# STATE OF PUNJAll & ORS v. s. DHARAM SINGH (DEAD) BY SUCCESSOR DESA SINGH.& ANR

- **Citation:** [1985] Supp. 2 S.C.R. 705
- **Court:** Supreme Court of India
- **Decided:** 1985-08-29
- **Case number:** Civil Appeal No. 625 .of 1972
- **Bench:** E.S. Venkataramiah, R.B. Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-punjall-ors-v-s-dharam-singh-dead-by-successor-desa-singh-anr-9009
- **Pages:** 6

## Headnote

70)
Punjab Land Revenue Act, section 67(b), scope of - Arrest
and detention of the borrowers' person to realise the loan amount
when can be resorted to under clause (b) of section 67 of Punjab·
A
ll
Land Revenue Act - Whether could be resorted to by-passing the
c
contractual remedy open under the loan Agreement.
Respondent No.2 a registered House Building Society with 32
members entered into an agreement with the Government of Punjab
whereunder the Government agreed to advance a loan of Rs.
1,02,000 to its members under the lower income group housing
D
scheme for the purpose of constructing residential houses in Dera
Baba Nanak. As per the written agreement the loan advance was
payable in three instalements. The first instalment of Rs. 20400
· was to be paid by the Govt. on the execution of the deed of
agreement, the second instalment of Rs. 51000 to be paid on the
completion of the houses to the plinth level and the last instalment of Rs. 30, 600 on the completion of the house to the roof
E
level. The society on the other hand had to mortgage the sites
together with the houses erected or to be erected thereon to the
govt. as security for the repayment of loan and
the amount of
loan was to be paid ·back in several instalments. Pursuant to the
agreement the Government issued a cheque for Rs.71,400 towards
the first and second instalments. The third instalment was not
F
paid for failure to furnish the required certificate that the
houses had reached the roof level. The members of the society
also failed to repay the loan. ln the situation, a notice was
issued by the Collector of the District to the members of the
society to deposit the overdue ins.talments of loan and to appear
before the Deputy commissioner, Gurdaspur on August 24, 1964 to
G
show cause why the entire amount should not be recovered from
them by means of arrest and detention. The society challenged the
\ notice by filing a writ petition in the High Court. Its stand was
tbat in the absence of any such stipulation in the loan agreement
the amount could ::wt be recovered by arrest of the members of the
H
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c
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E
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706
SUPREME COURT REPORTS
[1985] SUPP.2 s.c.R.
society in the first instance. The writ petition remained pending
for more than six years but no instalments had been paid by the
members of the society to the government during that period.
The Writ Petition was allowed by the learned Single Judge
by his judgment dated 17th March, 1971 holding that the government IilU6t resort to the contractual remedy which it reserved to
itself while entering into the loan agreement. The State preferred a letters patent appeal which was summarily dismissed. Hence
the appeal by special leave.
Dismissing the appeal, the Court,
llELl.l:
A bare reading of clause 4 of the agreement makes it
evidently clear that the Government has first to proceed against
the property mortgaged and sell the property. Only in case the
entire amount could not be realised that the Government could
proceed against the borrower personally. The government is as
much bound by the agreement aa the borrower and, therefore, the
government has first to proceed against the mortgaged property.
In other words, the government must resort to the contractual
remedy which it reserved to itself when entering into the loan
agreement before resorting to clause (b) of section 67 of the
Punjab Laud Revenue Act. [709 B-C, 706 H, 710]
llam Barayan Agarwal etc. v. State of u.P. & Ors. [1983]
3 S.C,R 684 explained and distinguished.

## Text

STATE OF PUNJAll & ORS ,
v.
s. DHARAM SINGH (DEAD) BY
SUCCESSOR DESA SINGH.& ANR.
AUGUST 29, 1985
[E.S. VENKATARAMIAH AND R.B. MISRA, JJ.j
70)
Punjab Land Revenue Act, section 67(b), scope of - Arrest
and detention of the borrowers' person to realise the loan amount
when can be resorted to under clause (b) of section 67 of Punjab·
A
ll
Land Revenue Act - Whether could be resorted to by-passing the
c
contractual remedy open under the loan Agreement.
Respondent No.2 a registered House Building Society with 32
members entered into an agreement with the Government of Punjab
whereunder the Government agreed to advance a loan of Rs.
1,02,000 to its members under the lower income group housing
D
scheme for the purpose of constructing residential houses in Dera
Baba Nanak. As per the written agreement the loan advance was
payable in three instalements. The first instalment of Rs. 20400
· was to be paid by the Govt. on the execution of the deed of
agreement, the second instalment of Rs. 51000 to be paid on the
completion of the houses to the plinth level and the last instalment of Rs. 30, 600 on the completion of the house to the roof
E
level. The society on the other hand had to mortgage the sites
together with the houses erected or to be erected thereon to the
govt. as security for the repayment of loan and
the amount of
loan was to be paid ·back in several instalments. Pursuant to the
agreement the Government issued a cheque for Rs.71,400 towards
the first and second instalments. The third instalment was not
F
paid for failure to furnish the required certificate that the
houses had reached the roof level. The members of the society
also failed to repay the loan. ln the situation, a notice was
issued by the Collector of the District to the members of the
society to deposit the overdue ins.talments of loan and to appear
before the Deputy commissioner, Gurdaspur on August 24, 1964 to
G
show cause why the entire amount should not be recovered from
them by means of arrest and detention. The society challenged the
\ notice by filing a writ petition in the High Court. Its stand was
tbat in the absence of any such stipulation in the loan agreement
the amount could ::wt be recovered by arrest of the members of the
H
A
B
c
D
E
F
G
H
706
SUPREME COURT REPORTS
[1985] SUPP.2 s.c.R.
society in the first instance. The writ petition remained pending
for more than six years but no instalments had been paid by the
members of the society to the government during that period.
The Writ Petition was allowed by the learned Single Judge
by his judgment dated 17th March, 1971 holding that the government IilU6t resort to the contractual remedy which it reserved to
itself while entering into the loan agreement. The State preferred a letters patent appeal which was summarily dismissed. Hence
the appeal by special leave.
Dismissing the appeal, the Court,
llELl.l:
A bare reading of clause 4 of the agreement makes it
evidently clear that the Government has first to proceed against
the property mortgaged and sell the property. Only in case the
entire amount could not be realised that the Government could
proceed against the borrower personally. The government is as
much bound by the agreement aa the borrower and, therefore, the
government has first to proceed against the mortgaged property.
In other words, the government must resort to the contractual
remedy which it reserved to itself when entering into the loan
agreement before resorting to clause (b) of section 67 of the
Punjab Laud Revenue Act. [709 B-C, 706 H, 710]
llam Barayan Agarwal etc. v. State of u.P. & Ors. [1983]
3 S.C,R 684 explained and distinguished.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 625 .of 1972.
From.the Judgment and Order dated 13.9.1971 of the Punjab.&
Haryana High Court in L.P.A. No. 254 of 1971.
'
S.K. Bagga, for the Appellants•
The ~udgment of the Court was delivered by
MISRA, J. The present appeal by special leave is directed
against the judgment of a Division Bench of the High Court of
Punjab and Haryana dated 13th September, 1971 dismissing ·the
letters patent appeal against the judgment of a learned Single
Judge dated 17th March, 1971 allowing the writ petition filed by
the respondents.
The short question that falls for consideration in the
present appeal is whether the amount of loan in question can be
STATE v. S .DHARAM SINGH [MISRA, J. J
707
recovered as arrears of land revenue by arrest and detention in
A
view of cl. 4 of the loan agreement.
Dera Baba Nanak Co-operative House Building Society Ltd.,
respondent No. 2, was a registered society. It had 32 members to
start with. The society entered into an agreement with the
Government of PUnjab whereunder the Government agreed to advance
B
· a loan· of Rs. 1,02,000 to its members under the lower income
group housing scheme for the purpose of constructing residential
houses on the site measuring 35, 100 sq.ft. in Dera Baba Nanak.
The agreement was evidenced by a written document. Under the
terms of the agreement the Govt. was to advance the loan in three
instalments - the first instalment of Rs. 20,400 was to be paid
c
by the government on the execution of the deed of agreement,
the
second instalment 'of Rs. 51,000 was to be paid on the completion
of the house to the plinth level and the last instalment of Rs.
30,600 on the completion of the house to the roof level. The
members of the society on the other hand had to repay the loan
advanced with interest in thirty annual instalments, the first
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instal.Dient was to become due twelve months after the date of
sanctioning the first instalment of loan. It was further stipulated that the society would mortgage the said sites Ugether with
houses erected or to ·be erected ,thereon thereafter tr·,. the government as security for the repayment of the said loan and interest.
The loan agreement further contemplated that the government would
recover the amount of loan 'first from the property mortgaged and
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if there was a shortfall then the government shall be entitled to
recover the same personally from the borrowers as well as from
the Diovable or other i1Illll0vable property belonging to the
borrowers.
The society pursuant to the terms ~f the agreement exeeuted
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the mortgage. The government in their turn issued a cheque for
Rs. 71,400 as payment towards the first two instalments .on 24th
of March, 1956. The third instalment of Rs. 30,600 was, however,
not paid by the government to the society on the ground that it
had not furnished the required certificate that the houses had
reached the roof level. The members of the society also failed to
G
repay the loan as stipulated. In the sl tuation a .notice was
issued by the Collector of the District to the members of the
society to deposit the overdue instalments of loan and to appear
before the Deputy Commissioner, Gurdaspur on August 24, 1964 to
show cause why the entire amount should not be recovered from
them by means of arrest and detention. The society challenged the
H
' notice by filing a writ petition in the High Court. Its stand was
708
SUPREME COURT REPORTS
[1985] SUPP.2 s.c.R.
A
that in the absence of any such stipulation in the loan agreement
the amount could not be recovered by arrest of the members of the
society in the first instance. The writ petition remained pending
for more than six years but no instalments had been paid by the
members of the society to the government during that period.
B
The claim was resisted by the government. The writ petition
c
was, however, allowed by the learned Single Judge by his judgment
dated 17th March, 1971 holding that the government DDJSt re•ort to
the contractual remedy which it reserved to itself when entering
into the loan agreement. The State preferred a letters patent
appeal which
was
slllllll8rily dismissed.
The state has
now
approached this court by special leave.
The learned counsel appearing for the State relied upon cl.
(b) of s. 67 of the Punjab Land Revenue Act. This section
provides the process for the recovery of arrears of land revenue
and one of the modes prescribed by cl. (b) of s. 67 is by arrest
and detention of the borrower's person. Reliance was also placed
on s. 98 of the said Act which enumerates what sums are recoverD
able as arrears of land revenue and cl. ( dd) of s. 98 includes a
loan advanced by the State Government towards the cost of the
house or site under the govenunent sponsored housing scheme
together with interest chargeable thereon and costs, if any,'in
making or recovering the same as land revenue. The counsel for
the respondents on the other hand strenuously relies upon cl. 4
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of the agreement of loan and contends that in view of the agreement between the · parties the government has to proceed first
against the property mortgaged and in case of a shortfall other
methods could be resorted to. It will be pertinent at this stage
to refer to cl. 4 of the loan agreement which reads:
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"4; For the consideration aforesaid and as security
for the repayment to the Government of the said loan
and interest, the borrower hereby transfers to the
Government the said sites together with houses now
erected or hereafter to be erected thereon, to the
intent that the same shall remain and be charged by
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way of mortgage in the manner following, namely,
that
for the purpose of recovering the said loan and
interest, and any other sum as may become due by the
borrower
to
the
Government
by
virtue of
these
presents, the Government may, at its option, either
sell
the
said
sites
and the houses erected or
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hereafter to be erected thereon or any part thereof
STATE v. s.DHARAM SINGH [MISRA, J.]
709
without the
intervention of any Court or enforce
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against the said property all or any of the remedies
of simple mortgage and in case the realisation from
the property ~entioned above falls short of the amount
due
to the Govermnant
under
these pre&ents,
the
Government shall be entitled to recover the same
personally from the borrower as well as from the
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movable or other immovable property belonging to the
borrower."
A bare reading of c. 4 of the agreement makes it evidently
clear that the Government has first to proceed against the
property mortgaged and sell the property. Only in case the entire
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amount could not be realised that the Government could proceed
against the brrower personally. The goveroment is as much bound
by the agreement as the borrwer
and, therefore, the government ·
has first to proceed against the mortgaged property.
During the course of argument celiance was placed upon
Ram
D
Narayan Agarwal etc. v. State of u.P. & Ors. [1983] 3 s.c.R. 684.
In that ease the petitioners had comnitted default in payment of
the tax payable by them under the U.P., Sales Tax Act, 1948. The
amount due was sought to be recovered as arrears of land revenue.
The procedure for such a recovery was provided by ss. 279 and 281
of the U.P. Zamindari Abolition and Land Reforms Act, 1950 read
with rr. 246, 247A, 247B and 251 of the U.P.Z.A. and L.R. Rules,
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1952. Clause (b) of sub s. (1) of s. 279 of the U.P.z.A. and L.R.
Act contemplates of recovery of the amount due by resort to
arrest and detention of the person
concerned. The procedure
contained in U.P.Z.A. and L.R;. Act and the rules made thereunder
was challenged on the ground that they are violative of Arts. 14,
19(1) (g) and 21 of the Constitution but this contention was
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overruled and it'was defiuitely held that the impugned procedure
contained in the U .P .z .A. and L.R; Act and the rules made thereunder were not violative of Arts. 14, 19 (1) (d) and 21 of the
Constitution. The writ petitions were, however, allowed in
the
case on the ground that there was
non-compliance with Rule
251
of the Rules which obligates an enquiry to be made by the officer
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who issued the warrant into the questioil whether the detention of
the defaulter would compel him to pay the arrear or a substantial
portion thereof and admittedly no such enquiry was held in any,of
those cases and in these circumstances it was
held
that
the
petitioners could not
be detained pursuant
to any warrants
already issued.
Such is not the position in this case and,
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therefore, that case is not of nruch assistance.
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710
SUPREME COURT REPORTS
[1985] SUPP.2 s.c.R.
For the reasons given above we do not find any fault with
the judgment of the learned Single Judge as confirmed by t.he High
Court in letters patent appeal.
The appeal, is, therefore,
dismissed. There is, however, no order as to costs.'
s.R.
Appeal dismissed.
I '