Venkataramiah, J. - (1.) 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.
(2.) The respondent is a resident of Railwayganj, Hardoi in the State of Uttar Pradesh. He applied to the Government of Uttar Pradesh 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 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 instalments commencing from May 1, 1962 together with interest at the rate of 3 percent 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 instalments 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 of 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 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 of 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.
(3.) Following the decision of this Court in Northern India Caterers (Pvt.) Ltd. v. State of Punjab, (1967) 3 SCR 399 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.;