M.M. Gupta, J. - (1.) This writ petition has been filed by Sri Ashok Kumar Singh and others for quashing the recovery proceedings in pursuance of the recovery certificates dated 24th March, 1973 and for quashing the auction sale dated 10th December, 1976 and its confirmation dated 22nd January, 1977.
(2.) The petitioners Nos. 1 and 2 claim that they are the partners of Chandra Sugar Factory. This partnership came into existence in 1960. One of the partners of this firm was Smt. Chandra Devi who died and after her death the partnership continued with partners Sri Ashok Kumar Singh and Sri Prakash Kumar Singh. The firm in 1960 had applied for a loan of one lakh rupees from U. P. Financial Corporation, Kanpur. This loan was sanctioned in 1962. The firm, however, in all took a loan of Rupees 90.000/-. The loan was to be repaid, according to the terms of the agreement in ten equal instalments. The first payable instalment was to commence after two years from the date on which the loan was drawn. It was claimed that the Firm on various dates had made payments and in total the sum repaid was Rs. 1,17,467-08 paise. The Firm owing to financial difficulty could not repay the loan on the dates as and when the payments became due. The result was that the U. P. Financial Corporation (hereinafter referred to as corporation) issued a recovery certificate on 24-3-1973 for realisation of sum of Rupees on 711 96 paise. The petitioners wrote to the Managing Director of the Corporation on 27-7-1973 stating the Firms difficulties. They were also intimated that the Firm had already paid a sum of Rs. 55,701-60 paise and the balance due was Rs. 50,731-96 paise out of which the Firm had sent a Bank Draft for Rs. 5,000/- of the same date and mentioned that the balance would be sent by August 1973. It was requested that the recovery proceedings may be withdrawn. (Vide Annexure I). Subsequently, after the letter dated 27th July, 1973 the petitioners also made payments from time to time. In spite of it the recovery certificate was not withdrawn. By 16th July, 1974 a sum of Rs. 14,500/- was also paid. In February, 1975 the petitioners received a copy of letter from the Corporation addressed to the Collector, Varanasi, for realising Rupees 44,622.71 paise from the petitioners. This was in modification of the earlier recovery certificate dated 24th March, 1973. On 20th February, 1975 the Firm further paid a sum of Rs. 10,000/- under a Bank Draft drawn on the State Bank of India, Kanpur. The Corporation thereupon sent a letter to the Collector Varanasi to realise the balance after adjusting the payment of Rs. 10,000/-. (Vide Annexures II and III). On 28th April, 1975 a further sum of Rs. 10,000/- was deposited with Tehsildar, Varanasi. In January, 1975 one of the petitioners received a notice dated 14-1-1975 from the Additional District Magistrate. Varanasi, informing him of the attachment of House No. D-48/132 Ramapura, Varanasi, in lieu of the aforementioned recovery proceedings (Annexure IV). It is claimed that no order of attachment was required under the law nor notice of attachment contemplated under the law. In September, 1975 a notice was received by the petitioners for payment of interest of Rs. 1,265.03 paise as half yearly interest due on September 30, 1975. The Firm was also required to pay towards interest a sum of Rs. 1,361.32 paise upto 30th September, 1975 and the principal amount Rs. 34,683.71 paise. Thus the petitioners were required to pay a total stun of Rs. 37,310.86 paise. (Vide Annexure V). In the meantime the petitioners had been approaching the Tehsildar for ascertaining the actual amount due which the firm was required to pay. The Tehsildar in his turn wrote to the Accounts Officer of the Corporation for the details of the amount to be realised after adjusting the payments made but no reply was received. On 10th December, 1976 House No. 48/132 Misir Pokhara, Varanasi, of which the partners of the Firm are co-sharers along with petitioner No. 3 was auctioned for a sum of Rs. 56,000/-. No notice of the auction was served on the firm. The auction was also not published in the local news- papers or in the official gazette. The order of attachment was made under O. 21, R. 54, Civil P. C. No proclamation of sale was drawn by the Collector, Varanasi. No copy of such proclamation was served on the petitioners. The sale was conducted without giving any publicity as required by law. The petitioner No. 3 is not the partner of the firm. His interest could not be sold in lieu of any recovery that was due against the firm of which the petitioners Nos. 1 and 2 are the partners. An objection was raised against the auction sale by the petitioners on 17th January, 1976. A further detailed objection was filed on 21 January, 1976.
(3.) The main objections that were raised against the auction sale were that the recovery certificate was not granted according to law and the Collector did not properly take into account the payments made. Another objection raised was that the Corporation could only proceed against the mortgaged property. The house sold in auction sale was not the mortgaged property under the agreement with the Corporation. Since the amount sought to be recovered was much higher than what was actually due a telegram was sent to the Chief Accounts Officer of the Corporation enquiring whether the adjustment of Rs. 10,000/- paid on 28-4-1975 was made. The Chief Accounts Officer of the Corporation replied that the amount of Rs. 10,000/- was not received in the book of the Corporation at Kanpur. On 30th December, 1976 an application was submitted to the Corporation stating that the payment of Rs. 10,000 was made on 28-4-1975 and a further sum of Rs. 2,500/- was paid on 16-7-1974. Adjustments of these amounts were not made. The fact of filing of objections was also mentioned. The request was made that the District authorities be informed about the actual balance outstanding against the petitioners and for issuing a modified recovery certificate. On 31st December, 1976 the Managing Director of the Corporation enquired from the Collector, Varanasi, whether the sums of Rs. 2,500/- and Rs. 10,000/- were deposited on 16-7-1974 and 28-4-1975 respectively and were adjusted or not. The District Magistrate entrusted the matter to the Additional District Magistrate, Varanasi, who also directed the Tehsildar to give the report immediately. On 7th January, 1977 the Additional District Magistrate (E), Varanasi, wrote a letter to the Managing Director of the Corporation stating the reasons therein why the amounts were not sent earlier and a draft was prepared on the same date. Regarding the stay of the recovery proceedings he informed that the question of stay did not arise as the house was sold on 10th December, 1976 but he requested them to inform the debtors the actual amount due and to deposit the same by 10th of January, 1977 in the office of the Collector and not with the Corporation (Vide Annexure XIII)- On 10th January, 1977 the partners of the firm moved an application before the Collector, Varanasi, that Sri Ashok Kumar Singh, one of the partners in the firm, had left for Kanpur for settlement of the accounts with the Corporation. Since the accounts with the Corporation were unfinalised, the question for depositing any money did not arise and wanted one months time for it. The aforementioned application was rejected by the Additional District Magistrate (E) on 10th January, 1977. The Collector, Varanasi, received a telegram from the Corporation requesting him not to confirm the sale held on December 10, 1976 (Vide Annexure XV). No notice of the hearing of the objections filed on the 17th and 21st December, 1976 was ever given nor any opportunity was given. The objections of the petitioners were decided and the sale was also confirmed without any intimation to the petitioners. The petitioners came to know of it about the 22nd of January, 1977. The loan was taken on security of the properties mentioned in Sch. A of the Agreement. Petitioner No. 3 was not the partner of the firm, and had also not taken the loan Recovery had to be made against the mortgaged property first as arrears of land revenue. The auction sale of the house without complying with the provisions of Section 4 (2) (b) of the U. P. Public Moneys (Recovery of Dues) Act 1972 is invalid. The property was auctioned for the recovery of a sum much in excess of the amount due. The sale of the property was, therefore, illegal, invalid and without any jurisdiction. The sale took place without effecting any attachment as required by O. 21, R. 54, C. P. C. No notice for drawing up the proclamation of sale was given to the petitioners. The sale proclamation purported to have been issued mentioning the property as D48/132 Misir Pokhara, Varanasi, whereas the actual property sold is D/48/132 Misir Pokhara, Varanasi. The value of the property has not been mentioned in the sale proclamation. The auction sale is, therefore, illegal. On these grounds the writ petition has been filed for quashing the sale dated 10th December, 1976 and its confirmation dated 22-1-1977.;