2010 Supreme(SC) 357

2010 (3) Supreme 520
SUPREME COURT OF INDIA
Aftab Alam and Swatanter Kumar, JJ.
M/s. A.P.T. Ispat Pvt. Ltd. — Appellant
versus
U.P. Small Industrial Corporation Ltd. & Anr. — Respondents
Civil Appeal No. 663 of 2003
Decided on : 23-04-2010

IMPORTANT POINT
The U.P. Public Moneys (Recovery of Dues) Act, 1972 is not intended to recover the goods or the monetary value of goods taken away in course of theft or dacoity or lost as a result of dishonest appropriation or any other alleged criminal action.

Headnote:U. P. Public Moneys (Recovery of Dues) Act, 1972- Section 3-Issuance of two recovery certificates by the Managing Director of the U.P. Small Industries Corporation Ltd. stating that Directors of appellant company had received from Corporation’s Dadanagar depot 1027.15 MT wire rods (iron and steel) worth Rs.1,54,93,421/- but the payment of the goods had not been made to the Corporation and it was to be recovered from the persons named in the recovery certificates as the company’s Directors together with interest-Writ Petition thereagainst-Dismissed-Appeal- If the appellant company was purchasing wire rods as raw material from Corporation held incomprehensible as to how the sale of the goods would become financial assistance rendered to appellant unless it was shown that supply of goods was as a loan or grant or by way of hire purchase in terms of some agreement- High Court had stretched the meaning of “financial assistance” as defined in section 2 and the scope of section 3 of the Act beyond reasonable limits- Instantly it was evident that the dues of which recovery was sought by impugned certificates did not pertain to any loan, advance or grant given to the appellant or to any credit concerning any hire purchase of goods sold to appellant by the Corporation under any agreement, express or implied- The dues not related to any financial assistance-So called supplies were not even made in the normal course of business- A reference to the FIR showed that according to the Corporation goods were taken away by the appellant in a criminal action constituting a number of offences under the Penal Code- The Act of 1972 was clearly not intended to recover the goods or the monetary value of goods taken away in course of theft or dacoity or lost as a result of dishonest appropriation or any other alleged criminal action-Hence held that in the facts of the case the two impugned recovery certificates werre quite illegal and untenable –Impugned order of High Court set aside and impugned recovery certificates quashed-Appeal allowed. (Paras 13 to 21)

       Facts of the Case :

       Two recovery certificates were issued herein in the instant case by the Managing Director of the U.P. Small Industries Corporation Ltd. stating that Directors of appellant company had received from Corporation’s Dadanagar depot 1027.15 MT wire rods (iron and steel) worth Rs.1,54,93,421/- but the payment of the goods had not been made to the Corporation and it was to be recovered from the persons named in the recovery certificates as the company’s Directors together with interest.Writ Petition thereagainst was Dismissed.

       2.Present appeal has been filed against said order of High Court.

       Findings of the Court :

       If the appellant company was purchasing wire rods as raw material from Corporation it was held incomprehensible as to how the sale of the goods would become financial assistance rendered to appellant unless it was shown that supply of goods was as a loan or grant or by way of hire purchase in terms of some agreement.High Court had stretched the meaning of “financial assistance” as defined in section 2 and the scope of section 3 of the Act beyond reasonable limits. From a bare reading of section 3 it was evident that dues must arise from an agreement to which the person from whom recovery is to be made is a party. Sub clause (a) of sub-section 1 then enumerates the kinds of agreement under which the transaction should have taken place. In the scheme of the Act there is no provision for any adjudication. Once there is any default under an agreement, the designated authority is authorized to issue a recovery certificate and send it to the Collector who is obliged to recover certificate amount together with interest from the certificate debtor as arrears of land revenue. At no stage the certificate debtor is given an opportunity to put up his case. Such being the legal position, the recovery certificate must be based on a tangible agreement and it should even prima facie appear that the dues arise from a breach of the terms of the agreement. A proceeding under section 3 of the Act cannot be sustained by piling up assumptions in favour of the certificate holder and against the judgment debtor. Instantly it was evident that the dues of which recovery was sought by impugned certificates did not pertain to any loan, advance or grant given to the appellant or to any credit concerning any hire purchase of goods sold to appellant by the Corporation under any agreement, express or implied. The dues not related to any financial assistance.So called supplies were not even made in the normal course of business. A reference to the FIR showed that according to the Corporation goods were taken away by the appellant in a criminal action constituting a number of offences under the Penal Code. The Act of 1972 was clearly not intended to recover the goods or the monetary value of goods taken away in course of theft or dacoity or lost as a result of dishonest appropriation or any other alleged criminal action.Hence held that in the facts of the case the two impugned recovery certificates werre quite illegal and untenable .Impugned order of High Court was set aside and impugned recovery certificates were quashed. Appeal was allowed.