Hon’ble Shishir Kumar, J.—This writ petition has been filed for quashing the recovery citation dated 20.9.2000 issued by respondent No. 3, Annexure-1 to the writ petition. Further prayer is for issuing a writ in the nature of mandamus commanding the respondent-Corporation to act in accordance with the terms of the agreement and either to disburse the remaining term loan to the petitioner or to dispose of the unit of the petitioners.

2. The facts arising out of the writ petition are that the petitioners No. 1 and 2 promoted a private limited company in the name of Jai Santoshi Chemical Industries Private Limited which was incorporated under the Companies Act 1956 with the Registrar of Companies , Kanpur and it was registered. The land belongs to U.P. State Industrial Development Corporation and was leased out to the company set up by the petitioners for a period of 90 years. Respondent No. 4 sanctioned a term loan of Rs. 65 lacs to the unit of the petitioners for the purpose of setting up an unit to manufacture I.P. Great Menthol Crystal, Menthol Flags and D. Menthol Oil. The petitioners in pursuance of the aforesaid agreement had brought in the entire promoters quota of Rs. 55 lacs in January 1994. The respondents disbursed an amount of Rs. 20 lacs out of the total sanction of Rs. 65 lacs. The second installment of Rs. 25 lacs was made to the petitioner on 8.8.1995. The balance amount of Rs. 20 lacs was never disbursed to the petitioner by respondent No. 4. The company to which the loan was granted specifically informed respondent No. 4 to either disburse the balance term loan or to dispose of the unit after adjusting the loan amount. But respondent No. 4 invokes the personal guarantee given by the petitioners. A copy of the same has been filed as Annexure-9 to the writ petition. The petitioners submitted a reply requesting therein for releasing of the plots in favour of the company for the purpose of purchasing 18 machines but the request of the petitioners was not acceded and on 20.9.2000 a recovery certificate was issued invoking the provisions of U.P. Public Money (Recovery of Dues) Act, 1972.

3. The petitioners submit that the recovery certificate which has been issued under the aforesaid Act is not valid. The second question for consideration raised on behalf of the petitioners is that the guarantee executed by the petitioners in favour of the respondent No. 4 has the effect of overriding the statutory provisions of U.P. Public Money (Recovery of Dues) Act, 1972. The third submission made on behalf of the petitioners is whether the recovery certificate, which has been issued, is based on non-application of mind and as such cannot be enforced?

4. The nature of transaction in respect of which the recovery certificate has been issued shows that the loan was granted on security of the properties which stands mortgaged in favour of respondent No. 4. Sub-section (3) of Section 3 empowers the Collector to proceed to recover the amount as arrears of land revenue stated in the certificate and in the circumstances, the said certificate can be issued as have been enumerated in Clauses (a)(b)(c) and (d) of sub-section (1) of Section 3. Section 4 contains the saving clause which inter alia provides that where the property of any person referred to in Section 3 is subjected to any mortgage, charge, pledge or other encumbrances in favour of the State Government, Corporation, a Government company or Banking Company, then the property so mortgaged, charged of the interest of the defaulter therein shall be first to be sold in the proceeding for recovery of the sum due from that person as if it was an arrear of land revenue and any further proceeding can be taken thereafter only if the Collector is satisfied or certified that there is no prospect of realization of the entire sum due through the first mentioned process within the reasonable time. For ready reference Section 4(2) is being quoted below :

“4. Savings—

(1) ..............