Tags Decree

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 661 of 2008, Judgment Date: Mar 28, 2017

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                         CIVIL APPEAL NO.661 OF 2008


Himachal Pradesh Financial Corporation                          … Appellant
 
                                  Versus

Anil Garg and others                                          … Respondents


                                  JUDGMENT


NAVIN SINHA, J.

      The Appellant is aggrieved by order dated 4.10.2005 allowing the  writ
petition of the Respondent, setting aside the auction notice  under  Section
85 of the Himachal Pradesh  Public  Moneys  (Recovery  of  Dues)  Act,  1973
(hereinafter be referred to as "the Act") issued consequent to  his  failure
to repay the two loans availed for purchase of a truck and  establishing  an
industry for manufacture of steel trunks.

2.    The Respondent has remained unrepresented  despite  valid  service  of
notice.

3.    Learned Senior Counsel Shri J.S. Attri, on behalf  of  the  Appellant,
submits that the High Court has erred by inferring abandonment of the  claim
by withdrawal of the Suit.   The  withdrawal  was  made  to  initiate  fresh
proceedings under the Act, as it provided for a more  speedy  and  effective
remedy, under a special law. The absence of any liberty  in  the  withdrawal
order is not relevant. There was no bar under the Act  to  the  proceedings.
The remedy under Section 3(1)(d)(iv) of the Act was independent and  without
prejudice to any other mode of recovery under any law for the time being  in
force, and which will include a Suit. The High  Court  had  wrongly  applied
the principle of ‘public policy’ to restrain recovery of a public loan.  The
doctrine of election had no application in the facts of the case.

4.    The High Court erred on facts in holding that  the  proceedings  under
the Act for recovery of the trunk loan was initiated only in the year  2003,
and that nothing had been done by the Appellant from  1996  till  2002  thus
making the claim time barred. The recovery certificate had  been  issued  by
the Collector as far as back 3.9.1994. It  was  stalled  by  the  Respondent
filing writ petitions before the High Court.  The  High  Court  had  granted
liberty to the Appellant for proceeding afresh in accordance with law.

5.    We have considered the submissions, as also perused the  materials  on
record.

6.    The Respondent applied  for  a  loan  of  Rs.1.90  lakhs  in  1989  to
purchase a Swaraz Mazda truck and executed a hypothecation  deed.  Repayment
schedule commenced from  10.1.1990  culminating  on  10.7.1994.  Rs.10,000/-
only was repaid on 6.3.1991.  The  vehicle  was  seized  on  6.5.1991  under
Section 29 of the State Finance Corporation Act, 1951 and  auction  sold  on
4.9.1991 for a sum of Rs.1.46 lakhs.   A Money Suit  was  filed  before  the
Senior Sub Judge, Shimla for recovery of the balance of Rs.1,25,270/-  along
with future interest and costs. The Suit was withdrawn on  12.12.1995  under
Order 23, Rule 1 of the Code of Civil Procedure stating that  the  Appellant
desired to proceed under the Act.  The  Suit  was  dismissed  as  withdrawn.
Recovery Certificate was then issued under the Act on 19.4.1996  for  a  sum
of Rs.1,94,283/- followed by a warrant of arrest.

7.    The Respondent thwarted the Certificate proceedings by filing  a  Suit
before the Senior Sub Judge, Shimla contending that  the  fresh  proceedings
were barred due to withdrawal of the Suit without any liberty, and that  the
claim was time barred. An interim-order was  obtained,  but  ultimately  the
Suit was dismissed for non-prosecution on 21.5.2001.

8.     Another  loan  of  Rs.30,000/-  was  availed  by  the  Respondent  on
15.12.1988 for  a  trunk  industry  and  a  hypothecation-deed  executed  in
respect of property bearing Khata/Khatuni No.102/347,  Khasra  No.1014.  The
last installment of the  loan  was  payable  on  10.1.1996.  The  Respondent
remitted Rs.4,000/- in May 1991 and Rs.1,000/- in November 1991.  A  request
was made before the Collector for recovery certificate  on  12.11.1992,  and
the Certificate was issued on 3.9.1994.  The  Respondent  objected  that  no
prior notice was given and that the proceedings were time barred.

9.    The Respondent instituted C.W.P. No. 1102  of  2002  before  the  High
Court questioning both the  recovery  proceedings.  The  writ  petition  was
allowed on technical grounds with liberty to the  Appellant  for  proceeding
afresh in accordance with law. Fresh show cause notices were then issued  in
respect of the two loans on 26.11.2002 and 2.11.2002 respectively,  followed
by fresh recovery certificates on 10.3.2003 for  recovery  of  Rs.5,50,165/-
and Rs.61,503.92/- respectively.

10.   The Respondent again filed C.W.P. No.136 of  2005  pursuant  to  which
the impugned order came to be passed.

11.   The  High  Court  relying  on  Sarguja  Transport  Service  vs.  State
Transport Appellate Tribunal, AIR 1987 SC 88,  held  that  the  Suit  having
been withdrawn unconditionally for inexplicable  reasons,  and  without  any
liberty granted under Order 23 Rule 1 of the Code  of  Civil  Procedure  for
initiating appropriate legal proceedings, it amounted to abandonment of  the
claim for the truck loan. It would be contrary to public  policy  and  abuse
of the process of law to allow any fresh proceeding for the  same  cause  of
action. The doctrine of election was also invoked. The loan with  regard  to
the trunk industry was held to be time barred as no  action  was  taken  for
recovery from 1996 till 2002.

12.   The factum of loan is not in dispute.  No  explanation  was  furnished
why the installments were not repaid and the loan  closed.  A  pittance  was
repaid. The loan was disbursed from public funds of the tax  payers'  money.
The Respondent was a trustee for the loan amount.  It  could  not  become  a
windfall  for  him.  All  attempts  by  the  Appellant  for  recovery   were
successfully  thwarted  by  the  Respondent  by  either  filing  a  Suit  or
successive writ petitions. The sanguine  confidence  of  the  Respondent  is
also reflected by his failure to appear in the present  proceedings  despite
valid service of notice.

13.   The question whether there has been an abandonment  of  the  claim  by
withdrawal of the Suit is a mixed question  of  law  and  fact  as  held  in
Ramesh Chandra Sankla vs. Vikram Cement, (2008) 14 SCC 58.  The language  of
the order for withdrawal will not always be  determinative.  The  background
facts will necessarily have to be examined for a proper and  just  decision.
Sarguja  Transport  Service  (supra)  cannot  be  applied  as  an   abstract
proposition or the ratio applied sans the  facts  of  a  case.  The  extract
below is considered relevant observing as follows :-
“9……While the withdrawal of a writ petition filed in a  High  Court  without
permission to file a fresh writ petition may not bar other remedies  like  a
suit……..”


14.   The application for withdrawal  stated  that  it  was  being  done  to
pursue remedies under the Act. Undoubtedly the  proceedings  under  the  Act
are more expeditious for recovery as compared to a Suit, which after  decree
is required to be followed by Execution proceedings. Section 3(1)(d)(iv)  of
the Act provided that the remedy under  it  was  without  prejudice  to  any
other remedy available under any other law. The Appellant, therefore,  never
intended to abandon its claim by withdrawing the Suit. The language  of  the
withdrawal order cannot be determinative without considering the  background
facts.

 15.  The bar under Order 23 Rule 1 would apply only to  a  fresh  Suit  and
not proceedings under the Act. In Sarva  Shramik  Sanghatana  vs.  State  of
Maharashtra, (2008) 1 SCC 494, the application under  Section  25-O  of  the
Industrial Disputes Act, 1947 for closure of undertaking  was  withdrawn  as
attempts were made for settlement of the matter. Settlement not having  been
possible, the Management filed  a  fresh  application.  It  was  opposed  as
barred under Order 23 of the Code  of  Civil  Procedure  since  the  earlier
application was withdrawn unconditionally with no liberty  granted,  relying
on Sarguja Transport Service (supra).  The  argument  was  repelled  holding
that the proceedings under the Industrial Disputes Act were not a  Suit  and
that withdrawal was bonafide to explore amicable settlement. It  was  not  a
withdrawal made malafide or for Bench hunting holding as follows:-
"22. No doubt, Order 23 Rule  1(4)  CPC  states  that  where  the  plaintiff
withdraws a suit without permission of  the  court,  he  is  precluded  from
instituting any fresh suit in respect of the same  subject-matter.  However,
in our opinion, this provision will apply  only  to  suits.  An  application
under Section 25-O(1) is not a suit, and hence, the said provision will  not
apply to such an application."


16.   In Vikram Cement (supra) the earlier petition  was  dismissed  as  not
pressed  and  the  second  application  was  opposed  as  not  maintainable.
Dismissing the objection it was observed as follows:-
"65. It is thus clear that it was not a case of abandonment or giving up  of
claim by the Company.  But, in  view  of  the  office  objection,  practical
difficulty and logistical problems, the petitioner Company did  not  proceed
with an “omnibus” and composite petition against several workmen  and  filed
separate petitions as suggested by the Registry of the High Court.”


17.   The Act provides for recovery of  certain  dues  as  arrears  of  land
revenue by sending a certificate to the Collector, mentioning  the  sum  due
requesting that the sum together with  costs  may  be  recovered.  The  High
Court erred in holding that the H.P. Public Moneys (Recovery of  Dues)  Act,
2000 repealing the earlier Act  did  not  contain  any  provision  that  the
remedy was without  prejudice  to  the  rights  under  any  other  law.  The
proceedings in a Suit and recovery under the Act as arrears of land  revenue
are under different  laws  governed  by  different  procedures.  A  Suit  is
instituted in a Court of law and is governed by the Code of Civil  Procedure
while the proceedings under the Act are  before  the  executive  statutorily
empowered.  In C.C.E. vs. Ramdev  Tobacco  Company,  (1991)(2)SCC  119,  the
distinction was noticed as follows :-
 "6.......There can be no doubt  that  ‘suit’  or  ‘prosecution’  are  those
judicial or legal proceedings which are lodged in a court  of  law  and  not
before any executive authority, even if a statutory one......"


18.    That  the  proceedings  in  a  Suit  could  not  be  equated  with  a
certificate  proceeding  was  further  noticed  in  ESI  Corpn.   vs.   C.C.
Santhakumar, (2007) 1 SCC 584, observing :-
"25.......Therefore, it cannot be said that a  proceeding  for  recovery  as
arrears of land revenue by issuing a certificate could be equated to  either
a suit, appeal or application in the court......"



19.   The phrase ‘public policy’ is not capable of  precise  definition.  In
P.Rathinam v. Union Of India, (1994) 3 SCC 394, it was observed:-
"92. The concept  of  public  policy  is,  however,  illusive,  varying  and
uncertain. It has also been  described  as  “untrustworthy  guide”,  “unruly
horse” etc...."

Broadly it will  mean  what  is  in  the  larger  interest  of  the  society
involving questions of righteousness, good conscience and  equity  upholding
the law and not  a  retrograde  interpretation.  It  cannot  be  invoked  to
facilitate a loanee to avoid legal obligation for repayment of a loan.   The
loanee has a  pious  duty  to  abide  by  his  promise  and  repay.   Timely
repayment ensures facilitation of the loan  to  others  who  may  be  needy.
Public policy cannot  be  invoked  to  effectively  prevent  a  loanee  from
repayment unjustifiably abusing the law.  Invocation  of  the  principle  of
doctrine of election in the facts of the case was completely misconceived.

20.   The High Court factually erred in holding  that  the  trunk  loan  was
time barred because the Appellant took no steps for  recovery  of  the  dues
from 1996 till 2002 overlooking the Certificate dated 3.9.1994.



21.   In conclusion,  it  is  held  that  the  proceedings  in  a  Suit  are
essentially different from proceedings under the  Act.   The  withdrawal  of
the Suit was no bar to proceedings under the Act.  There was  no  bar  under
the Act to the proceedings.  There had been no abandonment of claim  by  the
Appellant.  It would be contrary to public policy to prevent  the  Appellant
from recovering the loan.  The recovery proceedings were  not  time  barred.
The order of the High Court is held to be unsustainable and  is  set  aside.
The auction notice dated 13.01.2005/15.01.2005 under Section 85 of  the  Act
shall now proceed in accordance with law and be concluded  at  the  earliest
expeditiously.

22.   The appeal is allowed.
                                                            ………………………………….J.
                                                              (Ranjan Gogoi)



                                                           ……….………………………..J.
                                                               (Navin Sinha)
New Delhi,
March 28, 2017