# Man Mohan Rai v. U.P. Financial Corporation Kanpur & Ors

- **Citation:** (2014) 2 ILRA 892
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2014-07-17
- **Case number:** Civil Misc. Writ Petition No. 64875 of 2011
- **Bench:** Krishna Murari, Ashwani Kumar Mishra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/man-mohan-rai-v-u-p-financial-corporation-kanpur-ors-43000
- **Pages:** 7

## Headnote

Constitution of India, Art.-226-Recovery of
loan-advanced by financial corporation
amount exceeding Rs. 10 lacs-can be
recovered under state financial corporation
act-recovery proceeding under Act no.
1972-held-without jurisdicition.

Held: Para-16
From the discussions aforesaid, it is clear
that the recovery in the present case since
is for an amount exceeding Rs.10 lacs,
therefore, it could be resorted to only under
the provisions of the Act 1993 or the
enactment protected by virtue of section
34(2) therein, which includes the 1951 Act,
but omits the 1972 Act. The impugned
recovery certificate issued under the 1972
Act, therefore, is contrary to law and cannot
be
sustained.
Consequently,
the
writ
petition succeeds and is allowed. The
impugned recovery proceedings pursuant
to recovery citation dated 14.10.2010
initiated under the 1972 Act are set aside.
However,
it
will
be
open
for
the
respondent- corporation to proceed in
accordance with law under the Act 1993 or
State Financial Corporation Act, 1951,
which may be available to it.

Case Law discussed:
(2003) 2 SCC 455; 2005 AIR (All) 320; W.P.
No. 33035 of 2004; (2010) 5 SCC 761.

## Text

892 INDIAN LAW REPORTS ALLAHABAD SERIES
whether holding of an oral inquiry is
necessary or not, held that if no oral
inquiry is held, it amounts to denial of
principles of natural justice to the
delinquent employee. The aforesaid view
was reiterated in Subash Chandra Sharma
v. U.P. Cooperative Spinning Mills and
others, 2001(2) UPLBEC 1475 and Laturi
Singh v. U.P. Public Service Trinunal and
others, Writ Petition No. 12939 of 2001,
decided on 6.5.2005."

16. Applying the law, stated herein
above, on the facts of the case at hand, it
is admitted by the respondents that the
petitioner was terminated directly without
following the procedure as provided
under rule 7 of the Rules. Enquiry against
the petitioner was never contemplated nor
charges was framed, major penalty of
termination
was
imposed
on
the
investigation report that is not permissible
under the Rules.

17. The impugned order dated
18.05.2012 passed by respondent no. 4,
Superintendent Engineer, Vidyut Vitaran
Mandal, Banda and order dated 11.10.2012
passed by respondent no. 3, Chief Engineer,
Dakshinanchal Vidyut Vitran Nigam Ltd,
Banda Region Banda, are quashed. The
petitioner shall be reinstated in service with
all consequential benefits.

18. In the facts and circumstances of
the case and for the reasons stated herein
above, the writ petition is allowed.
Counsel fee assessed at Rs. 11,000/-.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.07.2014

BEFORE
THE HON'BLE KRISHNA MURARI, J.
THE HON'BLE ASHWANI KUMAR MISHRA, J.
Civil Misc. Writ Petition No. 64875 of 2011

Man Mohan Rai ...Petitioner
Versus
U.P. Financial Corporation Kanpur & Ors.
 ...Respondents

Counsel for the Petitioner:
Sri A.K. Malviya, Sri N.L. Pandey

Counsel for the Respondents:
C.S.C., Sri A.A. Khan

Constitution of India, Art.-226-Recovery of
loan-advanced by financial corporation
amount exceeding Rs. 10 lacs-can be
recovered under state financial corporation
act-recovery proceeding under Act no.
1972-held-without jurisdicition.

Held: Para-16
From the discussions aforesaid, it is clear
that the recovery in the present case since
is for an amount exceeding Rs.10 lacs,
therefore, it could be resorted to only under
the provisions of the Act 1993 or the
enactment protected by virtue of section
34(2) therein, which includes the 1951 Act,
but omits the 1972 Act. The impugned
recovery certificate issued under the 1972
Act, therefore, is contrary to law and cannot
be
sustained.
Consequently,
the
writ
petition succeeds and is allowed. The
impugned recovery proceedings pursuant
to recovery citation dated 14.10.2010
initiated under the 1972 Act are set aside.
However,
it
will
be
open
for
the
respondent- corporation to proceed in
accordance with law under the Act 1993 or
State Financial Corporation Act, 1951,
which may be available to it.

Case Law discussed:
(2003) 2 SCC 455; 2005 AIR (All) 320; W.P.
No. 33035 of 2004; (2010) 5 SCC 761.

(Delivered by Hon'ble Ashwani Kumar
Mishra, J.)

1. The present writ petition has been
filed challenging the recovery certificate
2 All]. Man Mohan Rai Vs. U.P. Financial Corporation Kanpur & Ors.
893
dated 14.10.2010 issued by the Assistant
Collector II- Grade Jagadhri under the
provisions
of
U.P.
Public
Moneys
(Recovery of Dues) Act, 1972.

2. The crux of the submission is that
the recovery since is of more than Rs.10
lacs, therefore, in view of the law laid
down by the Apex Court in Unique
Butyle Tube Industries (P) Ltd. vs. U.P.
Financial Corporation and others reported
in (2003) 2 SCC 455, the recovery
initiated under the U.P. Public Moneys
(Recovery of Dues) Act, 1972 (hereinafter
referred to as 1972 Act) is without
jurisdiction and the dues could only be
recovered by resorting to provisions of the
State Financial Corporations Act, 1951
(hereinafter referred to as 1951 Act) or
the Recovery of Debts Due to Banks and
Financial
Institutions
Act,
1993
(hereinafter referred to as 1993 Act).

3. The petitioner was a partner in a
firm, which availed of a term loan of Rs.9
lacs from the U.P. Financial Corporation
on 9.10.1996. It is claimed that petitioner
along with his family met with a serious
accident, in which some of his family
members died and petitioner also remain
hospitalized for long periods, as a result
whereof the petitioner could not pay the
dues of the Corporation. The recovery
proceedings were initiated and various
litigations ensued at the instance of the
firm and its partners, which need not be
enumerated in detail. Suffice it to say that
the factory premises of the firm was sold
for a sum of Rs.5,40,000/- for the dues of
the Corporation. The petitioner also
claims to have deposited a sum of
Rs.1,90,065/-.
Petitioner's
residential
house was also auctioned for the dues of
the Corporation for a sum of Rs.32.50
lacs and the same was adjusted for the
dues of the Corporation. The recovery in
question under the Act of 1972 has now
been issued on 14.10.2010 for a sum of
Rs.2,00,24,720/-. The recovery impugned
under the 1972 Act has been challenged
by the petitioner on the ground that the
same is wholly unauthorized in view of
law laid down in Unique Butyle Tube
Industries (P) Ltd. (supra) and the only
course available to proceed for any dues
is by resorting to the 1951 Act or 1993
Act.

4. We have heard Sri N.L. Pandey,
learned counsel for the petitioner, Sri Atiq
Ahmad Khan, learned counsel for the
U.P. Financial Corporation and learned
Standing Counsel for the respondentstate.

5. Learned counsel for the petitioner
has placed reliance upon the judgment in
Unique Butyle Tube Industries (P) Ltd.
(supra) and also upon a Full Bench
judgment of this court in Suresh Chandra
Gupta vs. Collector, Kanpur Nagar
reported in 2005 AIR (All) 320 to contend
that the impugned recovery proceedings
are wholly without jurisdiction.

6. Per contra, Sri Khan, learned
counsel for the Corporation has placed
reliance upon a Division Bench judgment
of this court dated 18.8.2004 in Writ
Petition No.33035 of 2004 'Ajit Kumar
vs. State of U.P. and others' and another
judgment dated 22.8.2008 delivered in
Writ Petition No.36803 of 2007 'M/s Mak
Plastic (P) Ltd. and others vs. U.P.
Financial Corporation and others'. Sri
Khan has also relied upon an order of the
Apex Court dated 21.9.2005 in Paliwal
Glass Works and others vs. State of U.P.
and others, referring the matter to a larger
bench for reconsideration of the decision
894 INDIAN LAW REPORTS ALLAHABAD SERIES
rendered
in
Unique
Butyle
Tube
Industries (P) Ltd. (supra).

7. The Apex Court in Unique Butyle
Tube Industries (P) Ltd. (supra) took note
of the relevant provisions of the 1951 Act,
1972 Act and 1993 Act. Para 7 of the said
judgment, which refers to the relevant
provisions, is reproduced herein below:-

"7. In order to appreciate the rival
submissions a few provisions throwing
light on the controversy need to be noted.

Act

"34. Act to have overriding effect.-
(1) Save as provided under sub- section
(2), the provisions of this Act shall have
effect
notwithstanding
anything
inconsistent therewith contained in any
other law for the time being in force or in
any instrument having effect by virtue of
any law other than this Act.

(2). The provisions of this Act or the
rules made thereunder shall be in addition
to, and not in derogation of, the Industrial
Finance Corporation Act, 1948 (15 of
1948), the State Financial Corporations
Act, 1951 (63 of 1951), the Unit Trust of
India Act, 1963 (52 of 1963), the
Industrial Companies (Special Provisions)
Act, 1985 (1 of 1986) and the Small
Industries Development Bank of India
Act, 1989 (39 of 1989)."

Financial Act

"32-G. Recovery of amounts 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."

U.P. Public Moneys (Recovery of
Dues) Act, 1972

"3. Recovery of certain dues as
arrears of land revenue. - (1) Where any
person is party-

(a)-(b) ---------

(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 any installments
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 of portion or
any installment thereof; or

-------------

(2) The Collector on receiving the
certificate shall proceed to recover the
2 All]. Man Mohan Rai Vs. U.P. Financial Corporation Kanpur & Ors.
895
amount stated therein as an arrear or land
revenue.

(3) No suit for the recovery of any
sum due as aforesaid shall lie in the civil
court against any person referred to in
sub-section (1).

(4) In the case of any agreement
referred to in sub-section (1) between any
person referred to in that sub-section and
the State Government or the Corporation,
no arbitration proceedings shall lie at the
instance of either party for recovery of
any sum claimed to be due under the said
sub-section
or
for
disputing
the
correctness of such claim:

Provided that whenever proceedings are
taken against any person for the recovery of
any such sum he may pay the amount
claimed under protest to the officer taking
such proceedings, and upon such payment
the proceedings shall be stayed and the
person against whom such proceedings were
taken may make a reference under or
otherwise enforce an arbitration agreement in
respect of the amount so paid, and the
provisions of Section 183 of the Uttar
Pradesh Land Revenue Act, 1901, or Section
287-A of the Uttar Pradesh Zamindari
Abolition and Land Reforms Act, 1950, as
the case may be, shall mutatis mutandis
apply in relation to such reference or
endorsement as they apply in relation to any
suit in the civil court."

8. After noticing the provisions
aforesaid, the Apex Court held that
recovery of money under the 1972 Act
was not a mode protected under subsection (2) of section 34 of the 1993 Act
and relying upon the principles of casus
omissus and reading of the statute as a
whole, came to the conclusion that once
the 1993 Act had come into being,
realization of debt covered therein had to
be regulated by the provisions of 1993
Act, or under the enactments which have
been
specifically
protected
therein,
including State Financial Corporation
Act, 1951. It was, therefore, held that
since the provisions of the Act of 1972
were not protected as such the recovery
initiated under the 1972 Act was without
jurisdiction.

9. The Apex Court, however, in a
subsequent order dated 21.9.2005 passed
in Civil Appeal No.5933 of 2005: Paliwal
Glass Works vs. State of U.P. and others,
referred the matter to a larger Bench on
the ground that while deciding the issue in
Unique Butyle Tube Industries (P) Ltd.
(supra), the implication of section 32G of
the Act 1951 and its impact on section
34(2) of the Act 1993 had not been
considered. The operative portion of the
referring order dated 21.9.2005 in Paliwal
Glass Works and others (supra) is
reproduced herein below:-

" We are of the view that the
submissions made on behalf of the parties
need to be considered. The respondents are
correct that the scope of section 32G of the
State Financial Corporation Act, 1951 and its
impact on Section 34(2) of the 1993 Act has
not been considered by the decision in
Unique Butyle (supra). We are therefore of
the view that the question of the scope of
Section 34 of the 1993 Act as determined in
Unique Butyle requires reconsideration. Let
the matters be placed before the Hon'ble the
Chief Justice of India for passing such
appreciate orders as the Hon'ble the Chief
Justice may thinks fit."

10. We have been informed at the
bar that Civil Appeal No.5933 of 2005,
896 INDIAN LAW REPORTS ALLAHABAD SERIES
wherein referring order had been passed
has been finally decided on 26.9.2013. It
transpires that appeal was decided by the
larger Bench of the Apex Court on the
facts noticed in the judgment dated
26.9.2013. It seems that larger Bench did
not consider, in view of the facts and
circumstances noticed in the judgment
dated 26.9.2013, to answer the reference,
and instead proceeded to decide the
matter on merits. The judgment in Unique
Butyle Tube Industries (P) Ltd. (supra),
therefore, continues to hold the field.

11. In a subsequent judgment of the
Apex Court in A.P.T. Ispat (P) Ltd. vs.
U.P. Small Industries Corporation Ltd.
reported in (2010) 5 SCC 761, another
Division Bench reiterated the view
expressed in Unique Butyle (supra). Para
22 of the said judgment is reproduced:-

"22. There is another point and
though it was not raised before the High
Court, we think it proper to mention it
since it is crucial to the proceedings under
Section 3 of the U.P. Public Moneys
(Recovery of Dues) Act, 1972. In a
decision by this Court in Unique Butyle
Tube Industries (P) Ltd. v. U.P. Financial
Corpn. it was held that after the coming
into force of the Recovery of Debts Due
to Banks and Financial Institutions Act,
1993, recourse cannot be taken for
recovery of dues to the provisions of the
U.P. Public Moneys (Recovery of Dues)
Act, 1972 because the U.P. Act does not
find mention in Section 34(2) of the
Recovery of Debts Due to Banks and
Financial Institutions Act, 1993."

12. We have otherwise considered the
submission of Sri Khan that the provisions of
section 32G incorporated under the 1951 Act
permits the recovery to be resorted under the
1972 Act. Section 32G of the 1951 Act
permits the Financial Corporation or any
person authorized by it, in writing in this
behalf, without prejudice to any other mode
of recovery, to make an application to State
Government for the recovery of the amount
due to it, and if the State Government or its
authority, specified by the State in this
behalf, is satisfied, after following such
procedure as may be prescribed regarding the
amount due, it may issue a certificate for that
amount to the Collector, who may then
recover it as arrears of land revenue. From
the materials brought on record, we do not
find that any course contemplated under
section 32G had been resorted to by the
Corporation in the present case, inasmuch as
no application appears to have been
addressed to the State Government for
recovery of the amount due to the
Corporation nor any certificate thereunder
has
been
issued
to
the
Collector.
Requirement of following the procedure, as
may be prescribed, to ascertain the dues does
not appear to have taken place. In such
circumstances,
necessary
ingredients
attracting provisions of Section 32G of the
1951 Act are completely missing and the
Corporation cannot rely upon Section 32G,
to justify the recovery resorted herein under
the 1972 Act. Section 32G permits recovery
by Corporation in addition to any other mode
of recovery which may be available to the
Corporation in accordance with law, and as it
has not been invoked by the Corporation in
the present case, reference of it has no
relevance in the facts of the present case.
Even
otherwise,
the
authoritative
pronouncement in Unique Butyle Tube
Industries (P) Ltd. (supra) continues to hold
the field and the recovery under the Act 1972
cannot be proceeded with.

13. Placing of reliance by Sri Khan,
on the unreported judgment of the
2 All]. Man Mohan Rai Vs. U.P. Financial Corporation Kanpur & Ors.
897
Division Bench in Ajit Kumar (supra)
also has no applicability on the facts of
the present case, inasmuch as the Division
Bench of this court in Ajit Kumar (supra)
after noticing the judgment in Unique
Butyle Tube Industries (P) Ltd. (supra)
refused to interfere in the matter, noticing
the conduct of the petitioner, who had
refused to pay even a part or fraction of
the dues and was only insisting upon plea
that recovery was not permissible, and as
such this Court refused to exercise
discretionary jurisdiction under Article
226 of the Constitution. The judgment
delivered in Writ Petition No.33035 of
2004 'Ajit Kumar vs. State of U.P. and
others' was delivered on the specific facts
and circumstances of the case concerned,
which cannot be treated to be a authority
for a proposition contrary to Unique
Butyle (supra), particularly in view of the
facts of the present case which are quite
different.

14. The other judgment of the
Division Bench of this Court dated
22.8.2008, relied upon by Sri Khan in
Writ Petition No.36803 of 2007 goes to
show that the case was decided, while the
reconsideration of Unique Butyle (supra)
was pending before Hon'ble Supreme
Court. The Division Bench in Writ
Petition No.36803 of 2007 while noticing
the judgment in Unique Butyle (supra)
observed as under:-

"So far as this case i.e. Unique
Butyle (supra) is concerned, the Division
Bench
of
the
Supreme
court
has
categorically held that a Bank or a
financial institution has the option or
choice to proceed either under the State
Act i.e. U.P. Act 1972 or under the modes
of
recovery
permissible
under
the
Corporation Act, 1951."

The observations made by the
Division Bench of this court noted above,
appears to be contrary to law laid down in
para 16 of the Unique Butyle (supra),
wherein the proceedings of recovery
under the 1972 Act had been specifically
quashed. The judgment in Writ Petition
No.36803 of 2007 permitting the recovery
proceedings under the 1972 Act to
continue essentially proceeded on the
premise that the matter is still subjudice
before the Apex Court, pursuant to the
referring order passed in M/s Paliwal
Glass Works (supra) and thus, will have
no relevance now, as the issue of
reconsideration of Unique Butyle (supra)
is no longer pending. The argument of Sri
Khan based upon the judgment delivered
in Writ Petition No.36803 of 2007,
therefore, also cannot be accepted.

15.The judgment in Unique Butyle
(supra) has also been a subject matter of
consideration by the Full Bench of this
court in Suresh Chandra Gupta (supra),
the conclusions wherein have been laid
down in para 23 and 24 of the said
judgment, which are reproduced:-

"23. Our conclusions are as follows:

(a) In case of repugnancy or
inconsistency between the Central Act
under list-1 and the State Act under listII-the Central Act shall prevail.

(b)
The
UP
Public
Moneys
(Recovery of Dues) Act, 1972 is neither
contrary to Section 32-G of the State
Financial Corporation Act, 1951 nor is
there any repugnancy between the two. It
is not void.

(c) The guarantors are covered under
the Recovery of Debt Due to Bank and
898 INDIAN LAW REPORTS ALLAHABAD SERIES
Financial Institution Act, 1993 and
recovery proceedings against them can be
taken under this Act.

(d) Recovery proceedings can neither
be initiated against the principal borrower
nor against the guarantor under the UP
Public Moneys (Recovery of Dues) Act,
1972 if the debt is more than 10 lakhs;
recovery proceedings can only be initiated
under the 1993 Act.

24. In view of our conclusion the writ
petition
is
allowed.
The
recovery
proceedings against the petitioner under UP
Public Moneys (Recovery of Dues) Act,
1972 are quashed. It would be open to the
respondents to initiate recovery proceedings
in accordance with law. Petition allowed."

16. From the discussions aforesaid,
it is clear that the recovery in the present
case since is for an amount exceeding
Rs.10 lacs, therefore, it could be resorted
to only under the provisions of the Act
1993 or the enactment protected by virtue
of section 34(2) therein, which includes
the 1951 Act, but omits the 1972 Act. The
impugned recovery certificate issued
under the 1972 Act, therefore, is contrary
to
law
and
cannot
be
sustained.
Consequently, the writ petition succeeds
and is allowed. The impugned recovery
proceedings pursuant to recovery citation
dated 14.10.2010 initiated under the 1972
Act are set aside. However, it will be open
for the respondent- corporation to proceed
in accordance with law under the Act
1993 or State Financial Corporation Act,
1951, which may be available to it.

17. Subject to the aforesaid
observations made, the writ petition is
allowed. No order is passed as to costs.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.03.2014

BEFORE
THE HON'BLE PRADEEP KUMAR SINGH
BAGHEL, J.

Civil Misc. Writ Petition No. 64991 of 2013

Priti Sharma ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Ganesh Shankar Srivastava
Sri R.D. Kishore

Counsel for the Respondents:
C.S.C., Sri Vivek Varma

Constitution of India, Art.-226-Educationpetitioner through out meritorious studentright from High School to B.A. Part-I and IIin Part III in Sanskrit-I and II paper
secured 65% marks but in III paper only
34 marks-on request of scrutiny-Writ Court
directed to get copy under R.T.I.-and after
fight
in
contempt-proceeding-university
came with case answer sheet weeded outdirection to award average marks issued.

Held: Para-17
In peculiar facts and circumstances of this
case, in my view, the end of justice would
be met if a direction is issued to the
University to award average marks to the
petitioner in IIIrd Paper of Sanskrit in
which she has been awarded only 34
marks. Accordingly a direction is issued
upon the University to award average
marks to the petitioner in the IIIrd Paper of
Sanskrit within two months from the date
of communication of this order.

Case Law discussed:
(2011) 8 SCC 497); (2009) 1 SCC 599.

(Delivered by Hon'ble Pradeep Kumar Singh
Baghel, J.)