Case: Himachal Pradesh Financial Corporation Vs. Anil Garg and Ors

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 The Suit was withdrawn on 12.12.1995 under Order 23, Rule 1 of the Code of Civil Procedure stating that the Appellant desired to proceed under the Act. The Suit was dismissed as withdrawn.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 v. 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.

Reasoning:
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.The bar under Order 23 Rule 1 would apply only to a fresh Suit and not proceedings under the Act.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.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.