DEEPAK KUMAR PANDEY Vs. STATE OF U P

JUDGEMENT

(1.) THE petitioner had taken a term loan of Rs. 5,85,000/- and soft loan of Rs. 2,26,000/-from the U. P. Financial Corporation. The petitioner defaulted in the payment of the loan and the U. P. Financial Corporation proceeding under section 29 of the State financial Corporation Act took possession of the unit on 2. 5. 2001. It appears that in the year 2004 an FDR which was pledged as collateral security with the U. P. Financial Corporation was got encashed by it for a sum of Rs. 2,98,000/ -. The U. P. Financial Corporation has issued a recovery certificate under the provisions of U. P. Public Money (Recovery of Dues) Act, 1972 for recovering the balance dues by way of arrears of land revenue. In consequence a citation dated 7. 12. 2007 was issued by the Tehsildar in which a sum of rs. 21,11,640. 82 has been demanded from the petitioner. This citation dated 7. 12. 2007 has been challenged by the petitioner.

(2.) WE have heard Sri Shashi Nandan learned Senior Counsel assisted by sri Saurabh Srivastava Counsel for the petitioner, Sri S. K. Srivastava for the u. P. Financial Corporation and the learned Standing Counsel.

(3.) THE submission of the petitioner's Counsel is that the loan which was advanced to the petitioner was not under any state sponsored scheme and therefore the provisions of the U. P. Public Money (Recovery of Dues) Act, 1972 would not be attracted for recovery of the loan. Such a loan submits the petitioner's counsel, can be recovered only under the provisions of The Recovery of Debts due to Banks and Financial Institutions Act, 1993 or under the provisions of section 32-G of the State Financial Corporation Act. The petitioner has not disputed the liability to pay the sum of Rs. 21,11,640/-and indeed Sri Shashi nandan Counsel for the petitioner did not contend before us that the amount which is being sought to be recovered is in excess of what was due. He submits that even under U. P. Public Money (Recovery of Dues) Act, 1972 the amount is to be recovered by sale of the mortgaged property. We shall first take up the last contention. The petitioner has filed a copy of the report of the Government valuer dated 5. 2. 2008 in which the value of the land is shown as Rs. 2,79,600/-, that of the building is shown as Rs. 7, 93,781. 02 Paisa and that of the machinery has been shown as 1,77,184/ -. Total valuation of the mortgaged property even according to the valuer's report filed by the petitioner is Rs. 12,50,565/ -. It is a well known fact of which judicial notice may be taken that the properties which are brought to sale by public auction do not fetch the full market value of the property for the obvious reason that an auction sale is liable to be challenged and its fate is uncertain. Thus even if resort is made to recover the dues by sale of the mortgaged property a very substantial balance is sure to remain, the mortgaged property being insufficient to satisfy the liability. The corporation would therefore have to proceed against other properties of the borrower.