SHARDA DEVI Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) This matter has come before us on a reference made by a Bench as in its opinion there was conflict of opinion in two Division Bench decisions of this Court rendered in Anupam Sari Centre v. Collector , 1999 (1) AWC 237 and M/s. Lal and Kumar v. State of U.P. , AIR 1998 All 156 : (1998 All LJ 987) and also Writ Petition No. 22507 of 1988 (M/s. R.K. Brothers v. Collector, Kanpur).

(2.) The case set up by the petitioner is that she is carrying on business of selling and supplying lubricating oil, mobil, grease and break oil in retail and whole-sale basis in the name and style of M/s. Sharda Automobiles Ltd. which is a sole proprietorship concern. In order to meet her capital requirements, the petitioner approached Union Bank of India, Pandeypur Varanasi, for financial assistance, which sanctioned to her a cash credit (Hypothecation) Limit facility up to Rs. 25,000 on 23/06/1992 and the limit was enhanced to Rs. 2 lakhs on 16/08/1995. The amount advanced from time to time was repayable with interest @ 14 per cent per annum with quarterly rests or such other rate of rates which may be fixed and notified as per the guidelines issued by the Reserve Bank of India. The mode of operation of the account was that the petitioner could take advance from the bank on credit basis from time to time in cash as per the sanctioned limit and deposit the amount as per schedule and on late payment, was liable to pay interest on the outstanding amount. The petitioner failed to keep her credit account regular and was accordingly served with a notice dated 28/10/1997 intimating that a sum of Rs. 2,01,337.30 along with further interest thereon from 26/09/1995 was due and outstanding against her and she was called upon to pay the said amount within 15 days of the receipt of the notice. Due to certain unavoidable financial contingencies, the petitioner could not make timely payments and vide lettrer dated 21/11/1998 requested the bank to encash in Fixed Deposit Receipts of her husband, who was the guarantor for the payment of loan, before maturity time and adjust the same in her account. The bank encashed the Fixed Deposit Receipts of her husband and adjusted Rs. 1,14,500 towards the said cash credit account. However, on 4/02/2000 the bank forwarded a Recovery Certificate under the provisions of U.P. Public Money (Recovery of Dues) Act, 1972 (hereinafter referred to as the Act) for recovering Rs. 2,22,543 from the petitioner. She came to know about the certificate when one of the guarantors Babban Singh was arrested by Tehsil authorities. The petitioner contends that the money advanced to her by the bank under the cash credit limit facility cannot be recovered as arrears of land revenue under the provisions of the Act and the entire proceedings initiated against her under the said Act including the recovery certificate are illegal and wholly without jurisdiction and are liable to be quashed. The relief claimed in the writ petition is that the recovery certificate dated 4/02/2000 issued by the bank be quashed and a writ of mandamus be issued commanding the respondents (State of U.P. and Tehsildar, respondents Nos. 1 and 2) not to recover the amount in question from the petitioner as arrears of land revenue.

(3.) In Anupam Sari Centre v. Collector, 1999 (1) AWC 237, it was held that where the bank had advanced money under a State Sponsored Scheme, it can be recovered by the Collector as arrears of land revenue on a certificate being sent by the concerned officer of the bank under S. 3(1)(b) of the Act but any amount taken as loan under a cash credit limit facility cannot be recovered under the provisions of the Act. However, in Krishna Rice Mills v. State of UP, 2000 (3) ACW 2583 : (AIR 2000 All 343), it was held that money taken as loan under the cash credit facility could also be recovered under the provisions of the Act in addition to those which had been advanced under the State Sponsored Scheme. In M/s. Lal and Kumar v. State of U.P., AIR 1998 All 156 : (1998 All LJ 987), a Division Bench dismissed the writ petition challenging recovery proceedings initiated against the writ petitioner who had been granted cash credit limit facility up to Rs. 15 lakhs with the observation that neither equity nor law was in his favour.