S.3(1)(c) of the Public Moneys (Recovery of Dues) Act, 1965 is unconstitutional for violating Article 14 by allowing arbitrary recovery procedures without guiding standards.

1. The petitioner, M/s. Prakash Pottery Industries, obtained a loan from the Uttar Pradesh Government for developing its pottery industry. A deed of agreement dated March 5, 1966, was executed between the petitioner and the State Government. It required the petitioner to apply the loan for purchasing machines for its pottery industry within a period of one year, and provided for repayment of the loan with interest in instalments. Then followed the provisions:
"10. If any of the instalments aforesaid shall be in arrears in whole or in part, the whole sum, then remaining due to the creditor under the deed on account of principal and interest shall thereupon become payable at once and the borrower will be liable to pay the same.
11. For the consideration aforesaid and in further pursuance of the aforesaid agreement the borrower hereby grant and transfer by way of simple mortgage to the creditor, all that property described in the schedule hereto to the intent that the said property hereby mortgaged shall remain and be charged by way of simple mortgage as security for the repayment to the creditor of the said principal money and interest in accordance with the covenants herein contained.
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13. It is hereby agreed and declared that In case of default in payment of instalments of loan and its interest, interest at the rate of 8 per cent, per annum shall be payable, on the such outstanding sum as may become due under the covenants hereinbefore contained, or in case of breach of any of the conditions by the borrower herein contained the creditor may realise the sum to be declared by the said District Magistrate as then due to him on account of this loan as arrears of land revenue by sale of the property hereby given In security without the intervention of Court or any other property of the borrower or in addition, or in the alternative, forthwith enforce against the said property hereby mortgaged or any part thereof all or any of the remedies of the holder of a simple mortgage."

2. It appears that on the ground that the petitioner had failed to comply with the terms of the agreement proceedings for recovery of the amount as an arrear of land revenue were initiated, and on February 14, 1968, the Tehsildar attached the mortgaged property. Thereafter on May 27, 1968, the property was sold by auction. Before the sale could be confirmed, the petitioner filed the present writ petition. It was amended subsequently, and in its present form it prays for the quashing of the notice of demand, the attachment and other consequential proceedings.

3. The petitioners in the connected writ petitions are also persons who took loans from the Uttar Pradesh Government by way of financial assistance in connection with the industries carried on by them. They executed similar agreements. The amounts due from them are also sought to be recovered as an arrear of land revenue.

4. The several writ petitions came on for hearing before a learned single Judge of this Court. It was contended by the petitioners before him that S.3(1)(c) of the Public Moneys (Recovery of Dues) Act, 1965, with reference to which recovery proceedings were being taken, contravened Art.14 of the Constitution and was, therefore, ultra vires. Reliance was placed on Deep Chand Agarwal v. Director of Industries , 1969 All WR (HC) 689 decided by a Division Bench of this Court. The learned single Judge, however, expre