The State Legislature had the competence to enact the Karnataka Public Moneys (Recovery of Dues) Act, 1979, and the action taken under the Act was validated by law. The Managing Director's failure to provide an opportunity for the loanees to be heard before certifying the recovery of loans was a breach of the doctrine of audi alteram partem.

( 1 ) THESE writ petitions are instituted under Article 226 of the Constitution of India. Petitioner in each case is an industrialist and he took loan and advance, from the Karnataka State Financial corporation (respondent 5) for the development of industry. It is the case of 1he respondents that the loanees did not repay the loans in accordance with the terms of the agreement for advancing loans and in some cases they did not even utilise loans for the proper purpose. Hence, the loans were recalled and steps were taken for recoveries under the Karnataka Public Moneys (Recovery of Dues) Act, 1976. The present writ petitions are filed challenging the competence of respondent 5 the Karnataka State Financial Corporation to so recover the loans as arrears of land revenue under the provisions of the Karnataka Public Moneys (Recovery of Dues) Act 1979.

( 2 ) THE writ Petitions are resisted by the respondents. They have contended by the counter filed by respondents 4 and 5 Viz,, the Managing Director, Karnataka State Financial Corporation , and the Karnataka State, Financial Corporation, that they had the competence to call for the dues as the moneys were not paid in accordance with the terms and the loanees defaulted and in many cases they did not utilise the loans for the proper purpose. They affirmed that they had the power to take steps under the Karnataka Public Moneys (Recovery of Dues) Act, 1976, as validated by the Karnataka Public Moneys (Recovery of Dues) /act, 1979.

( 3 ) THE learned counsel appearing for the writ petitioners in the different cases raised the following points in these writ petitions:

(1) The loans having been advanced under the State Financial Corporations Act, 1951, the respondents had no authority to take steps for the recovery of loans under the provisions of the karnataka Public Moneys (Recovery of Dues) Act.

(2) The Karnataka Public Moneys (Recovery of Dues) Act, (hereinafter called 'the Karnataka act'), is a legislation and the State Financial Corporations Act, 1951, is a Central Legislation. According to them, the Central Legislation prevails over the State Legislation.

(3) They also contended that the Karnataka State has no competence to enact the Karnataka public Moneys (Recovery of Dues) Act in question.

(4) Alternatively, they contended that Section 3 of the Karnataka Act which empowered the managing Director to send a certificate to the Deputy Commissioner mentioning the sum due from a loanee and requesting that such sum, together with cost of the proceedings, be recovered as if it were arrears of land revenue, is unconstitutional as it does not, provide for an enquiry before issuing the certificate and thus violates the principles of natural Justice.

(5) They further contended that the Managing Director (respondent 4) of the Financial corporation did not give any opportunity to the various loanees to show cause before certifying the dues recoverable from them and, as such, the procedure followed by him was vitiated and no steps could be taken on the basis of such certificate.

( 4 ) THE learned State Government Advocate and Shri C. B. Nandeeswar and Shri R. V. Vasantha kumar, the learned counsel appearing for the Karnataka State Financial Corporation, argued meeting these points raised by the learned counsel for the various writ petitioners.

( 5 ) THE points, therefore, that arise for my consideration in these writ petitions are:

(1) Whether the State Legislature has competence to enact the Karnataka Public Moneys (Recovery of Dues) Act. 1979 ? (2) Whether the Karnataka Act prevails over the Central Act, viz. , the State Financial corporations Act, 1951? (3) Whether Section 3 of the Karnataka Act has to be struck down as unconstitutional because it does not provide for the application of principles of natural justice before certifying the loan ? (4) Whether the Managing Director has followed the principles of natural justice by issuing a show cause notice and holding enquiry wherever necessa

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