; petitioner approached the Bank making request to waive the agricultural loan under the Agricultural Debt Waiver and Debt Relief Scheme, 2008; petitioner earlier filed WPMS No. 1228 of 2008 seeking waiver of loan under the Agricultural Debt Waiver and Debt Relief Scheme, 2008; WPMS No. 1228 of 2008 was disposed of by the Coordinate Bench of this Court on 22.07.2008 with the direction that petitioner shall move representation seeking benefit of waiver of loan under the Agricultural Debt Waiver and Debt Relief Scheme, 2008 before the Assistant General Manager of the Bank whereupon Assistant General Manager shall pass appropriate orders, in accordance with law; petitioner moved representation before the Bank on 13.08.2008 annexing therewith certified copy of the order dated 22.07.2008 passed by this Court in WPMS No. 1228 of 2008; representation of the petitioner was rejected by the Bank vide order dated 24.01.2009 saying since petitioner was granted loan under the cash credit facility, which was not covered under the provision of Agricultural Debt Waiver and Debt Relief Scheme, 2008, therefore, benefit of waiver could not be extended in favour of the petitioner; recovery certificate was issued to the Collector for recovery of the outstanding amount whereupon impugned citation was issued. Feeling aggrieved, petitioner has approached this Court by way of filing present writ petition. 2. Undisputedly, cash credit facility was given to the petitioner for the purpose of poultry farming and mortgaged deed was executed by the petitioner, as per Section 6 (1) of the U.P. Agricultural Credit Act, 1973 (for short “Act, 1973”). As per Section 2 (a) of the Act, 1973, poultry farming falls under the definition of ‘agriculture’ and ‘agriculture purpose’. 3. Undisputedly, cash credit facility was given to the petitioner for the purpose of poultry farming and mortgaged deed was executed by the petitioner, as per Section 6 (1) of the U.P. Agricultural Credit Act, 1973 (for short “Act, 1973”). As per Section 2 (a) of the Act, 1973, poultry farming falls under the definition of ‘agriculture’ and ‘agriculture purpose’. 3. Learned counsel for the petitioner has vehemently argued that since financial assistance, in question, falls within the definition of agricultural loan and petitioner has mortgaged his property in favour of the Bank under Section 6 (1) of the Act 1973, therefore, Bank should have approached the Prescribed Authority under Section 11 of the Act, 1973 wherein petitioner would have been heard on the questions of limitation and on the question of liability to pay outstanding amount and petitioner could have demonstrated his entitlement for the waiver of the agricultural debt under the Agricultural Debt Waiver and Debt Relief Scheme, 2008. It is further argued by learned counsel for the petitioner that to deprive the petitioner to claim benefit under the Agricultural Debt Waiver and Debt Relief Scheme, 2008 and to raise the plea of limitation, Bank has issued recovery certificate to recover the amount as arrears of land revenue whereupon impugned citation was wrongly issued. He further contends that the Revenue Authorities are adamant to arrest the petitioner pursuant to the impugned citation. 4. Mr. Siddharath Sah, Advocate for the respondent Bank, has vehemently argued that for the recovery of the agricultural loan, Bank has two options to follow, one under Section 11 of the Act, 1973 and another under Section 11A of the Act, 1973. He further contends that if Bank has opted to proceed under Section 11A of the Act, recovery certificate issued shall be treated as conclusive evidence of the existence of arrears of land revenue, as provided under Section 278 of the U.P. Zamindari Abolition and Land Reforms Act, 1950. He further contends that Bank is not duty bound to adopt the procedure prescribed under Section 11 of the Act, 1973 before proceeding under Section 11A of the Act, 1973. He further contends that if recovery certificate under Section 11A of the Act, 1973 is issued, learned Collector is free and well within his jurisdiction to cause arrest and detention of the agriculturist / borrower, therefore, citation issued cannot be said to be without jurisdiction. 5. He further contends that if recovery certificate under Section 11A of the Act, 1973 is issued, learned Collector is free and well within his jurisdiction to cause arrest and detention of the agriculturist / borrower, therefore, citation issued cannot be said to be without jurisdiction. 5. Section 11, 11A of the U.P. Agricultural Credit Act, 1973 and Rules 23 to 28 of the U.P. Agricultural Credit Rules, 1975 are being reproduced hereunder: “Section 11 - Recovery of dues of a bank through a prescribed authority (1) Notwithstanding anything contained in any law for the time being in force an officer specified by the State Government by notification in the Gazette (hereinafter referred to as the prescribed authority) may, on the application of a bank by order, direct that any amount due to the bank on account of financial assistance given to an agriculturist be paid by the sale of the land or any interest therein or other immovable property which is charged or mortgaged for the payment of such amount: Provided that no order of sale shall be made under this sub-section unless the agriculturist has been served with a notice by the prescribed authority calling upon him to pay the amount due. (1-A) The provisions of the Limitation Act, 1963, shall apply in relation to an application under sub-section (1), as if such application were a suit in Civil Court for sale of the land or interest therein or other immovable property for enforcing recovery of the sum referred to in that sub-section.] (2) An order passed by the prescribed authority shall, subject to the result of appeal under Section 12, be final and be binding on the parties. (3) Every order passed by the prescribed authority in terms of sub-section (1) or by the appellate authority under Section 12 shall be deemed to be a decree of a Civil Court and shall be executed in the same manner as a decree of such court by the Civil Court having jurisdiction.” “Section 11-A - Recovery in the case of personal security 5 (1) Where any amount of financial assistance is granted by a Bank to an agriculturist and the agriculturist fails to pay the amount together with interest on the due date, then without prejudice to the provisions of Sections 10-B and 11, the local principal officer of the Bank by whatever name called may forward to the Collector a certificate in the manner prescribed, specifying the amount due from the agriculturist. (2) The certificate referred to in sub-section (1) may be forwarded to the Collector within three years from the date when the amount specified in the certificate fell due. (3) On receipt of the certificate, the Collector shall proceed to recover the agriculturist the amount specified therein together with expenses of recovery as arrears of land revenue, and the amount due to the Bank shall be paid after deducting the expenses of recovery and satisfying any Government dues or other prior charges, if any. Explanation.—For the purposes of this section, the expression “Collector” means the Collector of the district in which the agriculturist ordinarily resides or carries on the activities referred to in clause (a) of Section 2 or where any movable or immovable property of the agriculturist is situate, and includes any officer, authorised by him in that behalf.” Rule 23. Application for sale of land or interest therein: Sections 11 and 25. (1) Where any charge or mortgage has been created on any land or interest or on any other immovable property in favour of a bank in respect of any financial assistance granted to an agriculturist and the whole or any part of amount due in respect thereof remains unpaid, the bank may apply to the Prescribed Authority for the sale of such land, or interest therein or other immovable property. (2) Every application by a Bank under sub-rule (1) shall be in Form D. The application shall be accompanied by sufficient number of copies thereof along with copies of notices in Form E for service on the agriculturist or his heirs or legal representatives, as the case may be. (3) A fee at the rate specified in Rule 12(3) shall be payable on every application referred to in sub-rule (1). The amount of fee shall be deposited in Government Treasury or the State Bank of India under the Head mentioned in Rule 12(3) and the Treasury Challan shall be attached to the application as evidence of payment of the prescribed fee. (4) An attested copy of the document creating the charge of mortgage shall be filed along with application referred to in sub-rule (1). But the Prescribed Authority may summon the original as and when it is considered necessary. 24. Notice to the agriculturist: Sections 11 and 25.— (1) On receipt of the application referred to in Rule 23, the Prescribed Authority shall cause to be noted thereon, the date of its presentation, and if it is satisfied that the application is in order, a notice in Form E shall be served on the agriculturist, his heir or legal representatives, as the case may be, calling upon him to pay the amount specified in the notice within a period of twenty-one days or to show cause why a direction for the sale of the property charged or mortgaged be not issued. (2) The notice referred to in sub-rule (1) shall be served in the manner laid down in Rule 14. 25. Order for sale of the property: Sections 11 and 25.— (1) If the amount specified in the notice referred to in Rule 24 or any part thereof remains unpaid after the expiry of the time allowed there for, or if no cause is shown, or where the cause shown is considered by the Prescribed Authority to be sufficient, the Prescribed Authority shall by order direct that the amount due to the bank be paid by sale of the property charged or mortgaged. (2) Every order under sub-rule (1) shall be in writing and shall contain the following particulars— (a) the reasons on which the decision is based; (b) a direction as to costs and interest, if any; (c) the number of cases, and the names and description of the parties; (d) the date when the order was signed and pronounced. (3) A copy of the order under sub-rule (1) shall be sent to the Civil Court having jurisdiction and, subject to the result of appeal, if any, shall be executed as a decree of such court. 8 27. Certificate of recovery: Sections 11-A and 25.— Every certificate referred to in sub-section (1) of Section 11-A shall be prepared in Form F and shall be sent to the Collector of the district in which the agriculturist or his heirs or legal representatives ordinarily reside or carry on the activities referred to in Section 2(a) or own properties. 28. Recovery as arrears of land revenue : Sections 11-A and 25.— On receipt of the certificate in accordance with Rule 27, the Collector shall cause the same to be entered in a register maintained for the purpose and shall proceed to recover the amount specified in the certificate as arrears of land revenue.” 6. A bare perusal of Section 11 of the Act, 1973 would demonstrate that if any amount is due to the Bank, on account of financial assistance given to the agriculturist, Bank may apply to the Prescribed Authority for the sale of the mortgaged property for recovery of the outstanding dues. 7. Section 11 of the Act, 1973 read with Rule 24 of the Rules, 1975 would reveal that on receipt of the application, on the prescribed proforma i.e. Form D, Prescribed Authority shall issue show cause notice to the agriculturist or his legal heirs, as the case may be, calling upon him to pay the amount specified in the notice within a period of twenty-one days or to show cause as to why a direction for the sale of property charged or mortgaged be not issued. If borrower fails to show cause as to why amount sought to be recovered may not be recovered or cause shown is not accepted, then Prescribed Authority may pass appropriate orders for recovery of the outstanding amount by sale of mortgaged or charged property. If borrower fails to show cause as to why amount sought to be recovered may not be recovered or cause shown is not accepted, then Prescribed Authority may pass appropriate orders for recovery of the outstanding amount by sale of mortgaged or charged property. Application on Form D for recovery of the loan amount by selling the mortgaged property must be moved by the Bank within the period of limitation. 8. In other words, if notice is issued to the agriculturist under the provisions of Section 11 read with Rule 24, agriculturist shall be at liberty to take all possible defences like the entitlement for waiver of loan under the Agricultural Debt Waiver and Debt Relief Scheme, 2008 and period of limitation, which shall be adjudicated upon by the Prescribed Authority before proceeding further to sell the property for recovery of the outstanding amount. 9. Section 11A demonstrates that without prejudice to the provisions of Section 10-B and 11 of the Act, the local Principal Officer of the Bank may forward to the Collector a certificate in the manner prescribed, specifying the amount due from the agriculturist, for recovery of the same, as arrears of land revenue. 10. Although, Bank may issue recovery certificate under Section 11A of the Act, 1973 without adopting the procedure provided under Section 10B and 11 of the Act, 1973. However, if property mortgaged or charged is sufficient to recover the outstanding amount, ordinarily, Bank should proceed under Section 11 of the Act, 1973 before proceeding under Section 11A of the Act. Section 11-A should be pressed in service, if there is reasonable apprehension in the mind of Principal Officer of the Bank that defaulter may abscond or disappear after disposing of his assets to make recovery doubtful, difficult or impossible or property charged or mortgaged shall not be sufficient to recover entire outstanding amount and meanwhile, defaulter may disposed of his other assets. 11. There is no fight between the parties that on receipt of the recovery certificate issued by the Bank under Section 11A of the Act, 1973, learned Collector shall proceed to recover the amount shown in the certificate, as arrears of land revenue. 12. The Division Bench of the Allahabad High Court in the case of Om Prakash Vs. State of U.P. reported in 2003 (95) RD 248 in paragraphs 5 to 8 has held as under: “5. 12. The Division Bench of the Allahabad High Court in the case of Om Prakash Vs. State of U.P. reported in 2003 (95) RD 248 in paragraphs 5 to 8 has held as under: “5. Section 279 of the Act prescribes following procedures for recovery of arrear of land revenue: (a) by serving a writ of demand or a citation to appear on any defaulter, (b) by arrest and detention of his person, (c) by attachment and sale of his movable property including produce, (d) by attachment of the holding in respect of which the arrear is due, (e) {by lease or sale} of the holding in respect of which the arrear is due, (f) by attachment and sale of other immovable property of the defaulter, and (g) by appointing a receiver of any property, moveable or immovable of the defaulter.” 6. The other relevant provisions, which are necessary to be referred to, are Sections 280 and 281 of the Act. Section 280 provides that when arrear of land revenue has become due, Tehsildar may issue writ of demand calling upon the defaulter to pay the amount within specified time and in addition to or in lieu of writ of demand the Tehsildar may also issue citation against the defaulter to appear and deposit the arrears. Next comes Section 281 which envisages that the person defaulted in the payment may be arrested and detained in custody. The other relevant provisions relate to attachment and sale of movable and immovable properties of the defaulter. 7. Next comes Section 281 which envisages that the person defaulted in the payment may be arrested and detained in custody. The other relevant provisions relate to attachment and sale of movable and immovable properties of the defaulter. 7. Arrest and detention of a defaulter as provided under Section 281 are borrowed from Section 51 and Order XXI Rule 37 C.P.C. Section 51 runs thus: “Powers of Court to enforce execution:- Subject to such conditions and limitation as may be prescribed, the Court may, on the application of the decree holder, order execution of the decree— (a) by delivery of any property specifically decreed; (b) by attachment and sale or by the sale without attachment of any property; (c) by arrest and detention in prison (for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section); (d) by appointing a receiver; or (e) in such other manner as the nature of the relief granted may require: (Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied- (a) that judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree- (i) is likely to abscond or leave the local limits of the jurisdiction of the Court, or (ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or (b) that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or (c) that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to amount. Order XXI Rule 37 under the heading arrest and detention in the civil prison reads as under: “Discretionary power to permit judgment debtor to show cause against detention in prison:- (1) Notwithstanding anything in these rules, where an application is for the execution of a decree for the payment of money by the arrest and detention in the civil prison of a judgment-debtor who is liable to be arrested in pursuance of the application, the Court shall, instead of issuing a warrant for his arrest, issue a notice calling upon him to appear before the Court on a day to be specified in the notice and show cause why he should not be committed to the civil prison: (Provided that such notice shall not be necessary if the Court is satisfied, by affidavit, or otherwise, that with the object or effect of delaying the execution of the decree, the judgment-debtor is likely to abscond or leave the local limits of the jurisdiction of the Court.) (2) Where appearance is not made in obedience to the notice, the Court shall, if the decree-holder so requires, issue a warrant for the arrest of the judgment-debtor. 8. A conjoint reading of both section 51 and Order XXI Rule 37 C.P.C. what appears is that warrant of arrest shall not be issued as a matter of course. It is when the court is satisfied that the judgment-debtor with the object of delaying the execution of the decree is likely to abscond or leave the local limits of its jurisdiction or has dishonestly transferred, concealed or removed any part of his property or having means to pay the decreetal amount or substantial part thereof refuses or neglects to pay the same, in that case, the court may order for his arrest and detention in prison. The question as to whether it would be reasonable and fair to arrest a judgment-debtor for his not satisfying the decree came for consideration before the Apex Court in case of Joll George Varghese and another v. the Bank of Cochin, (AIR 1980, SC, 470). Referring to Article 11 of International Covenant on Civil and Political Rights, which inter-alia says that ‘no one shall be imprisoned merely on the ground of inability to fulfil a contractual obligation as well as Article 21 of the Constitution, the Court held: “XXXXX The simple default to discharge is not enough. Referring to Article 11 of International Covenant on Civil and Political Rights, which inter-alia says that ‘no one shall be imprisoned merely on the ground of inability to fulfil a contractual obligation as well as Article 21 of the Constitution, the Court held: “XXXXX The simple default to discharge is not enough. There must be some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or, alternatively, current means to pay the decree or a substantial part of it. The provision emphasizes the need to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree. Here considerations of the debtor’s other pressing needs and straitened circumstances will play prominently. We would have, by this construction sauced law with justice, harmonized section 51 with the Covenant and the Constitution.” 13. I am in full agreement with the view expressed by the Division Bench of Allahabad High Court in the case of Om Prakash (Supra). 14. If dictum of Allahabad High Court is read with Section 11-A of the Act 1973, only interpretation would be that before issuing order of arrest and detention, learned Collector must issue show cause notice to the defaulter as to why he should not be committed to the civil imprisonment as provided under Rule 37 of Order 21 C.P.C. Having received such notice, defaulter may take all possible defences viz. challenging the outstanding amount, taking plea of waiver of loan, limitation etc. etc. 15. If Collector finds that amount shown in the Recovery Certificate is due and recoverable and it is brought to the notice of the Collector that property is mortgaged with the Bank, learned Collector, first of all, should proceed to recover the amount due by selling the mortgaged property. 16. In my considered opinion, arrest and detention should not be automatic. Recourse to arrest and detention for recovery of amount due should be adopted when there is reasonable apprehension that meanwhile defaulter may abscond or dispose of his assets with object to make recovery difficult or impossible. Satisfaction to cause arrest and detention should be recorded in writing justifying the arrest and detention. 17. Recourse to arrest and detention for recovery of amount due should be adopted when there is reasonable apprehension that meanwhile defaulter may abscond or dispose of his assets with object to make recovery difficult or impossible. Satisfaction to cause arrest and detention should be recorded in writing justifying the arrest and detention. 17. This is not the case of the Bank that property mortgaged is not sufficient to recover the amount due or petitioner is trying to abscond from the village by selling his other properties with ulterior motive not to pay outstanding amount due, therefore, in the facts and circumstances of the case, arrest and detention of the petitioner seems to be totally unjustified and arbitrary. 18. There is yet another aspect of the matter. Certain pubic moneys can be recovered as arrears of land revenue under the provisions of U.P. Public Moneys (Recovery of Dues) Act, 1972. 19. Division Bench of Allahabad High Court in the case of Surender Kishore Kela Vs. Union Bank of India reported in 1997 (89) Company Cases 668 and Hon’ble Apex Court in the case of Sobran Singh Vs. State of U.P. reported in the 2014 (6) Recent Apex Judgments 168 have opined that when property is mortgaged then first of all, for recovery of the outstanding amount, appropriate steps must be taken under Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972 to recover the amount by selling the charged or mortgaged property, however, this embargo is not available if Bank opts to recover the amount against the guarantor. 20. In the present case, it is not made clear as to whether recovery certificate was issued under Section 11A of the Act, 1973 or under the provisions of the U.P. Public Moneys (Recovery of Dues) Act, 1972. No recovery certificate can be issued to recover the outstanding amount under the provisions of Public Moneys (Recovery of Dues) Act, 1972 unless and until either of the ingredients of Section 3 of the Act, 1972 is available, as opined by this Court in WPMS No. 1637 of 2012 (Micky Palta Vs. State of Uttarakhand) decided on 17.12.2014 and by Hon’ble Apex Court in the case of Iqbal Naseer Usmani Vs. Central Bank of India reported in 2006 (2) SCC 241 . State of Uttarakhand) decided on 17.12.2014 and by Hon’ble Apex Court in the case of Iqbal Naseer Usmani Vs. Central Bank of India reported in 2006 (2) SCC 241 . In my considered opinion, if special Act i.e. Act, 1973 covers the field, recourse to recover the dues should only be taken under the provisions of the Act, 1973 only. 21. Citation, in question, in fact is a notice to appear and show cause, therefore, it shall be treated as show cause notice calling the petitioner to show cause as to why and how alleged amount be not recovered from the petitioner. 22. In view of the discussion made hereinbefore, writ petition is allowed. Petitioner shall show cause within twenty one days before the Collector, in writing, pursuant to the citation, in question. Thereafter, learned Collector shall afford the opportunity of being heard to the petitioner and Bank and shall pass appropriate orders thereon on the questions as to whether recovery certificate was issued as per Section 11A of the Act, 1973 read with Rule 27 of the Rules, 1975. If yes, whether same was issued in time, as per section 11A (2) of the Act, 1973. If yes, as to whether, petitioner is entitled for waiver under the Agricultural Debt Waiver and Debt Relief Scheme, 2008. If no, what is the amount due, and thereafter shall proceed to recover the same in accordance with law keeping in mind the observations made hereinbefore. No costs.