IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH

C.W.P. No. 2511 of 2007

DATE OF DECISION: 13.11.2007

Jagdish Rai

……Petitioner

Versus

The Haryana Financial Corporation

……Respondent

CORAM:

HON'BLE MR. JUSTICE M.M. KUMAR

HON'BLE MR. JUSTICE AJAY KUMAR MITTAL

Present:-

Mr. Rajesh Garg, Advocate

for the petitioner.

Mr. Puneet Gupta, Advocate

for the respondent.

JUDGMENT

M.M. KUMAR, J.

This petition filed under Article 226 of the Constitution

prays for quashing notice dated 31.1.2007 (P-5), issued to the

petitioner under Section 32G of the State Financial Corporations Act,

1951 (for brevity, ‘the Act’). The notice has been issued by the

respondent to effect recovery of Rs. 35,49,788/- and another amount

of Rs. 86,24,163/- with further interest at the rate of 9% per annum

from 1.6.2006 and 1.9.2006 respectively, with half yearly rests until

C.W.P. No. 2511 of 2007

realization besides other expenses. It is appropriate to mention that

under Section 32G of the Act, the recovery is to be effected as arrears

of land revenue.

Brief facts may first be noticed. The petitioner has been

a partner in the firm M/s Annapurna Udyog, Kaithal. The aforesaid

firm was sanctioned term loan by the respondent on 28.12.1992,

amounting to Rs.12.15 lacs. Earlier to that another amount of Rs.

4.50 lacs on 10.9.1991 was also sanctioned. According to the terms

and conditions of the loan agreement, the land, plant, building and

machinery (P-1 and P-2) were mortgaged with the respondent. In

addition, the firm had also furnished a collateral security by creating a

mortgage of six marlas of land situated at village Patti Chaudhary,

Tehsil and District Kaithal in order to secure the loan. It is claimed

by the petitioner that against the sanctioned loan of Rs.4.50 lacs, the

firm availed an amount of Rs. 4.32 lacs. The firm also availed an

amount of Rs. 6.87 lacs against the sanctioned loan of Rs. 12.15 lacs.

They failed to repay the loan amount to the respondent as per terms

and conditions. A sum of Rs. 50,582/- was, however, paid back. On

account of the default the respondent took over and sold the factory in

the year 1995 for about Rs. 5 lacs as well as collateral security of six

marlas of land in the year 2000 for a total consideration of Rs.

55,000/-. On 7.6.2005, the petitioner received a notice (P-3) stating

therein that a sum of Rs. 90.86 lacs was due from the petitioner,

which he was to deposit by 1.7.2005. The notice was issued under

the provisions of the Haryana Public Moneys (Recovery of Dues)

2

C.W.P. No. 2511 of 2007

Act, 1979 (for brevity, ‘the 1979 Act’). The aforesaid notice was

challenged by the petitioner by filling C.W.P. No. 11263 of 2005,

which was allowed on 10.10.2006 by a Division Bench of this Court

on the ground that respondent did not have any jurisdiction to issue

such a notice of recovery as per the judgment of Hon'ble the Supreme

Court in the case of Unique Butyle Tube Industries (P) Ltd. v.

U.P. Financial Corporation and others, (2003) 2 SCC 455. This

Court while allowing the writ petition and quashing the recovery

certificate granted liberty to the respondent to proceed afresh against

the petitioner as per law. After the aforesaid decision of this Court,

respondent has issued the impugned notice dated 31.1.2007 by

invoking provisions of Section 32G of the Act requiring the petitioner

to pay approximately a sum of Rs. 1.25 crores.

The petition has been opposed by the respondent by

filling written statement. It has been pointed out in the written

statement that M/s Annapurna Udyog, Kaithal, is a partnership

concern and the petitioner is one of the partner. The firm was set up

for manufacturing Gram Dal and grinding of wheat on job basis. For

the aforesaid purpose, it was sanctioned a loan of Rs. 2.46 lacs and

the availed amount was Rs. 2.00 lacs and that amount was adjusted.

In 1991, the firm added one plant for manufacturing Masri Dal and it

was sanctioned loa