Disposal of writ petition challenging recovery citation under U.P. Public Money (Recovery of Dues) Act, 1972 for procurement contract default. Court quashed citation due to lack of qualifying agreement for land revenue recovery.
Recovery citation dated 04.09.2012 is quashed.
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Court No. - 32
Case :- WRIT - C No. - 47416 of 2012
Petitioner :- Margoob Respondent :- State Of U.P. And Others Counsel for Petitioner :- Vikrant Pandey Counsel for Respondent :- Ashish Mishra
Hon'ble Shashi Kant Gupta,J. Hon'ble Saurabh Shyam Shamshery,J.
This writ petition has been filed for the following relief:-
"i. Issue a writ, order or direction in the nature of certiorari to call for the record of the case and to quash Recovery Citation dated 04.09.2012 issued by the Respondent No. 4 directing the petitioner to deposit a sum of Rs. 3,00,000.00. (Annexure no. 1 to the writ petition).
ii. Issue a writ, order or direction in the nature of mandamus directing the respondent no. 2 not to recover any amount in pursuance of the order dated 19.01.2011."
Petitioner was given a contract of cycle stand by Three Judges Committee in Civil Court Compound, Saharanpur through a bid process for the year 2010-11 for a sum of Rs. 6,20,000/-. It is an admitted case of the petitioner that he could not deposit the total contract amount. Reasons set out in the petition for not depositing the entire amount was inability to run the cycle stand outside the boundary of the Civil Court on account of the objection raised by the Nagar Nigam, Saharanpur. A recovery certificate was issued by the respondents for recovery of a sum of Rs. 3,00,000/- and in pursuance whereof, a citation dated 04.09.2012 has been issued, which is under challenge in this petition.
It is contended by the learned counsel for the petitioner that in view of the provisions of Section 3 of U.P. Public Money (Recovery of Dues) Act, 1972 (hereinafter referred to as the 'Act'), the amount could only be realised as arrears of land revenue, in case, there is an agreement between the parties 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 by a Government company under State sponsored scheme or under an agreement relating to guarantee given by the State Government or the Corporation in respect of a loan raised by an industrial concern or under an agreement providing for any money payable thereunder, shall be recoverable as arrears of land revenue.
For a ready reference, Section 3 of the Act is quoted below.
"3. Recovery of certain dues as arrears of land revenue. - (1) Where any person is a 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 any 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 agreement.
then, in the case of the State Government, such officer as may be authorised in that behalf by the State Government by notification in the official gazette and in the case of 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 for such officer of the Corporation or Government company, as may be authorized in that behalf by the Managing Director or the Chairman 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.
(2) The Collector on receiving the certificate shall proceed to recover the amount stated therein as an arrear of land revenue" .
Shri Ashish Mishra, learned counsel appearing on behalf of respondent no. 2 has filed a counter affidavit, wherein it is stated that recovery has been issued in pursuance to the violation by the petitioner of the conditions mentioned in the order of allotment as he failed to deposit the outstanding auction amount.
A specific query was made to the counsel for the respondent no. 2 about the provision under which the said money can be recovered from the petitioner as arrears of land revenue, but he could not reply the same.
From perusal of the records, it is evident that the amount sought to be recovered from the petitioner is neither a loan, advance or grant nor it relates to credit in respect of, or relating to hirepurchase of goods sold to him nor by way of financial assistance nor there exists any agreement between the parties that the amount shall be recoverable as arrears of land revenue.
The issue has been settled by the decision of the Hon'ble Apex Court in the case of M/s.A.P.T. Ispat Pvt. Ltd. Vs. U.P. Small Industrial Corporation Limited, AIR 2010 SCW 3001 . While interpreting the provisions of Section 3 of the Act, the Hon'ble Apex Court held in paragraphs 14, 15, 16 and 17 as under.
" 14. We think that the High Court has stretched the meaning of "financial assistance" as defined in Section 2 and the scope of section 3 of the Act beyond reasonable limits. From a bare reading of Section 3 it is evident that the dues must arise from an agreement to which the person from whom recovery is to be made is a party. Sub-clause (a) of sub-section (1) then enumerates the kinds of agreement under which the transaction should have taken place. It needs also to be borne in mind that in the scheme of the Act there is no provision for any adjudication. Once there is any default under an agreement, the designated authority is authorized to issue a recovery certificate and send it to the Collector who is obliged to recover the certificate amount together with interest from the certificate debtor as arrears of land revenue. At no stage the certificate debtor is given an opportunity to put up his case. Such being the legal position, the recovery certificate must be based on a tangible agreement and it should even prima facie appear that the dues arise from a breach of the terms of the agreement. A proceeding under Section 3 of the Act cannot be sustained by piling up assumptions in favour of the certificate holder and against the judgment debtor.
15. In the present case it is evident that the dues of which recovery is sought by the impugned certificates do not pertain to any loan, advance or grant given to the appellant or to any credit concerning any hire purchase of goods sold to the appellant by the Corporation under any agreement, express or implied. The dues do not relate to any financial assistance.
16. We also cannot overlook the fact that in this case the so called supplies were not even made in the normal course of business. A reference to the FIR makes it clear that according to the Corporation the goods were taken away by the appellant in a criminal action constituting a number of offences under the Penal Code. The U.P. Public Moneys (Recovery of Dues) Act, 1972 was clearly not intended to recover the goods or the monetary value of goods taken away in course of theft or dacoity or lost as a result of dishonest appropriation or any other alleged criminal action.
17. For the reasons discussed above, we are of the view that in the facts of
this case the two impugned recovery certificates are quite illegal and untenable and we are unable to sustain the High Court order coming under appeal. "
The petitioner has also placed reliance upon a decision of the Division Bench of this Court in the case of Mohd. Jeeshan vs. State of U.P. & Ors ., passed in Writ Petition No. 18525 of 2016, wherein this Court has followed the decision of the Apex Court in the case of M/s.A.P.T. Ispat Pvt. Ltd. (supra), and has held that the amount due is not recoverable as arrears of land revenue.
In the present case, it is evident from the facts that dues, recovery of which is being effected against the petitioner through impugned citation, did not pertain to any loan, advance or grant given to the petitioner nor is in respect of credit concerning any hire purchase of goods sold to him. The dues are also not in respect of any financial assistance nor the respondents have been able to demonstrate that the amount due is recoverable as arrears of land revenue.
For the reasons discussed above, we are of the considered view that the recovery citation impugned in this petition is illegal and unsustainable and, thus, hereby stands quashed.
Writ petition stands allowed.
It is being made clear that this order shall not have any effect on the right of the respondents to recover the amount from the petitioner by any lawful means available to them.
Order Date :- 24.7.2019 Pkb/
2 issues framed by the court
Whether the recovery citation issued for procurement of cycle stands can be recovered as arrears of land revenue under Section 3 of U.P. Public Money (Recovery of Dues) Act, 1972
Whether the proceedings under Section 3 of the Act require a tangible agreement and adjudication before issuing a recovery certificate
Colour shows how this judgement treated each authority
M/s.A.P.T. Ispat Pvt. Ltd. Vs. U.P. Small Industrial Corporation LimitedFollowed¶24
M/s.A.P.T. Ispat Pvt. Ltd. Vs. U.P. Small Industrial Corporation Limited, AIR 2010 SCW 3001 · Who else cites this
Mohd. Jeeshan vs. State of U.P. & Ors.Relied on¶30
Mohd. Jeeshan vs. State of U.P. & Ors., Writ Petition No. 18525 of 2016
1 provisions across 1 enactments
Margoob
State Of U.P.
Shashi Kant Gupta
Saurabh Shyam Shamshery
As recorded by the court registry
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