K.M. Josesph, C.J. (Oral)

Appellant is the writ petitioner. Appellant is a Company, which had taken a contract for collection of entry fee in the city of Nainital at two points. According to the appellant, during the continuance of the contract, certain disputes arose. In terms of the arbitration clause, the District Magistrate was appointed by Annexure No. 3 order. At the time when the writ petition was filed, it appears that there was no award. Appellant submitted Annexure No. 4 claim before the Arbitrator, which is alleged to be pending in the writ petition. While so, recovery proceedings were taken for an amount of ‘ 14,88,500/- together with recovery charges. Appellant moved an Application under Section 9 of the Arbitration and Conciliation Act, 1996 (Annexure No. 7). Objections were filed to the same and the same was rejected by Annexure No. 9 Order. Annexure No. 10 is the appeal carried before this court. The same was rejected by order dated 22.02.2011 (Annexure No. 11). Thereafter, appellant approached this Court by filing the writ petition seeking to quash the recovery notice dated 18.05.2010 and the letter dated 22.05.2010 of respondent No. 3 forwarding the same to the Deputy Commissioner.

2. The learned Single Judge found favour with the contention of the appellant that the respondent Municipal Board is not a notified corporation under the U.P. Public Moneys Recovery of Dues Act, 1972 (hereinafter referred to as the “Act”); but, noted that there is no equity in favour of the appellant, inasmuch as, the amounts sought to be recovered are amounts, which are not in dispute. The learned Single Judge, placing reliance on the judgment of a Bench of the Allahabad High Court in Rakesh Shukla vs. District Magistrate/SDM, Phulpur, Allahabad, reported in 2002(2) UPLBEC 1939, dismissed the writ petition. Feeling aggrieved, appellant is before us.

3. We have heard Mr. Sudhir Kumar, learned counsel appearing for the appellant; Mr. D.S. Patni, learned counsel appearing on behalf of respondent Nos. 1 & 2 Municipal Board; and Ms. Anjali Bhargava, learned Brief Holder appearing for the State.

4. Learned counsel for the appellant would submit that the proceedings taken under Section 9 culminated in their being rejected on the basis that the amounts sought to be recovered by the recovery proceedings were not subject matter of the arbitration proceedings. He would also point out that, in fact, in the judgment in Iqbal Naseer Usmani vs. Central Bank of India and others, reported in (2006) 2 SCC 241, which was in fact referred to by the learned Single Judge, there are observations, which should conclude the issue at hand. He drew our attention to paragraph 7 of the said judgment, which reads as follows:

“7. Upon a perusal of the record, and after hearing learned counsel, we are not satisfied that the case of the appellant falls within the parameters of Section 3 of the Act. Consequently, the Revenue Officers have neither the authority to issue any certificate for recovery, nor the power to take any steps for recovery of the decretal amount. The High Court seems to have been impressed by the fact that the money was public money, and that in order to encourage development in the country, banks are providing loan facilities to persons who are willing to purchase vehicles and further that if such a loan is treated as a commercial loan, it would be difficult for the bank to recover the same by filing a civil suit, which takes years and years to decide. According to the High Court “the money of the bank and financial institutions is public money, which should be in circulation, otherwise the bank and depositors will suffer”. We are afraid that while this may be very good sentiment, it cannot apply in the face of Section 3 of the Act for the reason that Section 3 does not envisage the provisions of the Act being utilized for recovery of every loan taken. Section 3(1)(b) permits this to be done only in respect of loans taken u