1998 Supreme(Del) 136

High Court Of Delhi
RAJIV ANAND - Appellant
Versus
UNION OF INDIA - Respondent
Civil 2028 of 1995
Decided On : 02/20/1998

Headnote:State Financial Corporation Act, 1951 - Section 32-G — Authority for exercise of power — Appointment of Managing Director of Financial Corporation cannot rule out likelihood of bias — No person can be judge of his own cause — Officer of Financial corporation cannot be appointed as an authority under the provision.

       Held: The question is not whether the Managing Director acting as an authority under Section 32-G on being so appointed by the State Government would be biased or not. The real question is whether his appointment as an authority under Section 32-G to determine and issue the recovery certificate would inspire confidence of the entrepreneur or not. The answer has to be in the negatives. The question is not of the bias but of the reasonable likelihood of bias. The question is about reasonable apprehension of the opposite party. It is against all canone of justice to make a man judge in his own cause. The justice should not only be done but should be seen to be done as well. The contention that this court, when a certificate issued under Section 32-G is challenged, has a limited jurisdiction of judicial review in such matters, further demonstrates the requirement, desirability and property of appointing such a person an authority under Section 32-G who inspires the confidence of both the parties. We are not suggesting that consent or opinion of entrepreneur is required to obtained before specifying authority under Section 32-G of the Act. We are only holding that an officer of the Financial Corporation should not be appointed as an authority under Section 32-G of the Act. If one of the parties or its representative is appointed as an authority under Section 32-G of the Act by the State Government in exercise of its power to specify any authority under this section it would certainly be against the principles that no one shall be judge in his own cause. The other party can have a reasonable apprehension of bias against such an authority.

       We are, thereforee, of the view that though Section 32-G is not unconstitutional but it postulates appointment of an independent person and thus it deserves to be declared that the Managing Director or any other officer of the Financial Corporation cannot be appointed by the State Government as an authority under Section 32-G of the Act. We, however, clarify that the concluded matters will not be reopened and certificate under Section 32-G of the Act which were earlier not questioned would not be open to challenge now on the ground of competence and authority of the Managing Director of the Corporation.

       Section 32-G — Recovery of amount due — Procedure — Absence of prescribed procedure — It is not condition precedent for exercise of power.

       Under the Act the procedure is to be prescribed by either State Government framing the rule or Board framing requisite regulations. The provisions in the Act do not show operation of Section 32-G would depend upon the action of the State Government or the Board and on account of their inaction, the legislative intent would remain in abeyance. In absence of the procedure being prescribed, the authority under Section 32-G would be required to follow and apply such procedure which is just, fair and reasonable and is in consonance with the principles of natural justice.

       Section 32-G — Recovery of amount due — Scope of powers — The contention that the provision can be invoked only for pre-determined amount by court of authority, is not maintainable. We find it difficult to accept the contention that Section 32-G can be invoked only for a pre-determined amount and the same cannot be determined under Section 32-G. A reading of the section shows that on an application being filed before the State Government or specified authority has to record its satisfaction about the amount due and it is only thereafter a certificate for the amounts so due can be issued to the Collector for recovery of the amount as arrears of land revenue.

       Section 32-G — Scope of application — Invocation against surety — Permissibility — The procedure for recovery can be invoked against surety.

       What Section 32-G says is where any amount is due to the Financial Corporation in respect of any accommodation granted by it to financial concern, the Financial Corporation can make an application before the State Government for recovery of the amount due to it. It cannot be held that the claim against the surety is not in respect of accommodation granted by Financial Corporation to any industrial concern. The acceptance of the contention would amount to making the words in respect of accommodation granted in Section 32-G redundant. If the intention of this section was to restrict its applicability only to industrial concern, the opening words of Section 32 would have been something like "where amount is due to Financial Corporation from any industrial concern....." In view of clear language of the provision, we are unable to accept the contention that applicability of Section 32-G is restricted to only industrial concerns and it cannot be invoked against the sureties.