IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.661 OF 2008
Himachal Pradesh Financial Corporation … Appellant
Anil Garg and others … Respondents
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
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 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
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.
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.
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.
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
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
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:-
“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……”
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
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.
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
22. The appeal is allowed.
March 28, 2017