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2010 Supreme(MP) 982
MADHYA PRADESH HIGH COURT AT JABALBUR BENCH
Sanjay Yadav, J.
Chanderkant Gupta - Appellant
Versus
M.P.State Industrial Development Corporation and Others - Respondent
W. P. Nos. 12005 of 2005 and 667 of 2010
Decided On : 09-04-2010
In W.P. No. 12005 of 2005 :For petitioner:Smt. Nandita Dubey ; For respondent No.1:Amit Seth ; For respondent Nos. 2 to 4: Sudesh Verma
In W.P. No. 667 of 2010 :For petitioner:S.A.Dharmadhikari ; For respondent Nos. 1, 2, and 4:Harish Agnihotri ; For respondent No.3: Amit Seth
The main legal point established in the judgment is that the SIDC, as a Financial Corporation, had the authority to resort to the provisions of Adhiniyam 1987 for recovery of dues, but the notice for arrest and committal to civil prison must be supported by law.
Headnote:
Revenue Recovery Proceedings - SIDC - Adhiniyam 1987 - Section 29 of the State Financial Corporation Act, 1951 - Recovery of Debts Due to Banks and Financial Institution Act, 1993 - M.P. Lok Dhan (Shodhya Rashiyon ki Vasuli) Niyam, 1988 - Unique Butyle Tube Industry (P) Ltd. vs. U. P. Financial Corporation and others, (2003) 2 SCC 455 - Santosh vs. Central Bank of India, 2003(2) MPLJ 246 = 2004(1) JLJ 158 - Lucknow Development Authority vs. M. K. Gupta, 1994 MPLJ (SC) 461 = AIR 1994 SC 787 - Daman Singh and others vs. State of Punjab and others, AIR 1985 SC 973 - Ramsharan Mittal and others vs. The State of M. P. and others, W. P. 436/2004
Fact of the Case:
Revenue recovery proceedings were initiated against the petitioners by the SIDC under Adhiniyam 1987 and section 29 of the State Financial Corporation Act, 1951. The petitioners sought quashment of the Revenue Recovery Certificate and the action initiated thereunder.
Finding of the Court:
The court found that the SIDC had the power to resort to the provisions of Adhiniyam 1987 for recovery of outstanding dues. However, the notice for arrest and committal to civil prison issued by the Sub Divisional Magistrate was set aside as it was not supported by law.
Issues: The issues were whether the SIDC had the authority to initiate recovery proceedings under Adhiniyam 1987 and whether the notice for arrest and committal to civil prison was legally valid.
Ratio Decidendi: The court held that the SIDC, as a Financial Corporation, had the power to resort to the provisions of Adhiniyam 1987 for recovery of dues. However, the notice for arrest and committal to civil prison was found to be unsupported by law and was set aside.
Final Decision: W.P. No. 12005/2005 was partly allowed, and W.P. No. 667/2010 was dismissed. No costs were awarded.
JUDGMENT :
As the common question of law arises in both these petitions, this order shall govern the disposal of W.P. 12005/2005 and W.P. No. 667/2010.2. Revenue Recovery Proceedings, initiated against the petitioner at the instance of respondent No. 1, M. P. State Industrial Development Corporation Ltd. (referred to as S.I.D.C) is being challenged in this petition under Article 226 of the Constitution of India.
3. Similar is the challenge in W.P. No. 667/2010, wherein series of notices dated 5-12-2009, 18-8-2008, 13-9-2004 and 31-12-2004 are being questioned.
4. In W.P. No. 12005/05, facts briefly are that, financial assistance was provided by the SIDC to M/s Malanpur Leathers by way of term loan of Rs. 90 lacs in the year 1992. The petitioner herein stood a guarantor for the said term loan facility. And for due repayment of the outstanding in the term loan account mortgaged his property as security.
5. The company faltered in making due repayment resulting in huge outstanding to the tune of Rs. 75,00,00/-.
6. In order to recover dues outstanding, respondent No. 1 resorted to proceedings under the Madhya Pradesh Lok Dhan (Snodhya Rashion ki Vasuli) Adhiniyam 1987; whereunder R.R.C on 20-8-2001 was issued and was forwarded for execution to the Divisional Commissioner, Co-ordination Branch, Head Quarter, Tees Hazari on 26-12-2001; wherefrom, it was sent to the Additional District Magistrate, District South New Delhi.
7. The petitioner was thereafter served with show cause notice for recovery on 15-7-2005. It was mentioned therein that since the petitioner had failed to deposit the amount of Rs. 75,00,00/- by 11-11-2004, why should he be not arrested and be committed to civil prison.
8. Brief facts in W.P. No. 667/2010 are that financial assistance was provided by the SIDC to the petitioner by way of term loan of Rs. 70 lakhs to set up a unit for manufacturing gram flour (Besan) Mill with a fineness of 300 Mesh, capacity of 50 tonnes per day at Khasra No. 541/2 and 535/2 at village Chirahkala, Tahsil Gadarwara, district Narsinghpur (M. P.).
9. The petitioner company faltered in making due repayment resulting in huge outstanding to the tune of over Rs. 5 crores. The SIDC besides resorting to an action under section 29 of the State Financial Corporation Act, 1951, proceeded to recover the dues outstanding by resorting to the measures under Adhiniyam, 1987 and issued the revenue recovery certificate which are being questioned in the present writ petition.
10. Being aggrieved of said action, the respective petitioners have filed these petitions seeking quashment of the Revenue Recovery Certificate and the action initiated thereunder.
11. Contention put forth by learned counsel for respective petitioners is that (i) the respondent, i.e., SIDC being not a corporation notified under section 2(c) of the Adhiniyam 1987, it is beyond its powers to resort to the recovery proceedings under said Adhiniyam and (ii) the notice for arrest and a committal to civil person in execution of the R.R.C is patently erroneous as there is no provision under the Adhiniyam, 1987 or the Rules made thereunder which contemplates such an action. It is further contended in W.P. No. 667/2010 that the SIDC having resorted to the remedy under section 29 of the Act of 1951 is prohibited by virtue of proviso to section 5 of Adhiniyam 1987 which stipulates that, the authority to which the sum is due shall take recourse to the provisions of only one law at a time for its recovery. It is also contended that the issue as to whether the 'banking company' after advent of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (referred to as Act of 1993) the Banking Company can resort to the provisions under Adhiniyam 1987 has been settled at rest by a judgment rendered in Santosh vs. Central Bank of India, 2003(2) MPLJ 246 = 2004(1) JLJ 158. It is further contended that it is only by virtue of a notification dated 29-1-2009 issued by the State in exercise of its p
