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SUPREME COURT OF INDIA
Ranjan Gogoi, Navin Sinha, JJ.
Himachal Pradesh Financial Corporation – Appellant
Versus
Anil Garg and others – Respondents
CIVIL APPEAL NO.661 OF 2008
Decided On : 28-03-2017
AIR 1987 SC 88; (2008) 14 SCC 58; (2008) 1 SCC 494 – Relied upon
(b) H.P. Public Moneys (Recovery of Dues) Act, 2000 – Section 3(1)(d)(iv) – Proceedings in a Suit and recovery under the Act – under different laws governed by different procedures – A Suit is instituted in a Court of law and governed by CPC – Proceedings under the Act are before statutorily empowered executive – Proceedings in a Suit could not be equated with a certificate proceeding under the Act. (Para 17, 18)
(1991) 2 SCC 119; (2007) 1 SCC 584 – Relied upon
(c) Words and phrases – Public policy – Public policy cannot be invoked to effectively prevent a loanee from repayment unjustifiably abusing the law. (Para 19)
(1994) 3 SCC 394 – Relied upon
Facts of the case:
The Respondent applied for a loan of Rs. 1.90 lakhs in 1989 to purchase a truck and executed a hypothecation deed. Repayment schedule commenced from 10.1.1990 culminating on 10.7.1994.
Rs. 10,000/- only was repaid on 6.3.1991.
The vehicle was seized and auction sold for a sum of Rs. 1.46 lakhs.
A Money Suit was filed for recovery of the balance of Rs. 1,25,270/- along with future interest and costs. The Suit was withdrawn stating that the Appellant desired to proceed under the Act. The Suit was dismissed as withdrawn. Recovery Certificate was then issued for a sum of Rs. 1,94,283/- followed by a warrant of arrest.
The Respondent thwarted the Certificate proceedings by filing a Suit contending that the fresh proceedings were barred due to withdrawal of the Suit without any liberty, and that the claim was time barred. Ultimately the Suit was dismissed for non-prosecution.
Another loan of Rs. 30,000/- was availed by the Respondent for a trunk industry and a hypothecation-deed executed in respect of property. The last installment of the loan was payable on 10.1.1996. The Respondent remitted Rs. 4,000/- in May 1991 and Rs. 1,000/- in November 1991. A request was made before the Collector for recovery certificate on 12.11.1992, and the Certificate was issued on 3.9.1994. The Respondent objected that no prior notice was given and that the proceedings were time barred.
The High Court held that the Suit having been withdrawn unconditionally for inexplicable reasons, and without any liberty granted for initiating appropriate legal proceedings, it amounted to abandonment of the claim for the truck loan. It would be contrary to public policy and abuse of the process of law to allow any fresh proceeding for the same cause of action. The doctrine of election was also invoked. The loan with regard to the trunk industry was held to be time barred as no action was taken for recovery from 1996 till 2002.
Finding of the Court:
Proceedings in a Suit are essentially different from proceedings under the Act.
Withdrawal of the Suit was no bar to proceedings under the Act.
There had been no abandonment of claim by the Appellant.
It would be contrary to public policy to prevent the Appellant from recovering the loan.
The recovery proceedings were not time barred.
Result: Appeal allowed.
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JUDGMENT
NAVIN SINHA, J.
The Appellant is aggrieved by order dated 4.10.2005 allowing the writ petition of the Respondent, setting aside the auction notice under Section 85 of the Himachal Pradesh Public Moneys (Recovery of Dues) Act, 1973 (hereinafter be referred to as "the Act") issued consequent to his failure to repay the two loans availed for purchase of a truck and establishing an industry for manufacture of steel trunks.
2. The Respondent has remained unrepresented despite valid service of notice.
3. Learned Senior Counsel Shri J.S. Attri, on behalf of the Appellant, submits that the High Court has erred by inferring abandonment of the claim by withdrawal of the Suit. The withdrawal was made to initiate fresh proceedings under the Act, as it provided for a more speedy and effective remedy, under a special law. The absence of any liberty in the withdrawal order is not relevant. There was no bar under the Act to the proceedings. The remedy under Section 3(1)(d) (iv) of the Act was independent and without prejudice to any other mode of recovery under any law for the time being in force, and which will include a Suit. The High Court had wrongly applied the principle of `public policy' to restrain recovery of a public loan. The doctrine of election had no application in the facts of the case.
4. The High Court erred on facts in holding that the proceedings under the Act for recovery of the trunk loan was initiated only in the year 2003, and that nothing had been done by the Appellant from 1996 till 2002 thus making the claim time barred. The recovery certificate had been issued by the Collector as far as back 3.9.1994. It was stalled by the Respondent filing writ petitions before the High Court. The High Court had granted liberty to the Appellant for proceeding afresh in accordance with law.
5. We have considered the submissions, as also perused the materials on record.
6. The Respondent applied for a loan of Rs. 1.90 lakhs in 1989 to purchase a Swaraz Mazda truck and executed a hypothecation deed. Repayment schedule commenced from 10.1.1990 culminating on 10.7.1994. Rs. 10,000/- only was repaid on 6.3.1991. The vehicle was seized on 6.5.1991 under Section 29 of the State Finance Corporation Act, 1951 and auction sold on 4.9.1991 for a sum of Rs. 1.46 lakhs. A Money Suit was filed before the Senior Sub Judge, Shimla for recovery of the balance of Rs. 1,25,270/- along with future interest and costs. The Suit was withdrawn on 12.12.1995 under Order 23, Rule 1 of the Code of Civil Procedure stating that the Appellant desired to proceed under the Act. The Suit was dismissed as withdrawn. Recovery Certificate was then issued under the Act on 19.4.1996 for a sum of Rs. 1,94,283/- followed by a warrant of arrest.
7. The Respondent thwarted the Certificate proceedings by filing a Suit before the Senior Sub Judge, Shimla contending that the fresh proceedings were barred due to withdrawal of the Suit without any liberty, and that the claim was time barred. An interim-order was obtained, but ultimately the Suit was dismissed for non-prosecution on 21.5.2001.
8. Another loan of Rs. 30,000/- was availed by the Respondent on 15.12.1988 for a trunk industry and a hypothecation-deed executed in respect of property bearing Khata/Khatuni No.102/347, Khasra No.1014. The last installment of the loan was payable on 10.1.1996. The Respondent remitted Rs. 4,000/- in May 1991 and Rs. 1,000/- in November 1991. A request was made before the Collector for recovery certificate on 12.11.1992, and the Certificate was issued on 3.9.1994. The Respondent objected that no prior notice was given and that the proceedings were time barred.
9. The Respondent instituted C.W.P. No. 1102 of 2002 before the High Court questioning both the recovery proceedings. The writ petition was allowed on technical grounds with liberty to the Appellant for proceeding afresh in accordance with law. Fresh show cause notices were then issued in respect of the two loans on 26.11.2002 and 2.
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