R.P.Misra, Shishir Kumar - (1.) -The present writ petition has been filed in the nature of certiorari quashing the recovery certificate and further quashing the notice dated nil issued by respondent No. 5 contained as Annexure-3 to the writ petition. Further a writ in the nature of mandamus directing the respondents not to take any coercive method against the petitioners.
(2.) THE petitioners are engaged in the business of printing and is carrying on its business by dyeing/printing of cloths which are sent for job work by different companies and corporations. THE respondent No. 1 U. P. State Handloom Corporation Limited is also one of the concern which sends towels, sarees, malmal for job work of dyeing, printing, bleaching etc. to the petitioners and pays the job charges after completion of their work. THE petitioners are dealing with the respondents since past about 15 years. According to the respondent No. 1 the petitioners' concern owes a sum of Rs. 3,58,828.91 to the Corporation. As per communication of the respondent No. 1 dated 22.8.1997 certain malmals and borders sarees are lying with the petitioners and they are still with the petitioners which they are ready to return even today. In another statement respondent No. 1 has shown dues to the tune of Rs. 7,86,484.45 against the petitioners. THE respondent itself is not clear what is the actual amount. THEre was a dispute between the petitioners and the Corporation, as such, the Chief Manager (Production) directing for constitution of a Committee to go into the details of the dispute between the petitioners and the respondents regarding the amount due to the petitioners. THE petitioners presented themselves before the respondents with all the details and relevant documents but the dispute was not resolved. However, inspite of the best efforts of the petitioners, the dispute was not resolved and all of a sudden the respondent No. 1 has started recovery proceeding against the petitioners. On the basis of the aforesaid recovery certificate sent to the District Magistrate, Kanpur Nagar for a sum of Rs. 21.59.588.80 is being recovered from the petitioners. Aggrieved by the aforesaid action of the respondents the petitioners filed the present writ petition. Notices were issued and counter and rejoinder-affidavits have been filed, therefore, with the consent of the parties the writ petition is being disposed of finally. It has been submitted by the petitioners that the respondents have placed reliance on alleged agreement executed on 8th September, 1993. Petitioner submits that certain amount is due to be paid by the respondent No. 1 to the petitioners towards printing of towels. On the other hand, the respondent No. 1 claims that certain amount is due and stock is lying with the petitioners. The dispute between the parties has not been adjudicated before any proper forum and in such situation, the petitioners submit that the respondents cannot claim any amount without having any proper adjudication of the amount. As the amount has not been quantified and liability of amount has not been fixed upon the petitioners, therefore, in view of the Division Bench judgment of this Court in the case of Ganesh Rice Mills Ltd. v. Stale of U. P. and others, 1993 EFR 549, it has been submitted in the aforesaid judgment that the authorities are not empowered to proceed straightway to recover the amount unless and until the amount is quantified. The reliance has been placed upon paras 9, 10 and 11 of the said judgment. "9. The claim of the Government is, in our opinion, pure and simple one for compensation in respect of the damage to gunny bags which it considers has resulted from some alleged acts or omission of the petitioner. It is clearly in the nature of a claim for unliquidated damage. There is, in our opinion, in these circumstances no right in the Government either under the agreement or under the Levy Order straightaway to proceed to recover such unliquidated damages from the petitioner without the same having been previously determined through mutual agreement, arbitration or a civil suit. 10. The view that we are taking is fully fortified by a pronouncement of the Supreme Court in the case of Union of India v. Raman Iron Foundary, 1974 SC 1265. The true legal import and nature of a claim for unliquidated Lordship Bhagwati, J., speaking for the Court observed thus : "Now the law is well-settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated by adjudicatory authority. When there is a breach of contract, the party which commits the breach does not co-instanti incur any pecuniary obligation, nor dots the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has in the right to sue for damages. After examining several decisions both of the English Courts and of various High Courts in India, His Lordships summed up the law thus : "A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable............." 11. Further, from the affidavits filed by the parties, it is clear that there was a dispute between the parties as regards who was reasonable for the gunny bags having become unserviceable. The claim of the petitioner is that it was ready and willing at all material times to return the gunny bags to the Government but the Government itself failed to take back the same even after orders to that effect had been passed by the Commissioner, Food and Civil Supplies. The petitioners' stand is that if the gunny bags have become unserviceable the same was not on account of any act or omission of the petitioners but entirely on account of the normal wear and tear to which the gunny bags were exposed because of the failure of the Government to take back the same within a reasonable time. On the contrary, the assertion of respondents in the counter-affidavit is that the gunny bags were damaged on account of the failure of the petitioners' to take care of the same. Whether the petitioners are right or the respondents, the fact remains that there was clearly a dispute between the parties as regards the claim of the Government to recover any amount from the petitioner on account of the gunny bags having become unserviceable. Now under Clause (11) of the agreement itself, there is a provision for arbitration. It provides that every dispute, difference or question touching or arising out of this agreement or the subject-matter thereof shall be referred to the sole arbitration of a person nominated or the Secretary to the Uttar Pradesh Government, Food and Civil Supplies Department whose decision thereon shall be final and binding to the parties. Admittedly, the dispute was not referred for arbitration. Instead the Government chose to determine the quantum of damages itself and thereafter demand the same on pain of the amount being adjusted against the price payable to the petitioner on account of levy rice. This was clearly arbitrary, and without any sanction of law."
(3.) FURTHER submission made on behalf of the petitioners is that the petitioners had not taken any loan, advance, grant or credit enabling the respondent No. 1 to invoke the provisions of Uttar Pradesh Public Money (Recovery of Dues) Act, 1972. The respondent No. 1 according to their own admission in para 4 of the counter-affidavit, is a Government company. The loan, advance of grant given by Banking Company or Government Company are covered under Section 3 (1) (b) of the Act 1972. Section 3 (1) (b) is being reproduced below : 3. Recovery of certain dues as arrears of land revenue.-(1) Where any person is party : (b) to any agreement relating to a loan, advance or grant given to him or relating to credit in respect of, or relating to hire-purchase of goods sold to him, by a banking company or a Government company, the case may be, under a State-Sponsored Scheme ; From the perusal of the aforesaid section it clearly goes to show that the amount can be recovered by the Banking Company or a Government company if it is a loan, advance or grant or credit under the State Sponsored Scheme, as the petitioner has not been given any loan, advance or grant or credit under the State Sponsored Scheme. In fact the petitioners and respondents have entered into the business transaction, therefore, the aforesaid act of the respondents are against the law.;