Dr. R. R Misra, J.- - (1.) THE petitioners were granted a loan of Rs. 83,000/- by the U. P. Financial Corporation, Kanpur in the month of December, 1983 in connection with their business of manufacture of micro rubber sheets. THE loan was a Medium Term Loan and was sanctioned to the tune of Rs. 5 lacs and Rs. 1 lac was to be repaid in 10 and 12 instalments respectively. Since there was default in the payment of the aforesaid loan as per terms of the contract, U. P. Financial Corporation (Opposite-party no. 3) issued a registered notice dated 8th August, 1988 calling upon the petitioners to pay all outstanding to the tune of Rs. 4,12,017.65 p within thirty days of the receipt of the said notice. It appears that in the said notice it was also stated that in case the said payment is not made recovery proceedings will be taken against the petitioners. THE petitioners have not filed a copy of the said registered notice dated 8th. August, 1988 issued by the U. P. Financial Corporation. THEy have, however, filed a reply to the said notice dated 9th September, 1988, a copy of which has been filed as Annexure VI to the writ petition A perusal of the said reply notice dated 9th September, 1988, however, shows that in fact a notice dated 8th August, 1988 was issued to the petitioners to deposit all the outstandings as aforesaid within thirty days from the date of the receipt of the notice failing which, it was stated, recovery proceedings will be taken against the petitioners. In the said reply letter dated 9th September, 1988 all that has been said is that certain payments have been made by the petitioners and, therefore, the recovery proceedings be stopped. THEreafter the petitioners wrote another letter dated 10th April 1989 (a copy of which has been filed as Annexure 7 to the writ petition) stating the causes of delay in payment and praying for allowing some more time to make the payment. In the petition a copy of the citation dated 27th July 1989 issued by the Naib Tehsildar (Finance and Revenue), Kanpur City for realisation of Rs. 4,54, 319/- has been filed as Annexure 8 to the writ petition. THE said amount included the principal amount in the sum of Rs. 3,52,830/- and interest and collection charges in pursuance of the said agreement between the parties. It is stated that the recovery in question is sought to be made against the petitioners under Section 3 of the Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972 (hereinafter referred to as the Recovery Act).
(2.) AT the time of hearing, the only submission pressed by Sri Rakesh Dwivedi, learned counsel for the petitioners, was that resort to recover the amount under the provisions of the Recovery Act is harsher than the provisions of Section 32-G of the State Financial Corporation Act, 1951 (hereinafter referred to as the Financial Corporation Act). As such the said proceeding of recovery followed by the U. P. Financial Corporation is violative of Article 14 of the Constitution of India. To examine the said submission, the relevant provisions of the two Acts are reproduced below : Section 3 of the Recovery Act reads as follows : "3. Recovery of certain dues as arrears of land revenue- (1) Where any person is party,- (a)............ (b)............... (c)............ (d) to any agreement providing that any money payble thereunder to the State Government (or the Corporation) shall be recoverable as arrears of land revenue ; and such person- (1) makes any default in repayment of the loan or advance or instalment thereof ; or (ii) having become liable under the condition of the grant of refund the grant or any portion thereof, makes any default in the refund of such grant or portion or any instalment thereof ; or (iii) otherwise fails to comply with the terms of the agreement ; then...........................in the case of the Corporation or a Government Company the Managing Director (or where there is no Managing Director then the Chairman of the Corporation, by whatever name called) thereof............... may send a certificate, to the Collector, mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue. (2) The Collector on receiving the certificates shall proceed to recover the amount stated therein as an arrear of land revenue." The provisions of Section 32-G of the Financial Corporation Act are as follows :- 32-G. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue." (emphasis supplied) From a perusal of the aforesaid two sections in the relevent two Acts, it is clear that Section 32-G of the Financial Corporations Act saves power of the Corporation to resort to any other mode of recovery.
(3.) IT has been recently held by a Full Bench of this Court in Civil Mics. Writ No. 20818 of 1988 M/s. Krishna Utensils v. State Financial Corporation D/- 10th July, 1989-See 1989 AWC 971-that the remedy of recovery under the Recovery Act is not lost to the Financial Corporations by the insertion of section 32-G in the Financial Corporations Act. The question involved in the aforesaid Full Bench was slightly different than in the present case inasmuch as in the Full Bench case the question that arose for consideration was as to whether because of the insertion of Section 32-G in the Financial Corporations Act, the aforesaid provisions under the Recovery Act has been rendered void and inoperative qua the dues of the Financial Corporations. The Full Bench answered the said question in the negative. Further the vires of Recovery Act were also unsuccessfully challenged before the Full Bench. The Full Bench has ultimately held that Section 3 of the Recovery Act continues to be valid notwithstanding the insertion of Section 32-G in the Financial Corporations Act. Because of the decision of the aforesaid Full Bench, the contention of Sri Rakesh Dwivedi now is that the recovery which is sought to be made under the provisions of the Recovery Act is hit by Article 14 of the Constitution of India because in case the said recovery if it is made under the provisions of Section 32-G of the Financial Corporations Act, it would have involved a lesser onerous procedure. He also states that no guidelines have been set out in the procedure for recovery under the Recovery Act whereas under Section 32-G of the Financial Corporations Act the Corporation may make an application to the State Government for the recovery of the amount due to it and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue. The emphasis laid by Sri Dwivedi in his submission is that before taking recourse to Section 32-G of the Financial Corporations Act, a safeguard has been provided for making an application to the State Government to satisfy itself regarding the proposed recovery and it is only after that satisfaction is there that a recovery certificate of the amount so found due against a debtor can be issued to the Collector. The suggestion is that this safeguard is wholly absent under the provisions of the Recovery Act. His contention is that for recording the satisfaction of the State Government, an opportunity has got to be given to the petitioners and then only a satisfaction has got to be recorded. In support of his submission, learned counsel for the petitioners also strongly relied upon a decision of the Supreme Court in the case of Maganlal Chhaganlal (P.) Ltd. v. Municipal Corporation of Greater Bombay, AIR 1974 SC 2009.;