# M/s Maheshwari Brothers v. The Chairman & M.D., U.P. State Textile Co. & others

- **Citation:** (2000) 3 ILRA 275
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 1998-10-24
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-maheshwari-brothers-v-the-chairman-m-d-u-p-state-textile-co-others-39238
- **Pages:** 5

## Text

275 INDIAN LAW REPORTS ALLAHABAD SERIES [2000
The
writ
petition,
accordingly,
succeeds and is allowed. The order of the
District Magistrate dated 3rd July, 2000 is
quashed.

10. It is, however, made clear that
we have not made any adjudication on the
merit of the election and it will be open to
respondent no. 4 to pursue the remedy by
filing an election petition, if he is so
advised.
Petition Allowed.

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By the Court

1. In the instant writ petition the
petitioner has prayed for quashing of the
impugned certificate dated 15.10.1998
(Annexure No. 6) issued by respondent
no.
1
against
the
petitioner
and
forwarding
letter
dated
24.10.1998
(Annexure No. 6-A) issued by respondent
no. 2 and recovery notice dated 5.6.1999
(Annexures No. 5 &5-A issued by
respondent no. 3 to the petitioner in
relation to recovery of the amount of Rs.
3,14,642 plus Rs. 2.00 with its all
consequential
effects
throughout
whatsover with immediate effect.

2. The petitioner has also prayed for
issuing
mandamus
commanding
the
respondents (I) not to recover the alleged
amount of Rs. 3,14,642.39 contained in
the recovery certificate as well as
3All] M/s Maheshwari Brothers V. The Chairman & M.D., U.P. State Textile Co. & others 276
recovery notice from the petitioner either
in case or by way of making attachment
of his movable and immovable property
and selling the same in the auction
proceedings,
(ii)
to
decide
his
representation dated 9.8.99 contained in
Annexures no. 7 & 7-A to the Writ
petition, and (iii) to refund the amount of
TDR/Fixed Deposit Amount of Rs.
50,000/- with the interest at the present
bank rate accrued thereupon for last
several years and further to pay the
commission and loss suffered by the
petitioner to the tune of Rs. 2 lacs due to
non-performance of the contract no. 12
dated 16.11.1991 (Annexure no. 7-A) by
respondent no. 1.

3. The petitioner has further prayed
for withdrawal of the recovery certificate
dated 15.10.1998 and recovery notice
dated 5.6.1999 with its all consequential
effects.

4. The fact interalia relating to the
writ petition are that in the year 1984 the
petitioner was appointed as an authorised
dealer by respondent no. 1 and an
agreement was executed containing the
terms and conditions of the business
agreed to be carried on between the
petitioner and respondent no. 1. On
22.9.1995 respondent no. 1 issued a
demand notice and on 16.10.1995 a legal
notice was issued to the petitioner
whereby a sum of Rs. 1,19,619.05 and
Rs.1,95,021.34 total Rs. 3,14,640-39 were
shown due against the petitioner. On
23.11.1995 petitioner submitted his reply
to the demand notice and the legal notice
through his lawyer. A recovery certificate
was issued on 15.10.1998 by respondent
no. 1 to the Collector/Dy. Commissioner,
District Mumbai through the Collector
Kanpur Nagar which was forwarded by
respondent no. 3 through its letter dated
24.10.1998. On 5.6.1999 respondent no. 3
issued recovery notice to the petitioner
claiming a sum of Rs. 3,14,642.39 plus
Rs.2.00 in pursuance to the recovery
certificate
dated
15.10.1998.

The
petitioner
on
19.8.1999
filed
his
representation
before
the
Manager
Marketing
to
the
department
of
respondent no. 1 annexing therewith a
copy of contract no. 12.

5. It appears from the record that the
matter arises out of a contract of
dealership by which the petitioner was
appointed as an authorised dealer and an
agreement had been entered into between
U.P. State Textile Corporation Limited
and
M/s
Maheshwari
Brother.
The
relevant clauses of the agreement arrest
out hereinbelow:

"3. That the Corporation shall supply the
goods to the Dealer at their ex-mill price
exclusive of excise duty and any other
taxes imposed from time to time. But
endeavour shall be made to affect supplies
in time but the Corporations shall not
accept any liability for unforced delay in
dispatch of goods or inability to supply
the goods ordered by the dealer for
reasons beyond its means.
4. That the goods will be supplied on the
terms and conditions of the sales contract
from time to time, read with the
conditions contained herein provided that
in case of inconsistency between the two,
the provisions of this contract shall
prevail.

5.That the Corporation's dealings with the
dealer shall be on principal to principal
basis and the Corporation shall not in any
way be responsible for the dealers
dealings with the third parties.
277 INDIAN LAW REPORTS ALLAHABAD SERIES [2000
6. That the Corporation will supply goods
to the dealers against payment in cash by
bank draft or by documents drawn
through or bankers at respective mills as
the case may be, depositing upon the
policy in force from time to time. That in
case the documents are drawn on D.D.
limit, any bank commission, interest or
other charges that may be charged by the
bankers would be borne by the dealer.

7. That in case documents are drawn on
bill collection basis or sent to M.O. direct
for collection, interest on bill amount @
20% per annum shall be payable by the
dealer from the day following the date of
the bill upto the date of actual payment.

8. That in case the documents are
received back unpaid from the bankers or
the documents sent to Head Office direct
for collection, are not paid within 15 days
of the intimation to the dealer, an interest
or bill amount @ 24% p.a. shall be
payable by the dealer from the day
following the date of the bill upto the date
of actual payment.

9. If the documents are not retired by the
buyers in time or buyers do not take
delivery or goods offered to them after
making payment, the company reserves
the right to cancel the contract without
further reference to the buyers. If any loss
is occurred tot he Company, the same
shall be recoverable from the buyers but
the buyers will not be entitled to any
difference in price on such cancellation.

10. That on satisfactory performance, the
Corporation shall allow incentive bonus at
the rates decided by the Sales Committee
from time to time.

13. That the Corporation shall have the
right to sell directly or indirectly sized
yard on beams and/or any other yarn from
time to time or use the same themselves in
processing as weaving etc., without any
reference to the said dealer, who shall not
be entitled to any incentive whatsover on
such transactions.

17. That in the event of breach of any
terms mentioned in this agreement, the
Corporation shall be entitled to claim
damages from the loss suffered apart from
forfeiting the security. If the loss suffered
is less than the amount of security deposit
then only security deposit shall stand
forfeited.

24. That all questions and disputes
relating to or arising out of the contract,
whether during the continuance of the
contract or after its completion or
abandonment
shall
be
referred
to
Chairman, U.P. State Textile Corporation
Ltd. or his nominee as sole Arbitrator and
his decision upon such dispute or
difference shall be final and binding on
the parties."

6. Learned Advocate for the
petitioner has referred to Section 3 of the
Uttar Pradesh Public Moneys (Recovery
of Dues) Act, 1972 (hereinafter referred
to as 'the act') and has submitted that the
said recovery proceedings as arrears of
land revenue can be initiated only under
the said section which is not applicable in
the instant case. The contention of the
writ petitioner is that there was no direct
loan transaction between respondent no.1
and the writ petitioner. The writ petitioner
was
appointed,
according
to
the
agreement on the basis of which loan was
advanced, to act as authorized dealer and
as such, the dealer-writ petitioner, is
3All] M/s Maheshwari Brothers V. The Chairman & M.D., U.P. State Textile Co. & others 278
supplying goods to different parties. The
provision contained in section (3) (1)(a)
pertains to agreement relating to hire
purchase of goods sold to the dealer by
the State Government or the Corporation,
by way of financial assistance. The writ
petitioner is neither carrying on business
on hire purchase nor the goods have been
sold to the petitioner by the Corporation
by way of financial assistance. Subsection (1)(b) of section 3 is also not
applicable,
according
to
the
writ
petitioner, since the agreement in the
instant case, is not relating to a loan,
advance or grant or relating to credit in
respect of, or relating to hire purchase of
goods sold to the petitioner by a banking
company or a Government company, as
the case may be, under the State
sponsored scheme, Sub-section (1) of the
said Act is set out herein below:
'3(1) Where any person is party -
(a) to any agreement relating to a loan,
advance or grant given to him or relating
to credit in respect of, or relating to hire
purchase of, goods sold to him by the
State Government or the Corporation, by
way of financial assistance, or
(b) to any agreement relating to a loan,
advance or grant given to him or relating
to credit in respect of, or relating to hire
purchase of goods sold to him, by a
banking company or a Government
company, as the case may be, under a
State sponsored scheme, or
(c) to any agreement relating to a
guarantee given by the State Government
or the Corporation in respect of a loan
raised by an industrial concern, or

(d) to any agreement providing that any
money payable thereunder to the State
Government (or the Corporation) shall be
recoverable as arrears of land revenue,
and such person-
(i) makes any default in repayment of the
loan or advance or instalment thereof, or
(ii) having become liable under the
conditions of the grant to refund the grant
or any portion thereof, makes any default
in the refund of such grant or portion or
any instalment thereof, or
(iii) otherwise fails to comply with the
terms of the agreement.
then in the case of the State Government,
;such officer as may be authorized in that
behalf by the State Government by
notification in the official Gazette, and in
the case of the Corporation or a
Government
company
the
Managing
Director(or where there is no Managing
Director then the Chairman of the
Corporation, by whatever name called)
thereof, and in the case of a banking
company, the local agent thereof, by
whatever name called, may send a
certificate, to the Collector, mentioning
the sum due from such person and
requesting that such sum together with
costs of the proceedings be recovered as if
it were an arrears of land revenue."

7. In our view there is no dispute
that the writ petitioner has taken the
goods from the State Textile Corporation
Ltd. and is liable to pay the amount due
and payable for the same. The corporation
in the instant case is in the position of a
creditor and the writ petition is in the
position of debtor in respect of the textile
goods received by the writ petitioner from
the Corporation and the writ petitioner is
under an obligation to make payment for
the same. It cannot be disputed that the
goods have been sold to the writ
petitioner and the writ petitioner has not
paid the amount, which has become due
and payable in respect of the said goods.
It appears that there is an agreement,
279 INDIAN LAW REPORTS ALLAHABAD SERIES [2000
 which relates to goods sold to the
writ petitioner on principal to principal
basis and for the amount due in respect of
these goods, the Corporation can enforce
the same as creditor pursuant to the
agreement mentioned herein before. It
also appears from Section 3(1)(d) of the
Act if any money is due and payable to
the State Government or the Corporation,
the same shall be recoverable as arrears of
land revenue. On proper interpretation of
Section 3(1) of the said Act it appears that
since the money is recoverable on the
basis of the goods sold to the writ
petitioner,
the
U.P.
State
Textile
Corporation can claim as creditor in terms
of Section 3(1) of the act. The said Act
has been enacted for the purpose of
speedy recovery of debts and as such we
are of view that the Corporation is right in
issuing the certificate for recovery of the
dues in the manner as it has done in the
instant case. Our view also finds support
from the decision of a Division Bench of
this Court in the case of M/s Jaishree
Poultry Feed Industries versus State of
U.P. and others (Allahabad Civil Journal
1991, Page 47).

8. Considering all aspects of the
matter, we are in view that there is no
scope for quashing the certificate as
prayed for by the writ petitioner. There
appears no merit in the writ petition and
the petition is liable to be dismissed.

In the result the writ petition fails
and is hereby dismissed. There shall be no
order as to costs.
Petition Dismissed.

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