JUDGMENT Janardan Sahai and S.P. Mehrotra, JJ.
1. The petitioner had taken a term loan of Rs. 5,85,000/- and soft loan of Rs. 2,26,000/- from the U.P. Financial Corporation. The petitioner defaulted in the payment of the loan and the U.P. Financial Corporation proceeding under Section 29 of the State Financial Corporation Act took possession of the unit on 2.5.01. It appears that in the year 2004 an FDR which was pledged as collateral security with the U.P. Financial Corporation was got encashed by it for a sum of Rs. 2,98,000/-. The U.P. Financial Corporation has issued a recovery certificate under the provisions of U.P. Public Money (Recovery of Dues) Act, 1972. for recovering the balance dues by way of arrears of land revenue. In consequence a citation dated 7.12.07 was issued by the Tehsildar in which a sum of Rs. 2,11,640-82/- has been demanded from the petitioner. This citation dated 7.12.07 has been challenged by the petitioner.
2. We have heard Sri Shashi Nandan learned Sr. Counsel assisted by Sri Saurabh Srivastava counsel for the petitioner, Sri. S.K. Srivastava for the U.P. Financial Corporation and the learned Standing Counsel.
3. The submission of the petitioner's counsel is that the loan which was advanced to the petitioner was not under any state sponsored scheme and therefore the provisions of the U.P. Public Money (Recovery of Dues) Act, 1972 would not be attracted for recovery of the loan. Such a loan submits the petitioner's counsel, can be recovered only under the provisions of The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or under the provisions of Section 32 G of the State Financial Corporation Act. The petitioner has not disputed the liability to pay the sum of Rs. 21,11,640/- and indeed Sri Shashi Nandan counsel for the petitioner did not contend before us that the amount which is being sought to be recovered is in excess of what was due. He submits that even under U.P. Public Money (Recovery of Dues) Act, 1972 the amount is to be recovered by sale of the mortgaged property. We shall first take up the last contention. The petitioner has filed a copy of the report of the Govt. valuer dated 5.2.08 in which the value of the land is shown as Rs. 2,79,600/-, that of the building is shown as Rs. 7, 93,781.02 Paisa and that of the machinery has been shown as 1,77,184/-. Total valuation of the mortgaged property even according to the valuer's report filed by the petitioner is Rs. 12,50,565/-. It is a well known fact of which judicial notice may be taken that the properties which are brought to sale by public auction do not fetch the full market value of the property for the obvious reason that an auction sale is liable to be challenged and its fate is uncertain. Thus even if resort is made to recover the dues by sale of the mortgaged property a very substantial balance is sure to remain, the mortgaged property being insufficient to satisfy the liability. The Corporation would therefore have to proceed against other properties of the borrower.
4. In the supplementary counter affidavit filed by the U.P. Financial Corporation several advertisements inviting offers for the sale of the mortgaged properties have been annexed. These are the notices dated 11.1.02, 4.9.05 and 6.5.06 which show that at different points of time the U.P. Financial Corporation made efforts for sale of the property but sufficient offers were not received by it. It was in these circumstances that the recovery certificate was issued by the U.P. Financial Corporation and we find no illegality in its issuance. The issuance of the recovery certificate however by itself does not mean that the Collector would not proceed against the mortgaged property. A recovery certificate under the U.P. Public Money (Recovery of Dues) Act is issued under Sub-section (1) of Section 3. The requirement to recover the dues first from the mortgaged property is provided under Clause (b) of Sub-section 2 of Section 4 of the Act. The occasion to proceed against the mortgaged property or against any other property would arise only after the recovery certificate is sent to the Collector and he proceeds to realise the dues as arrears of land revenue. If the Collector certifies that the entire loan cannot be recovered from the mortgaged property he can proceed to recover the dues from other property. In the present case the value of the mortgaged properties is insufficient to meet the liability. Moreover the petitioner has not filed any proclamation of sale which may indicate that steps are being taken to sell property other than those which were mortgaged.
Section 32G of the State Financial Corporation Act provides for one of the modes for recovery of the dues of the Corporation. Section 32G is quoted below:
Section -32(G):- Recovery of amount due to the Financial Corporation as an arrear of land Revenue. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any Industrial concern, the Financial Corporation or any person authorized by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of Land Revenue.
5. Thus it is clear from the provisions of Section 32G that in order to recover the dues under that provision the U.P. Financial Corporation is required to move the State Government which is required to satisfy itself regarding the existence of the dues and thereafter issue a certificate for recovery of that amount to the Collector as arrears of land revenue. It is manifestly clear from the provisions of Section 32G of the Act that the purpose of the exercise which the State Government is required to perform is for determination of the liability. In this case there is no dispute about the liability of the petitioner and as such reference to the State Government on the point of determinating of the liability would be a mere academic exercise for even under the provisions of Section 32 G the recovery has to be made as arrears of land revenue. Counsel for the petitioner placed reliance upon certain decisions which hold that the dues of the U.P. Financial Corporation cannot be recovered under the U.P. Public Money (Recovery of Dues) Act but can be recovered either under the provisions of Recovery of Debts Due to Bank & Financial Institutions Act, 1993 or under the provisions of the Act. The cases are , Unique Butyle Tube Industries Pvt. Ltd. v. U.P. Financial Corporation; Suresh Chand Gupta v. Collector, a decision of a Full Bench of this Court in writ petition No. 8386 of 2002 and Iqbal Naseer Usmani v. Central Bank of India . Another division bench of this Court in Writ petition No. 9252 of 2006 M/s Sharda Glass Industries v. State of U.P. had occasion to go into this question. It was held that where the liabilities are not in dispute a writ court which is a court of equitable jurisdiction is not bound to interfere in the recovery of dues as arrears of land revenue even though that course may not be available to the U.P. Financial Corporation under the law. A large number of decisions have been considered in that case, namely, , Andhra Pradesh State Financial Corporation v. GAR Re-Rolling Mills , M.P. Mittal v. State of Haryana and Ors. In M.P. Mittal's case the apex court held:
The appeal arises out of a writ petition, and it is well settled that when a petitioner invokes the jurisdiction of the High Court udder Article 226 of the Constitution, it is open to the High Court to consider whether in the exercise of its undoubted discretionary jurisdiction, it should decline relief to such petitioner if the grant of relief would defeat the interest of justice. The Court always has power to refuse relief where the petitioner seeks to invoke its writ jurisdiction in order to secure dishonest advantage or perpetuate an unjust gain. This is a case where the High Court was fully justified in refusing relief", Similar view has been taken in State of Maharasthra v. Prabhu ; Chandra Singh v. State of Rajasthan , ONGC Ltd. v. Sendhabhai Vastram Patel and Ors. (2005) 6 SCC 454, it was held;
It is now well settled that the High Court and the Supreme Court while exercising their equity jurisdiction under Articles 226 and 32 of the Constitution as also Article 136 thereof may not exercise the same in appropriate cases. While exercising such jurisdiction, the superior courts in India may not strike down even a wrong order only because it would be lawful to do so. A discretionary relief may be refused to be extended to the appellant in a given case although the Court may find the same to be justified in law (See S.D.S. Shipping (P) Ltd. v. Jay Container Services Co. (P) Ltd. ).
6. The general principle in the aforesaid cases finds support in the Maxim that he who seeks equity must do equity. This maxim of the equity courts is now well recognized and is the basis behind many a statutory provision. In fact we made an offer to the petitioner's counsel that if the petitioners want to pay the amount in instalments on account of any hardship the request may be considered but the counsel for the petitioner declined and said that the respondents must be bound to follow the procedure which is provided under law. If the debtor has the means or the resources to pay but does not pay and challenges the recovery on the ground that the statute does not allow recovery as arrears of land revenue court exercising equitable jurisdiction can refuse relief. In Lodge v. National Union Investment Co. Ltd. (1907) 1 Ch 300 the contract of a person who had borrowed money from an unregistered money lender was illegal and void under the Money Lundors Act, 1900 but his action for delivery up of the securities mortgaged by him was dismissed on the ground that he should repay the money as he was seeking an equitable relief. This decision does not lay down any wide and general principle says Snell in Principles of Equity 2828 Edition, 31 but can in our opinion be applied to a case like the present one where a discretionary equitable and extraordinary remedy under Article 226 is being claimed. The petitioner no doubt is basing his case upon statutory provisions and not on equity but he is seeking a discretionary equitable remedy under Article 226. He must therefore be ready to perform his pan of the obligation and must put forward before the court the material to indicate the manner in which he proposes to clear of the liability or furnish such proof that he has no assets and means to pay any amount. The latter situation has been taken care of in Rule 251 of the U.P. Zamindari Abolition & Land Reforms Rules which provides that detention in civil prison can be resorted to if the officer who issued the warrant is satisfied that it would compel the defaulter to pay the dues. This rule contemplates by implication an inquiry whether the defaulter has means to pay. In view of the fact that the liability in this case is not disputed and the value of the mortgaged properties is quite insufficient to meet the liability and the non compliance of the procedure provided under Section 32G of the Act viz., the omission to apply for a certificate of the State Govt. is only academic because the exercise which the State Government is required to perform is for determining the liability which in this case is not disputed no purpose would be served by relegating the Corporation to apply to the State Govt. under Section 32G of the Act when under that provision too the recovery is to be made just in the same manner as is being made here as arrears of land revenue.
7. Counsel for the petitioner submitted that Iqbal Naseer Usmani's case covers this case on all fours. We have considered the said decision. That was a case in which a decree was passed by the civil court and instead of proceeding to execute the decree the corporation had resorted to the provisions of the U.P. Public Money (Recovery of Dues) Act. The High Court took the view that as public money is involved the court should not interfere. Upsetting the decision of the High Court the apex court held that while the High Court's sentiments in the matter of recovery of dues may be respected but the law cannot be bye passed. In our opinion the case is distinguishable. The procedure for recovery of money by execution of a decree is quite different from that for recovery as arrears of land revenue. That apart there are distinct remedies provided against orders passed by execution courts which are not available where recovery is made as arrears of land revenue. Recovery of dues under Section 32G is also as arrears of land revenue. Moreover we are not deciding this case on the basis that what is involved is public money. We are rather declining to interfere on the ground that the liability is not disputed and a certificate of the State Government which distinguishes the procedure under Section 32G as we have seen is only for the purpose of determining the liability. Moreover the jurisdiction we are exercising under Article 226 is an equitable jurisdiction and we are of the view that on facts the petitioner is not entitled to the equitable relief. For these reasons, we find no merit in this petition. Dismissed.