HIGH COURT OF JUDICATURE AT ALLAHABAD
A.F.R.
RESERVED ON 5.8.2011
DELIVERED ON 25. 8.2011
Case :- WRIT - C No. - 7347 of 2011
Petitioner :- Sanjay Gupta
Respondent :- State Of U.P. And Others
Petitioner Counsel :- Ashok Kumar,Swapnil Kumar
Respondent Counsel :- C.S.C.,Sudha Pandey
WITH
Case :- WRIT - C No. - 70077 of 2010
Petitioner :- Radhey Shyam Gupta And Others
Respondent :- State Of U.P. And Others
Petitioner Counsel :- Ashok Kumar,Praveen Kumar,Swapnil Kumar
Respondent Counsel :- C.S.C.,Sudha Pandey
WITH
Case :- WRIT - C No. - 3121 of 2011
Petitioner :- Smt. Arti Gupta
Respondent :- State Of U.P. And Others
Petitioner Counsel :- Swapnil Kumar,Ashok Kumar,Praveen Kumar
Respondent Counsel :- C.S.C.,Sudha Pandey
WITH
Case :- WRIT - C No. - 9383 of 2011
Petitioner :- Om Prakash Agrawal
Respondent :- State Of U.P. & Others
Petitioner Counsel :- K. Shahi,Rajendra Prasad
Respondent Counsel :- C. S. C.,D. Vaishya
__________
Hon'ble Ashok Bhushan,J.
Hon'ble Ran Vijai Singh,J.
(DELIVERED BY HON'BLE ASHOK BHUSHAN, J.) Heard Sri Swapnil Kumar, learned Counsel for the petitioner, Sri N.K. Pandey and Smt. Sudha Pandey for respondent no. 3 as well as learned standing counsel representing the respondents no. 1 and 2.
These four writ petitions raising common questions of facts and law, have been heard together and are being decided by this common judgment. Counter affidavit has been filed by the Bank to which rejoinder affidavit has also been filed by the petitioner. For deciding all the writ petitions, it is sufficient to refer the pleadings in writ petition No. 7347 of 2011 Sanjay Gupta Vs. State of U.P., which is being treated as leading writ petition. In all these writ petitions, the petitioners have prayed for quashing the recovery certificate dated 28.7.2010/27.8.2010 issued by the Punjab National Bank addressed to the Collector for recovering the amount of Rs. 12,45601/- plus interest under the provisions of the U.P. Public Moneys Recovery of Dues) Act, 1972.
The brief facts giving rise to these writ petitions are; the respondent no. 4 Jai Ganpati Gramodyog Sewa Samit of which petitioner Sanjay Gupta was the Secretary and the respondent no. 5 was the President, made an application before the District Industry Officer, Jhansi for sanction of a loan for installing the unit of absorbent cotton under State sponsored scheme by the U.P. Khadi and Village Industry Commission (KVIC). The District Industry Officer vide letter dated 3.10.2006 directed the Branch Manager, Punjab National Bank Branch, Jokhanbagh Jhansi to disburse the term loan of Rs. 2,00000/- and working capital under the Cash Credit Limit of Rs. 15.00 Lacs. On the recommendation of the District Industry Officere, the Bank sanctioned fixed term loan of Rs. 2,00000/- and sanctioned 15,00000 cash credit Limit for working capital. An agreement was entered between the society and Bank on 10.11.2006. The account was opened with the signature of Secretary Sanjay Gupta and President Shailendra Maheshwari. Subsidy to the tune of Rs. 3,43,200 was also provided by the competent authority on 7.9.2007. At the time of sanction of the loan, the bye-law and memorandum of association was submitted by the society which contains the name of all the petitioners who have filed the above four writ petitions as office bearers/members of the society. On default being committed in repayment of the loan, recovery certificate dated 28.7.2010 was sent in which the names of Shailendra Maheshwari, Secretary and Sanjay Gupta Treasurer was mentioned. The recovery certificate was subsequently modified by letter dated 3.7.2010 in which name of all the writ petitioners were mentioned as office bears/members of the Committee of Management of the society. After recovery certificate dated 28.7.2010 was issued, representation was made by certain members against the amended recovery certificate dated 28.7.2010 on which the bank wrote a letter dated 6.9.2010 to the District Magistrate that recovery certificate dated 28.7.2010 be treated to be an effective recovery certificate and subsequent recovery certificate dated 26.8.2010 be treated as cancelled. The District Magistrate however, vide subsequent letter dated 26.10.2010 clarified that the responsibility for repayment of the loan is of the office bearers as well as members of the Committee of Management hence, recovery be effected on the basis of amended recovery certificate dated 26.8.2010. In writ petition No. 7347 of 2011 following reliefs have been prayed:
"I. Issue a writ, order or direction in the nature of certiorari quashing the recovery certificates dated 28.7.2010/27.8.2010 (Annexure No. 4 and 5 to this writ petition) issued by respondent no. 3 so far they relates to the petitioner.
II. Issue a writ, order or direction in the nature of mandamus restraining the respondents no. 1,2 and 3 and their agents to pursue the impugned recovery against petitioner.
III. Issue any other suitable writ order or direction, which this Hon'ble Court may deem fit and proper under the facts and circumstances of the case."
Sri Swapnil Kumar, learned counsel for the petitioner challenging the recovery certificate issued by the Bank has submitted that bank has no jurisdiction to issue recovery certificate under the provisions of U.P. Public Moneys (Recovery of Dues) Act, 1972. The loan being more than Rs. 10 lacs, it was obligatory for the bank to have taken steps for recovery in accordance with the provisions of Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 1993 Act). It is submitted that any other mode of recovery by the Bank is without jurisdiction. Reliance has been placed on Section 1(4), 2(g) Section 17, 18 and 34 of the 1993 Act. Reliance has been placed on the judgment of the apex Court reported in (2003) 2 SCC 455 Unique Butyle Tube Industries (P) Ltd. Vs. U.P. Financial Corporation and another, (2010) 6 Supreme Court Cases 193, Eureka Forbs Ltd. Vs. Allahabad Bank and others, Full Bench judgment of this Court reported in 2005(4) AWC 3342 Suresh Chandra Gupta and another Vs. Collector, Kanpur Nagar. In view of the aforesaid, it is submitted that recovery certificate issued under the 1972 Act is liable to be quashed. It is submitted that petitioners of writ petition Nos. 7077 of 2010 and 3121 of 2011 are not office bearers of the society hence, they are not liable to pay any amount and recovery according to clause 13 of the bye-laws of the society, can be made only against office bearers of the society. It is submitted that amendment of the recovery certificate by amended recovery certificate dated 26.8.2010 is without jurisdiction.
Learned counsel for the respondent Bank refuting the submissions of learned counsel for the petitioners, contended that initiation of recovery under the 1972 Act is fully within the jurisdiction of the Bank. It is submitted that the loan which was taken by the Society whose office bearers are the petitioners, was a loan under State sponsored scheme and the provisions of 1993 Act are not applicable in sofar as State sponsored scheme is concerned. It is submitted that for recovery of the loan granted under State sponsored Scheme, 1972 Act is still available. It is submitted that the loan in question cannot be termed as "debt" within the meaning of section 2(g) of 1993 Act. It is submitted that the debt which is recoverable under the 1993 Act is a debt during course of any business activity undertaken by the Bank. In the present case, Bank has not sanctioned loan in exercise of its business activity rather loan has been sanctioned under the State sponsored scheme on recommendation of the District Industry Officer. The provisions of 1972 Act have not ceased to exist after the enforcement of 1993 Act and for recovery of loan granted under State sponsored Scheme, 1972 Act can be enforced. Reliance has been placed by the counsel for the Bank on Full Bench judgment of this Court in Sharda Devi (Smt.) Vs. State of U.P. and others, reported in (2001) 3 UPLBEC 1941, judgment of the apex Court in Unique Butyle Tube Industries (P) Ltd. Vs. U.P. Financial Corporation and another (supra) as well as Division Bench judgment reported in 2008 (7) A. D. J. 546, M/s Mak Plastic (P) Ltd. and others Vs. U.P. Financial Corporation and others. It is submitted that all the office bearers and members of the Committee of Management of the society are liable to repay the loan and the recovery certificate has rightly been amended on 26.8.2010. Allegations and counter allegations by one office bearer against another office bearer cannot be a ground for non payment of loan taken from the Bank.
We have heard learned counsel for the parties and perused the record.
There is no dispute regarding factum of taking loan by the respondent society of which the petitioners are office bearers or members. The loan which was applied by the society was a loan under the State sponsored scheme of Khadi Village Industry Commission. It is not case of the petitioners that the loan applied was not under State sponsored scheme. The payment of State subsidy of Rs. 3,40,000/- is not denied. The case of the petitioner Sanjay Gupta in writ petition No. 7347 of 2011 is that at present Sanjay Gupta is not Secretary of the Society and he having resigned and one O.P. Agrawal having been elected as Secretary, Sanjay Gupta has no liability to pay the loan.
Principal submission which has been raised by learned counsel for the petitioner is challenging the recovery certificate issued by the Bank under U.P. Public Moneys Recovery of Dues Act, 1972. Submission of the learned counsel for the petitioner is that 1972 Act is no longer available to the Bank and the only mode for recovering the loan which is more than Rs. 10 lacs was to file an appropriate application before the Debt Recovery Tribunal under 1993 Act. It is submitted that recovery certificate being without jurisdiction deserves to be set aside on this ground alone. For considering the aforesaid submission, it is useful to refer to relevant provisions of 1972 Act and 1993 Act. 1972 Act was an Act enacted to provide speedy recovery of certain classes of dues payable to the State Government or to the U.P. Financial Corporation or any other Corporation notified by the State Government in that behalf or to any nationalised or the Scheduled Bank. Section 3 of the Act provides that conditions under which certain dues can be recovered as arrears of land revenue. There can be no dispute that the loan sanctioned by the nationalised bank under State sponsored scheme could have been recovered under 1972 Act. The submission which is to be considered is as to what is the effect and consequence of 1993 Act on the applicability of 1972 Act.
1993 Act has been enacted to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected thereto. Section 1 (4) provides that provisions of 1993 Act shall not apply where amount of debt due to any bank or financial institution is less than 10 lacs. Section 2(g) defines "debt" which is to the following effect.
"2 (g) "debt" means any liability (inclusive of interest) which is claimed as due from any person by a bank of a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application"
Section 17 of 1993 act provides for jurisdiction, powers and authority of Tribunals. Section 18 provides for Bar of Jurisdiction. Sections 17 and 18 are as follows:
"17. Jurisdiction, powers and authority of Tribunals.--(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.
(2) An Appellate Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.
17A. Power of Chairperson of Appellate Tribunal.--(1) The Chairperson of an Appellate Tribunal shall exercise general power of superintendence and control over the Tribunals under his jurisdiction including the power of appraising the work and recording the annual confidential reports of Presiding Officers.
(2) The Chairperson of an Appellate Tribunal having jurisdiction over the Tribunals may, on the application of any of the parties or on his own motion after notice to the parties and after hearing them, transfer any case from one Tribunal for disposal to any other Tribunal.
18. Bar of Jurisdiction.--On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17."
Section 34 of 1993 Act contains provision giving over-riding effect of 1993 Act. Section 34 of the Act is quoted as below:
"34. Act to have over-riding effect.--(1) Save as provided under subsection (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 Reconstruction Bank of India Act, 1984 (62 of 1984) 2[, the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989)"
From the scheme of 1993 Act, it is clear that for a debt which is an amount of more than Rs. 10 lacs due to a bank, the only authority which can exercise jurisdiction is the Debt Recovery Tribunal constituted under the 1993 Act and according to section 18 of the said Act, no Court or other authority shall have, or entitled to have any jurisdiction, powers or authority in relation to the matters specified in section 17. Section 34 of the 1993 Act gives over-riding effect to the provisions of 1993 Act. Section 34 (1) contains a non-obstante clause which means that anything inconsistent therewith contained in any other law may be law passed by State Legislature or by Parliament shall have no force and the provisions of 1993 Act shall prevail. Sub-section (2) of Section 34 provides for an exception to provisions given in Section 34(1) to the effect that provisions of the Act shall be in addition to and not in derogation of certain Acts as mentioned in Sub-section (2). It is to note that under section 34(2), the provisions of U.P. Public Moneys (Recovery of Dues) Act, 1972 are not saved. Thus, 1993 Act clearly intends to over-ride all inconsistent law including 1972 Act. The judgment which has been much relied by learned counsel for the petitioners is in the case of Unique Butyle Tube Industries (P) Ltd. Vs. U.P. Financial Corporation and another (supra) which needs detail consideration. In the aforesaid case recovery proceedings were initiated under the U.P. Public Moneys (Recovery of Dues) Act, 1972 for recovery of certain dues from the appellant. The citation was issued by the Tahsildar, which was challenged in this Court on the ground that proceedings for recovery under 1972 Act are not maintainable. It was contended that no other proceedings could have been initiated except those proceedings as contemplated under section 32-G of the State Financial Corporations Act, 1951. The Corporation contended before the High Court that alternative mode of recovery were permissible and choice was left upon the Corporation either to proceed for recovery under the State Financial Corporation Act or to initiate proceedings under the 1972 Act. The High Court accepted the contention of Financial Corporation and held that choice is left open to the U.P. Financial Corporation which may proceed under the Debt Recovery Tribunal Act or may proceed under the other modes of recovering the debts as are permissible under the State Financial Corporation Act including recovery under 1972 Act. The judgment of the High Court was challenged in the apex Court. The apex Court considered the provisions of Section 34, Sections 17 and 18 of 1993 Act as well as provisions of Section 32-G of State Financial Corporation Act, 1951 and Section 3 of 1972 Act. The apex Court in the said judgment laid down following in paragraph 9:
"9. Section 34 of the Act consists of two parts. Sub- section (1) deals with the over-riding effect of the Act 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 the Act. Sub-section (1) itself makes an exception as regards matters covered by sub-section (2). The U.P. Act is not mentioned therein. The mode of recovery of debt under the U.P. Act is not saved under the said provision i.e. sub- section (2) which is of considerable importance so far as the present case is concerned. Even a bare reading therein makes it clear that it is intended to be in addition to and not in derogation of certain statutes; one of which is the Financial Act. In other words, a Bank or Financial institution has the option or choice to proceed either under the Act or under the modes of recovery permissible under the Financial Act. To that extent, the High Court's conclusions quoted above were correct. Where the High Court went wrong is by holding that proceedings under the U.P. Act were permissible. U.P. Act deals with separate modes of recovery and such proceedings are not relatable to proceedings under the Financial Act."
The apex Court held that the High Court was wrong in holding that proceedings under the U.P. Act were permissible. The apex Court held that the Financial Corporation could have adopted the mode prescribed under the State Financial Corporation Act, 1951 or under 1993 Act by virtue of Section 34(2) but it was held that recovery under 1972 Act was not permissible. The judgment of the Full Bench which has been relied by learned counsel for the petitioner in Suresh Chandra Gupta and another Vs. Collector, Kanpur Nagar (supra) needs to be noted in some detail. In Suresh Chandra Gupta's case also the question was as to whether recovery under 1972 Act can proceed or the recovery could have been under the 1993 Act. The loan was taken from U.P. Financial Corporation . The company failed to pay its loan. The original suit was filed by the company for injunction in which temporary injunction order was passed which was set aside in appeal filed by the Corporation. The Corporation took possession under section 29 of the Financial Corporation Act and auctioned the factory. The writ petitioners, who were guarantors challenged the proceedings initiated by the Corporation by sending recovery certificate to the Collector, Kanpur for recovery under 1972 Act. The Full Bench noted the points which arose for deterimination in paragraph 6, which is quoted below:
"6. We have heard counsel for the parties. The following points arise for determination in this case:
(i) Which Act will prevail in case an Act enacted by the Parliament in pursuance of an entry in list-I of the seventh schedule of the Constitution is contrary to an Act enacted by the State in pursuance of an entry in list-II of the same schedule?
(ii) Whether the 1972 Act has been rendered void and inoperative, after the insertion of Section 32-G in the 1951 Act in so far as it relates to recovery of debt payable to the Corporation? (iii) Whether Section 3 of the 1972 Act is inconsistent with section 32-G of the 1951 Act and if it is so, what is the effect?
(iv) Whether recovery against the guarantor can be made under the 1993 Act (v) Whether the jurisdiction of the Collector to entertain an application of the Corporation for recovery under section 3 of the 1972 Act of debt not being less than Rs. 10 lacs, is barred by section 18 of the 1993 Act.
(vi) Whether the Corporation having taken possession of the assets and properties of the borrower company under section 29 of the 1951 Act was bound to exhaust its remedy under the said provision before initiating recovery proceeding against the sureties/guarantors? Point number (ii), (iii), (v) and (vi) were framed by the Division Bench in its referring order; the remaining points have been framed by us."
Referring to Unique Butyle's case (supra), Full Bench held that recovery could have been taken only under 1993 Act. Following was laid down on paragraphs 16,17 and 19:
"16. The 1993 Act has been enacted for expeditious adjudication and recovery of debts due to the banks and financial institutions. However, in view of sub-section (4) of section 1 {Section 1(4)} of this Act, it does not apply when the amount of debt is less then Rs. 10 lakhs.
17. Section 2(d), (e), (h) define the words 'Bank', 'Banking Company' and 'Financial Institution'. The Corporation is neither a bank nor a banking company. Under section 2(h)(i) the financial institution has been defined to mean a public institution within the meaning of section 4(A) of the Company Act, 1956. The Corporation is also not a financial institution within the meaning of this section. Section 2(h) (ii) of the 1993 Act includes such other institution as financial institution that the Central Government may by notification specify. The Central government has specified the Corporation under section 2(h)(ii) of the 1993 Act by notification dated 28.3.1995. This means the Corporation is a financial institution within the meaning of the 1993 Act. The debt is more than Rs. 10 Lakhs and the 1993 Act is applicable for recovery of this debt.
19. In the Unique Butyle case, the recovery was against the principal borrower. While deciding point-IV, we have held that recovery against the guarantor can be initiated under the 1993 Act. Same reasoning as applicable to the principal borrower will apply to a recovery against the guarantor. In view of the Unique Butyle case, recovery proceedings can neither be initiated against the principal borrower nor against the guarantor under the 1972 Act if the debt is more than 10 lakhs: recovery proceedings can only be initiated under the 1993 Act.
The conclusions were recorded in paragraph 23, which is quoted below:
" 23. Our conclusions are as follows:
(a)In case of repugnancy or inconsistency between the Central Act under list-I and the State Act under list-II 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 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."
The Full Bench thus, also opined that after 1993 Act, recovery under 1972 Act is not permissible. Learned counsel for the respondents Bank to meet the above submission of learned counsel for the petitioner has submitted that the provisions of 1993 Act cannot be resorted to with regard to loan granted under State sponsored scheme. The submission of the learned counsel for the respondent Bank is that the loan granted under the State sponsored scheme cannot be included in the definition of "debt" under section 1(g) of the 1993 Act. He submits that the loan which was granted to the society of which the petitioners were office bearers, were not loan granted to the petitioners under normal banking business of the bank rather it was granted under the State sponsored scheme with regard to which subsidy has also been paid by the State hence, it is not covered under the normal definition of "debt" as defined under section 1(g). To support his submission learned counsel for the Bank has relied on the Full Bench judgment of this Court in Sharda Devi's case (supra). In Sharda Devi's case, a cash credit limit (hypothetication limit) was granted by the Bank and when the petitioner failed to repay the amount, proceedings under 1972 Act were initiated as arrears of land revenue. The reference was made to larger Bench, there being conflict in opinion of two Division Benches namely; Anupam Sari Centre and others Vs. Collector and others, 1999 (1) AWC 237 and M/s Lal & Kumar Vs. State of U.P. ,AIR 1998 Alld. 156. In Anupam Sari Centre, it was held that money advanced by the bank under State sponsored scheme can be recovered as arrears of land revenue whereas in subsequent case it was also held that money taken as loan under cash credit facility can also be recovered under 1972 Act. The aforesaid Full Bench had also occasion to consider the effect of 1993 Act. The Full Bench held that for the purpose of recovery of a loan given under State sponsored scheme, 1972 Act can very well be resorted. The Full Bench considered the provisions of 1993 Act specially sections 17, 18 and following was laid down in paragraphs 21,22 and 23.
"21. The provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act No. 51 of 1993) enacted by the Parliament have a bearing on the controversy and therefore they have to be examined. The object of this Act is to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto. In view of sub-section (4) of S. 1, the provisions of this Act apply where the amount of debt due to any bank is ten lakh rupees or more. The definition of banks as given in sub-section (d) of S. 2 of this Act shall take within its fold all such banks which have been defined as banking company" in sub-section (f) of S. 2 of the U.P. Public Moneys (Recovery of Dues) Act except for such banks which are defined under the U.P. Co-operative Societies Act, 1965. Sub-section (g) of S. 2 of this Act defines 'debt and it means any liability (inclusive of interest) which is alleged as due from any person by a bank or a Financial Institution during the course of any business activity undertaken by the bank. Sections 17 and 18 of this Act read as under :
17. Jurisdiction, powers and authority of Tribunals.- (1) A Tribunal shall exercise on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institution.
(2) An Appellate Tribunal shall exercise on and from the appointed day, the jurisdiction, powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act.
18.Bar of Jurisdiction.- On and from the appointed day, no Court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under Arts. 226 and 227 of the Constitution) in relation to the matters specified in S. 17".
22. Sections 17 and 18 of the 1993 Act confer exclusive jurisdiction on the Tribunals to decide applications from banks for recovery of debts. In view of Art. 254, the provisions of Recovery of Debts Due to Banks Act, 1993 shall prevail over U.P. Public Moneys (Recovery of Dues) Act, 1972 and if there is any repugnancy in the latter the same shall be void to the extent of repugnancy. The effect of these provisions has been examined in considerable detail in Allahabad Bank v. Canara Bank, 2000 (4) JT (SC) 411 where in para 21 of the reports it was held as under :
In our opinion, the jurisdiction of the Tribunal in regard to adjudication is exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to Banks or Financial Institutions. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under S. 19(22) (formerly under S.19(7) to the Recovery Officer for recovery of the debt specified in the certificate. The question arises as to the meaning of the work 'recovery in S. 17 of the Act. It appears to us that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under S. 19(22). Under S. 18, the jurisdiction of any other Court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. (This exclusion does not however apply to the jurisdiction of the Supreme Court or of a High Court exercising power under Art. 226 of the Constitution). This is the effect of Ss. 17 and 18 of the Act."
23. The view taken in Krishna Rice Mills (supra) will mean that where any person is party 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, the bank may send a certificate to the Collector mentioning the sum due from such person and the Collector shall proceed to recover the amount stated therein as arrears of land revenue. This would clearly come in conflict with the provisions of Recovery of Debts Due to Banks Act, 1993 where the Tribunal alone, to the exclusion of all other Courts or authorities, has been conferred jurisdiction to decide applications from the banks for recovery of debts due to them. Such an interpretation which makes the U.P. Act repugnant to the Central Act and, consequently, void in view of clause (1) of Art. 254 of the Constitution must be avoided in order to uphold the validity of the Act. There will be no repugnancy between the U.P. Act and 1993 Act passed by the Parliament if the loans, advances, grants or credits given by a banking company under a State Sponsored Scheme alone are held to be covered by clause (b) of S. 3 of the Act as such loans being for a very low amount are outside the purview of Recovery of Debts Due to Banks Act, 1993. The liability incurred by a borrower in such a case being not in the course of business activity of a bank" shall not be a debt as defined in S.2(g) of the 1993 Act and will not come within the ambit of Section 17."
Much emphasis which has been placed by learned counsel for the respondents is on the following observation made in paragraph 23 :
"There will be no repugnancy between the U.P. Act and 1993 Act passed by the Parliament if the loans, advances, grants or credits given by a banking company under a State Sponsored Scheme alone are held to be recovered by clause (b) of Section 3 of the Act as such loans being for a very low amount are outside the purview of Recovery of Debts Due to Banks Act, 1993. The liability incurred by a borrower in such a case being not "in the course of business activity of a bank" shall not be a "debt" as defined in Section 2(g) of the 1993 Act and will not come within the ambit of Section 17. "
In the aforesaid, two reasons have been given by the Full Bench in holding that 1993 Act is not applicable firstly, the loans given under State sponsored scheme was for a very low amount. The said reasons may not be applicable in the present case where the amount is more than ten lacs. However, subsequent reason that liability incurred by borrowers in such case being not "in the course of business activity of a bank" shall not be a debt as defined under section 2(g) of 1993 Act, fully supports the contention of learned counsel for the respondent Bank. Learned counsel for the petitioner referring to the provisions of Section 6 of Banking Regulations 1949 contended that loans disbursed under State sponsored scheme shall also be in the course of business activity of a bank and definition of "debt" given under section 2(g) of 1993 Act is wide enough to include all type of loans. He has placed reliance on the judgment of the apex Court in the case of Eureka Forbes Ltd. Vs. Allahabad Bank and others (supra), wherein the definition of "debt" came for consideration. There cannot be any dispute to the proposition that the debt as used in section 2(g) has to be given a wide meaning but in view of the fact that Full Bench of this Court have expressly held the loan granted under the State sponsored scheme beyond the definition of debt as defined under section 2(g), we feel ourselves bound by the said pronouncement of the Full Bench although we have our own doubt as to whether the loan granted under the State sponsored scheme can be kept out of the definition of "debt" as defined under section 2(g) but in the facts of the present case, we are not inclined to make a reference for reconsideration of the Full Bench judgment in Sharda Devi's case (supra).
The judgment of the apex Court in Unique Butyle (supra) that for recovery of amount of more than 10 lacs, 1993 Act has to be resorted and 1972 Act is not applicable, is a pronouncement of the apex Court which is binding on all courts. However, in the said judgment, the question was not for consideration as to whether loan granted under the State sponsored scheme are covered by the definition of "debt" within the meaning of section 2(g) whereas in the Full Bench judgment in Sharda Devi's case (supra), the said question was specifically considered and answered. In the Full Bench of Suresh Chandra Gupta and another Vs. Collector, Kanpur Nagar which was also a case where loan was disbursed by the financial corporation and the question whether the loan was under any State sponsored scheme, had not arisen nor considered. Thus, the said judgment also does not help the petitioner in the present case. When the Full Bench judgment of our Court in Sharda Devi (supra) had categorically held that the loan granted under the State sponsored scheme are not covered within the definition of "debt" under section 2(g) of 1993 Act, the recovery under 1972 Act is thus permissible for the Bank and no objection can be taken by the petitioners on the said ground. Thus, we do not find any infirmity in the certificate for recovery of the amount as arrears of land revenue under 1972 Act and the contention of the petitioner on the said ground cannot be accepted.
The submission which has been pressed by learned counsel for the petitioner is that the petitioner in writ petition No. 7347 of 2011 Sanjay Gupta was although Secretary at the time when the loan was applied but subsequently he had resigned and one Om Prakash Agrawal has been elected as Secretary. It is submitted by learned counsel for the petitioner that Radhey Shytam Gupta, the petitioner in writ petition No. 70077 and Arti Gupta petitioner in writ petition No. 3121 of 2011 are not office bearers and there is no liability of them towards the recovery certificate. Petitioners have referred to clause 13 of the byelaws which is relevant, is quoted below:
"laLFkk vius mn~';ksa dh iwfrZ gsrq fdlh Hkh jk"Vzh;d`r cSad] jkT; foRr fuxe vFkok vU; fdlh foRrh; laLFkku ls _.k izkIr dj ldrh gSA mDr _.kksa dh izkfIr gsrq leLr vkSipkfjdrk;sa iw.kZ djus dk vf/kdkj v/;{k ,oa lfpo la;qDr :i ls gksxkA laLFkk mDr mn~ns';ksa dh iwfrZ gsrq viuh lEifRr cU/kd j[k ldrh gSA _.k laca/kh mRrjnkf;Ro lfefr ds leLr inkf/kdkfj;ksa dk O;fDrxr :i ls gksxk pkgs og laLFkk esa jgs vFkok u jgsaA"
The petitioners have also filed the Memorandum of Association of the Society, which is also part of Annexure-7 to the writ petition. The memorandum contains the names of nine persons with their due signatures and in clause 9 of the bye-laws, it is provided that the name of office bearers/members of the Committee of Management of Jai Ganpati Gramodyog Sewa Samiti are as follows:
1. Sri Shailendra Maheshwari President
2. Smt. Vinita Gupta Vice President
3. Sri Sanjay Gupta Secretary
4. Smt. Arti Gupta Treasurer
5. Sri Sachin Gupta Member
6. Sri R. S. Gupta Member
7. Sri Madan Lal Gupta Member
8. Sri Rahul Maheshwari Member
9. Sri Yogendra Kumar Member Thus, all the petitioners who have come to this Court are either shown as office bearers or members of the Committee of Management. Members of Committee of Management also holds office which is an office in the management.
The petitioners thus, being office bearers/members of the Committee of Management are fully covered by clause 13 of the Byelaws. It is relevant to note that byelaws 13 provides that responsibility towards loan shall be of office bearers whether they remain in the society or not. Thus, a person who has ceased to be an office bearer also cannot escape his responsibility to pay the loan. Thus, the submission of learned counsel for the petitioners that Sanjay Gupta is no longer Secretary or the petitioners of writ petition of Radhey Shyam Gupta or Arti Gupta are not liable, cannot be accepted.
In view of the foregoing discussions, we are of the view that there is no infirmity in the recovery proceedings under the 1972 Act and the petitioners are not entitled for any relief in the writ petition.
All the writ petitions are dismissed. No costs.
Order Date :- 25.8.2011 L.A./-