2017 (3) TMI 1846 - SC - Indian Laws

Validity of auction notice - failure to repay the two loans availed for purchase of a truck and establishing an industry for manufacture of steel trunks - Section 85 of the Himachal Pradesh Public Moneys (Recovery of Dues) Act, 1973 - HELD THAT - 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. The bar under Order 23 Rule 1 would apply only to a fresh Suit and not proceedings under the Act. In Sarva Shramik Sanghatana v. State of Maharashtra 2007 (11) TMI 590 - SUPREME COURT , the application Under Section 25-O of the Industrial Disputes Act, 1947 for closure of undertaking was withdrawn as attempts were made for settlement of the matter.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 It was opposed as barred under Order 23 of the Code of Civil Procedure since the earlier application was withdrawn unconditionally with no liberty granted. 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 - 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 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of withdrawal of Suit for recovery under the Himachal Pradesh Public Moneys Act, 1973.
2. Time-barred claim for recovery of loans availed for truck purchase and steel trunk industry.
3. Application of public policy in loan recovery proceedings.
4. Distinction between proceedings in a Suit and recovery under the Act.
5. Validity of auction notice under Section 85 of the Act.

Analysis:

1. The Appellant contested the High Court's order allowing the Respondent's writ petition, which set aside the auction notice under the Act due to the withdrawal of a Suit for loan recovery. The Appellant argued that the withdrawal aimed at pursuing a more efficient remedy under the Act, not abandonment, as the Act allowed independent recovery proceedings without prejudice to other modes. The absence of liberty in the withdrawal order was deemed irrelevant, and the principle of public policy was wrongly applied by the High Court.

2. The dispute involved loans for a truck and a trunk industry, with repayment issues dating back to the early 1990s. The High Court's finding of the claim being time-barred due to lack of action from 1996 to 2002 was challenged, highlighting earlier recovery efforts through a recovery certificate issued in 1994 and subsequent legal battles initiated by the Respondent.

3. The concept of public policy was debated concerning loan recovery, emphasizing the loanee's duty to repay and the societal interest in upholding legal obligations. The High Court's application of public policy to restrain loan recovery was criticized as misconceived, with timely repayment being crucial for facilitating loans to those in need.

4. The judgment clarified the distinction between legal proceedings in a Suit and recovery under the Act, emphasizing that the withdrawal of the Suit did not bar proceedings under the Act. The Act's provisions for recovery as arrears of land revenue through a certificate to the Collector were distinguished from court-based legal actions, highlighting the different legal procedures governing each.

5. Finally, the Supreme Court set aside the High Court's order, ruling in favor of the Appellant and allowing the auction notice under Section 85 of the Act to proceed. The Court emphasized the necessity of expedited loan recovery proceedings and rejected the notion of the Appellant abandoning the claim, ultimately deeming the High Court's decision unsustainable and ordering the continuation of the recovery process in accordance with the law.