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REPORTABLE   IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.661 OF 2008

Himachal Pradesh Financial Corporation … Appellant

Versus

Anil Garg and others … Respondents

JUDGMENT

NAVIN SINHA, J.

 The Appellant is aggrieved by order dated 4.10.2005 allowing

the writ petition of the Respondent, setting aside the auction notice

under Section 85 of the Himachal Pradesh Public Moneys (Recovery of

Dues)  Act,  1973  (hereinafter  be  referred  to  as  "the  Act")  issued

consequent to his failure to repay the two loans availed for purchase of

a truck and establishing an industry for manufacture of steel trunks.  

2. The  Respondent  has  remained  unrepresented  despite  valid

service of notice.

3.   Learned  Senior  Counsel  Shri  J.S.  Attri,  on  behalf  of  the

Appellant,  submits  that  the  High  Court  has  erred  by  inferring

abandonment of the claim by withdrawal of the Suit.  The withdrawal

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was made to initiate fresh proceedings under the Act, as it provided for

a more speedy and effective remedy, under a special law. The absence

of any liberty in the withdrawal order is not relevant. There was no bar

under the Act to the proceedings. The remedy under Section 3(1)(d)

(iv) of the Act was independent and without prejudice to any other

mode of recovery under any law for the time being in force, and which

will include a Suit. The High Court had wrongly applied the principle of

‘public  policy’  to restrain recovery of  a public  loan.  The doctrine of

election had no application in the facts of the case.

4.  The High Court erred on facts in holding that the proceedings

under the Act for recovery of the trunk loan was initiated only in the

year  2003,  and that nothing had been done by the Appellant from

1996  till  2002  thus  making  the  claim  time  barred.  The  recovery

certificate had been issued by the Collector as far as back 3.9.1994. It

was  stalled by the  Respondent  filing  writ  petitions  before  the  High

Court.  The  High  Court  had  granted  liberty  to  the  Appellant  for

proceeding afresh in accordance with law.  

5. We  have  considered  the  submissions,  as  also  perused  the

materials on record.

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6. The Respondent applied for a loan of Rs.1.90 lakhs in 1989 to

purchase a Swaraz Mazda truck and executed a hypothecation deed.

Repayment  schedule  commenced  from  10.1.1990  culminating  on

10.7.1994. Rs.10,000/- only was repaid on 6.3.1991. The vehicle was

seized on 6.5.1991 under Section 29 of the State Finance Corporation

Act, 1951 and auction sold on 4.9.1991 for a sum of Rs.1.46 lakhs.   A

Money Suit was filed before the Senior Sub Judge, Shimla for recovery

of the balance of Rs.1,25,270/- along with future interest and costs.

The Suit was withdrawn on 12.12.1995 under Order 23, Rule 1 of the

Code of Civil Procedure stating that the Appellant desired to proceed

under  the  Act.  The  Suit  was  dismissed  as  withdrawn.  Recovery

Certificate was then issued under the Act on 19.4.1996 for a sum of

Rs.1,94,283/- followed by a warrant of arrest.  

7.  The Respondent thwarted the Certificate proceedings by filing a

Suit before the Senior Sub Judge, Shimla contending that the fresh

proceedings were barred due to withdrawal  of the Suit without any

liberty,  and  that  the  claim  was  time  barred.  An  interim-order  was

obtained, but ultimately the Suit was dismissed for non-prosecution on

21.5.2001.  

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8. Another loan of Rs.30,000/- was availed by the Respondent on

15.12.1988 for a trunk industry and a hypothecation-deed executed in

respect  of  property  bearing  Khata/Khatuni  No.102/347,  Khasra

No.1014. The last installment of the loan was payable on 10.1.1996.

The Respondent remitted Rs.4,000/- in May 1991 and Rs.1,000/- in

November 1991. A request was made before the Collector for recovery

certificate on 12.11.1992, and the Certificate was issued on 3.9.1994.

The Respondent objected that no prior notice was given and that the

proceedings were time barred.

9. The Respondent instituted C.W.P. No. 1102 of 2002 before the

High  Court  questioning  both  the  recovery  proceedings.  The  writ

petition was allowed on technical grounds with liberty to the Appellant

for proceeding afresh in accordance with law. Fresh show cause notices

were  then  issued  in  respect  of  the  two  loans  on  26.11.2002  and

2.11.2002  respectively,  followed  by  fresh  recovery  certificates  on

10.3.2003  for  recovery  of  Rs.5,50,165/-  and  Rs.61,503.92/-

respectively.

10. The Respondent again filed C.W.P. No.136 of 2005 pursuant to

which the impugned order came to be passed.  

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11. The  High  Court  relying  on  Sarguja  Transport  Service  vs.

State Transport Appellate Tribunal, AIR 1987 SC 88, held that the

Suit having been withdrawn unconditionally for inexplicable reasons,

and without any liberty granted under Order 23 Rule 1 of the Code of

Civil  Procedure  for  initiating  appropriate  legal  proceedings,  it

amounted to abandonment of the claim for the truck loan. It would be

contrary to public policy and abuse of the process of law to allow any

fresh proceeding for the same cause of action. The doctrine of election

was also invoked. The loan with regard to the trunk industry was held

to be time barred as no action was taken for recovery from 1996 till

2002.

12. The  factum  of  loan  is  not  in  dispute.  No  explanation  was

furnished why the installments were not repaid and the loan closed. A

pittance was repaid. The loan was disbursed from public funds of the

tax payers' money. The Respondent was a trustee for the loan amount.

It could not become a windfall for him. All attempts by the Appellant

for recovery were successfully thwarted by the Respondent by either

filing a Suit or successive writ petitions. The sanguine confidence of

the Respondent is also reflected by his failure to appear in the present

proceedings despite valid service of notice.  

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13. The question whether there has been an abandonment of the

claim by withdrawal of the Suit is a mixed question of law and fact as

held in  Ramesh Chandra Sankla vs. Vikram Cement, (2008) 14

SCC 58.  The language of the order for withdrawal will not always be

determinative.  The  background  facts  will  necessarily  have  to  be

examined for a proper and just decision.  Sarguja Transport Service

(supra)  cannot  be  applied  as  an  abstract  proposition  or  the  ratio

applied  sans  the  facts  of  a  case.  The  extract  below  is  considered

relevant observing as follows :-

“9……While the withdrawal of a writ petition filed in a High  Court  without  permission  to  file  a  fresh  writ petition may not bar other remedies like a suit……..”

14. The application for withdrawal stated that it was being done to

pursue remedies under the Act. Undoubtedly the proceedings under

the  Act  are  more  expeditious  for  recovery  as  compared  to  a  Suit,

which after decree is required to be followed by Execution proceedings.

Section 3(1)(d)(iv) of the Act provided that the remedy under it was

without prejudice to any other remedy available under any other law.

The  Appellant,  therefore,  never  intended  to  abandon  its  claim  by

withdrawing the Suit. The language of the withdrawal order cannot be

determinative without considering the background facts.     

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15. The bar under Order 23 Rule 1 would apply only to a fresh Suit

and not proceedings under the Act. In Sarva Shramik Sanghatana

vs. State of Maharashtra, (2008) 1 SCC 494, the application under

Section  25-O  of  the  Industrial  Disputes  Act,  1947  for  closure  of

undertaking was withdrawn as attempts were made for settlement of

the matter. Settlement not having been possible, the Management filed

a fresh application. It was opposed as barred under Order 23 of the

Code of  Civil  Procedure since the earlier  application was withdrawn

unconditionally with no liberty granted, relying on Sarguja Transport

Service  (supra).  The  argument  was  repelled  holding  that  the

proceedings under the Industrial Disputes Act were not a Suit and that

withdrawal was bonafide to explore amicable settlement. It was not a

withdrawal made malafide or for Bench hunting holding as follows:-  

"22. No  doubt,  Order  23  Rule  1(4)  CPC  states  that where the plaintiff withdraws a suit without permission of the court, he is precluded from instituting any fresh suit in respect of the same subject-matter. However, in our opinion, this provision will  apply only to suits.  An application  under  Section  25-O(1)  is  not  a  suit,  and hence,  the  said  provision  will  not  apply  to  such  an application."

16. In Vikram Cement (supra) the earlier petition was dismissed

as  not  pressed  and  the  second  application  was  opposed  as  not

maintainable. Dismissing the objection it was observed as follows:-

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"65. It is thus clear that it was not a case of abandonment or giving up of claim by the Company.  But, in view of the office objection, practical difficulty and logistical problems, the petitioner Company did not proceed with an “omnibus” and composite petition against several workmen and filed separate petitions as suggested by the Registry of the High Court.”

17. The Act provides for recovery of certain dues as arrears of land

revenue by sending a certificate to the Collector, mentioning the sum

due requesting that the sum together with costs may be recovered.

The  High  Court  erred  in  holding  that  the  H.P.  Public  Moneys

(Recovery of Dues) Act, 2000 repealing the earlier Act did not contain

any provision that the remedy was without prejudice to the rights

under any other law. The proceedings in a Suit and recovery under

the Act as arrears of land revenue are under different laws governed

by different procedures. A Suit is instituted in a Court of law and is

governed by the Code of Civil Procedure while the proceedings under

the Act are before the executive statutorily empowered.  In  C.C.E.

vs. Ramdev Tobacco Company, (1991)(2)SCC 119, the distinction

was noticed as follows :-

"6.......There can be no doubt that ‘suit’ or ‘prosecution’ are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority, even if a statutory one......"

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18. That the proceedings in  a Suit  could not be equated with a

certificate proceeding was further  noticed in  ESI Corpn.  vs.  C.C.

Santhakumar, (2007) 1 SCC 584, observing :-

"25.......Therefore, it cannot be said that a proceeding for  recovery  as  arrears  of  land  revenue  by  issuing  a certificate could be equated to either a suit, appeal or application in the court......"

19.  The phrase ‘public policy’ is not capable of precise definition. In

P.Rathinam v. Union Of India, (1994) 3 SCC 394, it was observed:-

"92. The concept of public  policy is,  however, illusive, varying  and  uncertain.  It  has  also  been  described  as “untrustworthy guide”, “unruly horse” etc...."

Broadly  it  will  mean  what  is  in  the  larger  interest  of  the  society

involving  questions  of  righteousness,  good  conscience  and  equity

upholding the law and not a retrograde interpretation. It cannot be

invoked to facilitate a loanee to avoid legal obligation for repayment of

a loan.  The loanee has a pious duty to abide by his promise and

repay.  Timely repayment ensures facilitation of the loan to others who

may be needy. Public policy cannot be invoked to effectively prevent a

loanee from repayment unjustifiably abusing the law.  Invocation of

the  principle  of  doctrine  of  election  in  the  facts  of  the  case  was

completely misconceived.

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20.  The High Court factually erred in holding that the trunk loan was

time barred because the Appellant took no steps for recovery of the

dues from 1996 till 2002 overlooking the Certificate dated 3.9.1994.  

21.  In  conclusion,  it  is  held  that  the  proceedings  in  a  Suit  are

essentially different from proceedings under the Act.  The withdrawal

of the Suit was no bar to proceedings under the Act.  There was no bar

under the Act to the proceedings.  There had been no abandonment of

claim by the Appellant.  It would be contrary to public policy to prevent

the  Appellant  from recovering  the  loan.   The  recovery  proceedings

were  not  time barred.   The order of  the  High Court  is  held  to  be

unsustainable  and  is  set  aside.   The  auction  notice  dated

13.01.2005/15.01.2005 under Section 85 of the Act shall now proceed

in accordance with law and be concluded at the earliest expeditiously.

22. The appeal is allowed.

………………………………….J.     (Ranjan Gogoi)   

……….………………………..J.    (Navin Sinha)   

New Delhi, March 28, 2017

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