Case: S.K. Bhargava Vs. The Collector, Chandigarh &amp; Ors

it may, by notification, appoint in this behalf;(b) by a Corporation or a Government company, the Managing Director thereof,shall determine the sum due from the defaulter.(2) The Officer or the Managing Director, as the case may be, referred to in sub-section (1), shall send a certificate to the Collector mentioning the sum due from the defaulter and requesting that such sum together with the cost of proceedings be recovered as if it were an arrears of land revenue.(3) A certificate sent under sub-section (2) shall be conclusive proof of the matters stated therein and the Collector, on receipt of such certificate, shall proceed to recover the amount stated therein as arrears of land revenue.(4) No civil court shall have jurisdiction -(a) to entertain or adjudicate upon any case; or(b) to adjudicate upon or proceed with any pending case,relating to the recovery of any sum due as aforesaid from the defaulter. The proceedings relating to the recovery of the sums due from the defaulters, pending at the commencement of this Act in any civil court, shall abate." 6. It is not in dispute that before a certificate was sent by the Managing Director to the Collector for recovering the amount of Rs. 18,22,178.05, no notice was given to the appellant. Section 3(1) provides a procedure where any sum is recoverable from a defaulter. Section 3(1)(b) requires the Managing Director of a Corporation or a Government company to whom amount is due to determine the sum due from the defaulter. It is that sum so found due in respect whereof certificate is sent by the Managing Director under sub-section (2) of Section 3. The certificate so sent is by sub-section (3) regarded as conclusive proof of matters stated therein and the Collector, on receipt of the said certificate, is required to proceed to recover the amount stated therein as arrear of land revenue. Sub-section (4) ousts the jurisdiction of the civil court to entertain or adjudicate upon any case or proceedings relating to the recovery of any sum due from the defaulter.7. It is clear from the perusal of the above quoted Section that before a certificate can be issued by the Managing Director under sub-section (2) of Section 3, he must determine the `sum due from the defaulter as enjoined upon him by Section 3(1)(b). It is difficult to appreciate the contention of the learned counsel for the respondent Financial Corporation that any such determination can take place without notice to the defaulter. The jurisdiction of the civil courts to go into the question as to what is the amount due is expressly ousted by sub-section (4) of Section 3. In its place, the power has been given to the Managing Director under Section 3(1)(b) to determine as to what is the amount due from the defaulter. There can be no doubt that any such determination by the Managing Director will result in civil consequences ensuing. The determination being final and conclusive, would have the result of the passing of a final decree, inasmuch as the defaulters from whom any amount is found to be due, would become liable to pay the amount so determined and the Collector will have the right to recover the same as arrears of land revenue.8. In our opinion, even though Section 3 does not expressly provide for an opportunity being given to the alleged defaulter to explain as to whether any amount is due or not but in view of the nature of the said provision, the principles of natural justice must be read into it. The requirement of determination of the sum due by the Managing Director must be regarded as providing for the Managing Director hearing the alleged defaulter before coming to the conclusion as to what is the sum due. The very use of the words `determine and `sum due implies that there may be a lis between the parties and they have to be heard before a final conclusion is arrived at by the Managing Director. It is not a mere claim of the Corporation which is forwarded to the Collector for realisation, but it is the `sum due as determined by the Managing Director which alone is recoverable. As already observed, this determination cannot be done without notice to the alleged defaulter. 9. Ms. S. Janani, leaned counsel for the respondent Financial Corporation sought to rely upon the decision of this Court in Director of Industries, U.P. & Ors. v. Deep Chand Aggarwal, 1980(2) SCR 1015. In that case the validity of Section 3 of the Public Moneys (Recovery of Dues) Act, 1965 of U.P. was challenged. That Section enabled the State Government to recover the sums advanced as arrears of land revenue and it was sought to be contended that the said provisions was discriminatory and violative of Article 14 of the Constitution. The validity of the said Section 3 was upheld, but we find that the court was not called upon to deal with a question as to whether the principles of natural justice were implicitly enshrined in the said Section. In any case, this decision is of no assistance to the respondent for the simple reason that Section 3 of the U.P. Act is not identical with Section 3 of the Haryana Act, inasmuch as the U.P. Act did not contain a provision similar to Section 3(1)(b) of the Haryana Act which requires determination by the Managing Director of the sum due from the defaulter. We, however, do not express any opinion that where a provision like Section 3(1)(b) of the Haryana Act is not incorporated in a statute, whether the principles of natural justice would require a notice being given before any amount is sought to be recovered as arrears of land revenue. 10. For the reasons hereinabove as, admittedly, principles of natural justice were not complied with, it must be held that determination of the Managing Director under Section 3(1)(b) and the consequent certificate issued under Section 3(2) of the Haryana Act, both were vitiated.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. It is not in dispute that before a certificate was sent by the Managing Director to the Collector for recovering the amount of Rs. 18,22,178.05, no notice was given to the appellant. Section 3(1) provides a procedure where any sum is recoverable from a defaulter. Section 3(1)(b) requires the Managing Director of a Corporation or a Government company to whom amount is due to determine the sum due from the defaulter. It is that sum so found due in respect whereof certificate is sent by the Managing Director under sub-section (2) of Section 3. The certificate so sent is by sub-section (3) regarded as conclusive proof of matters stated therein and the Collector, on receipt of the said certificate, is required to proceed to recover the amount stated therein as arrear of land revenue. Sub-section (4) ousts the jurisdiction of the civil court to entertain or adjudicate upon any case or proceedings relating to the recovery of any sum due from the defaulter.7. It is clear from the perusal of the above quoted Section that before a certificate can be issued by the Managing Director under sub-section (2) of Section 3, he must determine the `sum due from the defaulter as enjoined upon him by Section 3(1)(b). It is difficult to appreciate the contention of the learned counsel for the respondent Financial Corporation that any such determination can take place without notice to the defaulter. The jurisdiction of the civil courts to go into the question as to what is the amount due is expressly ousted by sub-section (4) of Section 3. In its place, the power has been given to the Managing Director under Section 3(1)(b) to determine as to what is the amount due from the defaulter. There can be no doubt that any such determination by the Managing Director will result in civil consequences ensuing. The determination being final and conclusive, would have the result of the passing of a final decree, inasmuch as the defaulters from whom any amount is found to be due, would become liable to pay the amount so determined and the Collector will have the right to recover the same as arrears of land revenue.8. In our opinion, even though Section 3 does not expressly provide for an opportunity being given to the alleged defaulter to explain as to whether any amount is due or not but in view of the nature of the said provision, the principles of natural justice must be read into it. The requirement of determination of the sum due by the Managing Director must be regarded as providing for the Managing Director hearing the alleged defaulter before coming to the conclusion as to what is the sum due. The very use of the words `determine and `sum due implies that there may be a lis between the parties and they have to be heard before a final conclusion is arrived at by the Managing Director. It is not a mere claim of the Corporation which is forwarded to the Collector for realisation, but it is the `sum due as determined by the Managing Director which alone is recoverable. As already observed, this determination cannot be done without notice to the alleged defaulter.For the reasons hereinabove as, admittedly, principles of natural justice were not complied with, it must be held that determination of the Managing Director under Section 3(1)(b) and the consequent certificate issued under Section 3(2) of the Haryana Act, both were vitiated.