HARISH TARA REFRACTORIES P LTD Vs. CERTIFICATE OFFICER

JUDGEMENT

(1.) M/s. Harish Tara Refractories Private Limited, the petitioner herein, is a company having its registered office at No. 31/G, Beadon Row, Calcutta. The company carries on business at Mccluskuegang, Ranchi in the State of Bihar. The petitioner company had entered into several agreements with the State Bank of India, Main Branch, Ranchi, the Respondent No. 3 herein, for cash credit and other facilities. The case of the State Bank of India is that there were various dealings and transactions between the parties and a large sum of money became due and payable by the petitioner company to the Bank. The admitted liability of the petitioner company "as on 1st Oct, 1979 was Rs. 31,18,993,55 P. (inclusive of stamp costs). The petitioner company formally closed its business on or about 16th Aug, 1977 and as it had no chance of revival, the bank called upon the petitioner company to pay the accumulated dues together with interest. The Directors of the Company who had guaranteed the repayment of the loans advanced by the State Bank of India were also called upon to pay off the loan amount. Since the repayment of the loan was not made in spite of demands, on or about 8th Dec, 1980, the Branch Manager of the State Bank of India, Main Branch, Ranchi, sent a requisition for a certificate in Form No. 2 under S.5 of the Bihar and Orissa Public Demands Recovery Act (hereinafter described as the said Act) for recovery of the outstanding loan amount together with interest. In the requisition form the nature of the demand was described as "Advances for cash credit, bill advance, medium term loan and instalment credit". The Branch Manager certified in the requisition form that he was satisfied after enquiry that the amount was due from the petitioner company. A letter was also sent along with the requisition dated 8th Dec, 1980 in which it was noted that the interest had been calculated up to 15th October, 1980 and the interest at the rate of 15.10% per annum had to be realised from 16-10-1980 to the date of realisation. Thereupon, the Certificate Officer issued a certificate for a sum of Rs. 31,18,999.10P. under Ss.4 and 6 of the Bihar and Orissa Act IV of 1914. The Certificate Officer certified in the certificate "I further certify that the above mentioned sum of Rs. 31,18,999. 10p. was recoverable and its recovery by suit is not barred by law". This certificate has been challenged by the petitioner company on mainly two grounds. It has been contended that the certificate was issued without any application of mind mechanically and without any compliance with the requirements of the statute. Secondly, it has been contended that in any event, the Bihar and Orissa Public Demands Recovery Act, in so far as it permits recovery of any debt due to the State of Bank of India by certificate proceeding, is ultra vires the Constitution.

(2.) In support of the contention that the certificate was issued without any application of mind, my attention was drawn to the certificate itself and also the order sheet. It appears from the order sheet that it was recorded on 13th Jan, 1981, inter alia, that a requisition had been issued from the State Bank of India, Ranchi Branch and "From the examination of the requisition, I am satisfied that the demand is recoverable and the recovery suit is not barred by law". It was recorded on 21st Jan, 1981 that Court-fees stamp of Rs. 19,500/- had been filed on that day and notices were issued to all certificate debtors under S.7 of the Act. The contention of the petitioner is that at the time of filing of the certificate, the Certificate Officer had nothing but a requisition for certificate under S.5 under, a covering letter of the Branch Manager of the State Bank of India. Under S.6 the Certificate Officer had to be satisfied (1) the demand was recoverable, and (2) the recovery was not barred by law before a certificate could be filed. The contention of the petitioner is that the certificate as well as the covering letter did not contain any material on the basis of which the Certificate Officer could be satisfied that the demand was recoverable, or that the recovery of the demand was not barred by law. The Certificate Officer merely reproduced the language of the section in the order sheet without any basis or any material.

(3.) On behalf of the Respondents it has been contended that in the requisition it was categorically stated by the Branch Manager that the amount was justly recoverable and that its recovery by suit was not barred by law. The nature of the loan amount was given in the requisition. The Certificate Officer was entitled to rely upon the statements made by a high official of the State Bank of India and the requisition itself was sufficient material on the basis of which the Certificate Officer was entitled to act. It was further contended that it cannot be stated as a matter of law that the statement of the Bank Manager was not a material on the basis of which the requisite satisfaction of the Certificate Officer could not be arrived at.