The State Legislature has the power to enact laws for the recovery of public debts of the State, including those due to its agencies and instrumentalities, and such laws are not ultra vires the legislative competence of the State.

G.S. Singhvi, J. - In order to provide medium and long term credit to industrial undertakings which could not be financed by the commercial banks, the Central Industrial Financial Corporation was set up under the Industrial Finance Corporation Act, 1948. After some time, the State Governments expressed their desire that State Financial Corporations should also be set up on the pattern of Central Industrial Financial Corporation which may function under the ultimate control of the State Governments. In order to meet this demand, and keeping in view the provision of Entry 43 of the List 1 of Seventh Schedule, the Parliament enacted the State Financial Corporations Act, 1951 (hereinafter referred to as the 1951 Act). The object of providing financial assistance to the exiting industrial concerns and new entrepreneurs who wanted to set up industries was satisfactorily achieved. But in the later years, the State Financial Corporations had been dragged into litigation and there is no High Court in the country in which dozens of petitions are filed every year by the persons who have availed the above facilities from such Corporations. The primary objective of these petitions is to frustrate the recovery of the dues and as on date recovery of hundreds of crores of rupees given in the form of loans etc., has been blocked due to the petitions filed in the High Courts and else where. This High Court is no exception to this malady. The present one is also a case in which the petitioners have, in the garb of challenging the constitutional validity of the Haryana Public Money (Recovery of Dues) Act, 1979 (hereinafter referred to as the 1979 Act), tried to frustrate the proceedings initiated by the Haryana Financial Corporations (hereinafter referred to as the Corporation) to recover the amount due from them.

2. Petitioners Vipin K. Singal, Vinay K. Singal and Varinder K. Singal are Directors of the company which was initially incorporated in the name of M/s S.N.S. Medical Leasing Limited. Later on, its name was changed as S.N.S. Laboratories Limited (hereinafter described as the company). The Company was sanctioned loan of Rs. 60 lacs by the Corporation in the year 1987. After two years, the Haryana State Industrial Development Corporation (hereinafter referred to as HSIDC) sanctioned another loan of Rs. 62.60 lacs to the Company. Notices dated 14.2.1992 (Annexure-P.2) and 19.4.1993 (Annexure-P.8) were issued by the Corporation to remind the Company of its obligation to repay the loan in accordance with agreed schedule. In the second notice, it was clearly indicated that the failure of the Company to repay the loan along with interest will lead to initiation of action under Section 29 of the 1951 Act. However, the Company did not pay any heed to these notices. Consequently, the Corporation took possession of the unit. In 1994, the Corporation took steps to auction the unit of the company for recovery of the dues. However, at the instance of the Directors of the Company, the Corporation agreed to defer the sale of the industry subject to the conditions incorporated in the letter Annexure-P.16 dated 25.3.1994 sent to the Managing Director of the Company. The representative of the Company assured the Corporation that all the dues will be cleared as per the terms of settlement package but the said assurance proved to be a hollow and despite the fact that extra-ordinary concession was granted by the Corporation by accepting the request of the Managing Director of the Company to sell the machinery, the Company and its Directors failed to clear the dues. Ultimately, the Corporation withdrew the settlement package and communicated its decision to the Company vide letter Annexure-P.26 dated 5.7.1995. Simultaneously, the Corporation initiated action for recovery of the dues under the 1979 Act and issued recovery certificate to the Assistant Collector at Delhi who, in turn, issued notice Annexure-P.27 dated 15.10.1996 to the petitioners to dep