Back
IN THE HIGH COURT OF ALLAHABAD
K. C. AGRAWAL, UMESH CHANDRA BENERJEE
TRIJUGI NARAIN - Appellant
Versus
GORAKHPUR KSHETRIYA GRAMIN BANK - Respondents
C. M. W. 9445 Of 1984
Decided On : 09/02/1985
U. P. AGRICULTURAL CREDIT ACT, 1973 - SECTION 11A - VALIDITY - ARTICLE 14 OF THE CONSTITUTION - RECOVERY OF LOANS BY BANKS - PROCEDURE - WHETHER ARBITRARY AND DISCRIMINATORY - HELD, NOT ARBITRARY OR DISCRIMINATORY.
Fact of the Case:
The petitioners took a loan from Gorakhpur Kshetriya Gramin Bank for purchasing a tractor. They failed to pay the installments on time. A recovery certificate was issued for the recovery of the loan amount under Section 11A of the U. P. Agricultural Credit Act, 1973. The petitioners challenged the validity of Section 11A, arguing that it was arbitrary and discriminatory and violated Article 14 of the Constitution.
Finding of the Court:
The Court held that Section 11A was not arbitrary or discriminatory. It was a valid provision that provided for a speedier method of recovery of loans by banks. The Court noted that the object of the Act was to facilitate the flow of credit for agricultural production and development. The Court also noted that the procedure for recovery under Section 11A was not harsh and onerous. It was similar to the procedure for recovery of government dues as arrears of land revenue. The Court further held that the absence of a provision for appeal against the issuance of a recovery certificate under Section 11A did not make the provision invalid. The Court noted that the Certificate Officer had to apply his mind before issuing a recovery certificate. The defaulter had the evidence of the amount paid by him in his possession. In such a case, there was no point in providing for an appeal.
Issues: 1. Whether Section 11A of the U. P. Agricultural Credit Act, 1973 is arbitrary and discriminatory and violates Article 14 of the Constitution? 2. Whether the procedure for recovery of loans under Section 11A is harsh and onerous? 3. Whether the absence of a provision for appeal against the issuance of a recovery certificate under Section 11A makes the provision invalid?
Ratio Decidendi: 1. Section 11A of the U. P. Agricultural Credit Act, 1973 is not arbitrary or discriminatory. It is a valid provision that provides for a speedier method of recovery of loans by banks. 2. The procedure for recovery under Section 11A is not harsh and onerous. It is similar to the procedure for recovery of government dues as arrears of land revenue. 3. The absence of a provision for appeal against the issuance of a recovery certificate under Section 11A does not make the provision invalid. The Certificate Officer has to apply his mind before issuing a recovery certificate. The defaulter has the evidence of the amount paid by him in his possession. In such a case, there is no point in providing for an appeal.
Final Decision: The writ petitions were dismissed with costs.
( 1 ) THIS bunch of writ petitions challenges the validity of S. 11a of the U. P. Agricultural Credit Act, 1973 (U. P. Act No. 19of 1973), hereinafter referred to as the Act which provides for recovery of loans advanced by a Bank to an agriculturist by way of financial assistance. Common questions of law are since involved in these cases, we propose to take the writ petitions Nos. 9545 of 1984,trijugi Narain Tewari and others v. Gorakhpur Kshetriya Gramin Bank and another, and No. 5588 of 1984, Kashmira Singh v. State of U. P. and others, as leading cases. It would suffice to mention the facts of only one of them.
( 2 ) TRIJUGI Narain Tewari and others took a loan of Rs. 40,000/- from Gorakhpur Kshetriya Gramin Bank for purchasing a tractor, on May, 2,1980, The petitioners were required to deposit the entire amount in six monthly instalments. The payment of the last instalment had to be made by December. 1985. Each instalment was of Rs. 4000/ -. Out of this, Rs. 13,400/- was paid. Under R. 27 of U. P. Agricultural Credit Rules, 1975 (hereinafter referred to as the Rules), a recovery certificate was issued for the recovery of a sum of Rs. 50,559. 80 paise. This certificate was issued in Form "f" under S. 11a of the Act. Before issuing the recovery certificate, no other mode of recovery was resorted to.
( 3 ) CHAPTER 4 deals with recovery of dues by Banks. The relevant sections of this Chapter which provide for the same are Ss. 10a, 10b, 11 and 11a. The main thrust of the argument of the petitioner was that out of these four sections, the procedure of recovering the loan by sending a recovery certificate to the Collector under S. 11a was more harsh and in the absence of any guide line as to when should the procedure of recovery under S. 11a be resorted to, the same is violative of Art. 14 of the Constitution.
( 4 ) SECTION 10a provides that where a bank has granted any amount of financial assistance to any agriculturist on the charge or mortgage of any land or any interest in such land and later on the bank intends to get the property attached and sold through the civil Court for the recovery of its dues, then any law which provides for any restriction on such attachment and sale shall not be effective and would not prevent the bank from applying for sale of the property mortgaged and utilization of the proceeds towards the satisfaction of the bank dues. Section 10b empowers the bank to apply to the Tahsildar for the distraint and sale of the movables charged in favour of such bank. Section 11 deals with recovery of loan of a bank through an application to a Prescribed Authority. An order which is contemplated to be passed by the Prescribed Authority under sub-sec. (1) of S. 11 for sale of the mortgaged property is subject to an appeal under sub-sec. (2) of S. 11. Section 11a can be availed by a Bank for recovering the amount of financial assistance without prejudice to the provisions of Ss. 10b. and 11. What the local principal Officer of the bank is required to do for resorting to S. 11a is to forward to the Collector a certificate of recovery in the manner prescribed, specifying the amount due from the agriculturist, and on receipt of the certificate the Collector shall proceed to recover the amount specified therein together with expenses of recovery, as arrears of land revenue.
( 5 ) SECTION 11a was inserted by U. P. Agricultural Credit (Amendment) Ordinance, 1975, which was promulgated on Jan. 25,1975. This Ordinance was replaced by U. P. Agricultural Credit (Amendment) Act, 1975 (U. P. Act No. 19 of 1975 ). If we examine the background which led to the passing of the Act, we find that in September 1969, the Reserve Bank of India appointed an Expert Group under the Chairmanship of Sri R. K. Talwar, Chairman, State Bank of India, for studying the question of lending by commercial banks to agriculturists. The Expert Group suggested certain measures and also drafted Model Bill. The U. P. Agricultural Credit
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
