Page 1 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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Page 2 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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Page 3 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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Page 4 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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Page 5 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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Page 6 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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Page 7 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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Page 8 "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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Page 9 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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Page 10 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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