S K BHARGAVA Vs. COLLECTOR CHANDIGARH

JUDGEMENT

(1.) The short question which arises for consideration in this appeal by special leave is whether the Collector was justified in proceeding against the appellant, who was a Director of a company which is alleged to have defaulted in repayment of loan to the Haryana Financial Corporation, without affording the appellant an opportunity of being heard under the provisions of the Haryana Public Moneys (Recovery of Dues) Act, 1979.

(2.) Briefly stated the facts are that the appellant was appointed as one of the Directors of M/s. Depro Food Pvt. Ltd., which was subsequently converted into a public limited company. In 1971 and in 1973 the said company took loans on two occasions from the Financial Corporation. According to the appellant, he resigned as a Director of the company on 25th February, 1974 and the factum of his resignation was communicated to the Registrar of Companies on 11th March, 1974. It is further the case of the appellant that after he ceased to be a Director of the company, another loan of a sum of Rs. 3 lakhs on the basis of a registered mortgage was taken by the company on 12th November, 1974.

(3.) It appears that default was committed by the company in repayment of the loan and the interest thereon. This led to the filing of the winding up petition in the Punjab and Haryana High Court. On 18th September, 1978, the Haryana Financial Corporation filed an application under Section 31 of the State Financial Corporation Act, 1951 for an order for the recovery of Rs. 52,78,227.48 (Rs. 30,07,621.86 plus interest thereon) being the outstanding amount against the loans taken by the company on three different occasions. It may here be stated that by order dated 21st August, 1980, the company was ordered to be wound up. Thereupon in an application which was filed, the Company Judge by order dated 3rd December, 1981 held the Haryana Financial Corporation to be a preferential creditor in respect of the amounts which were due to it. Thereafter, the assets of the company were sold and from the proceeds thereof some amount was paid to the Haryana Financial Corporation. After adjusting the amount so paid, there remained a shortfall of Rs. 18,22,178.05 plus interest thereon.