DIRECTOR OF INDUSTRIES, U.P. AND ORS. versus DEEP CHAND AGGARWAL

Citation: [1980] 2 S.C.R. 1015 · Decided: 06-02-1980 · Supreme Court of India · Bench: D.A. DESAI · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

• 
• 
DIRECTOR OF INDUSTRIES, U.P. AND ORS. 
v. 
DEEP CHAND AGGARWAL 
February 6, 1980 
[D. A. DESAI AND E. S. VENKATARAMIAH, JJ.] 
1015 
A 
Public Moneys (Recovery of Dues) Act, 1965 (U.P. Act 
No. XXV 
of 
B 
1965) Section 3-Whether offends Article -14 of tl:e Constitution. 
A sum of Rs. 15000 /- \Vas advanced to the Re~:pon<lent by the a.ppellant 
for the purpose of setting up a panel pins and wire nails industry in Hardoi 
.on the former hyPothecating under the mortgage deed his house by ·way of 
security for the loan. 
The respondent committed default in repayment of the 
loan. 
The State Government was compelled to take coercive measures 
to 
:oecover the ha.lance of the amount due and payable under the <leed as if it 
were an arrear of land revenue by resorting to section 3 of the Public Moneys 
(Recovery of Dues) Act, 1965 read with sections 279/281 
of 
the 
U.P. 
Zamindari Abolition and Land Reforms Act, 1950. 
The respondent, there-
fore, filed a petition under Article 226 of the Constitution on the file of the 
High Court of Allahabad (Lucknow Bench) questioning the competence of 
the revenue authorities to recover the balance of the amount due under the 
,deed as if it were an arrear of land revenue on the ground of violation of 
Article- 14 of the Constitution. 
Following the decision of this Court in Nor-
thern India Calere.rs P. Ltd. and Anr. v. Stute of Punjab and Anr., [1967] 
3 SCR 399 (which held the field at that time and since 
overruled) 
the 
High Court declared that Section 3 of the Act violated Article 14 of the 
Constitution and quashed the recovery proceedings initiated by the revenue 
authorities. 
Allowing the appeal by certificate, the Court 
c 
D 
E 
HELD : Section 3 of the Public Moneys (Recove1y of Dues) Act 
1965 
which enables the State Government to recover the sums advanced under the 
circumstances mentioned therein, as if these were arrears of 
land 
revenue 
cannot be held to be discriminatory and viblative of Article 14 of the Consti-
F 
tution. 
[10230-El 
(a) Section 3 ( 1) ( c) of the Act provides that \vhere any person is a party 
to a.ny agreement providing that any money payable thereunder to the State 
Government shall be recoverable as arrear of land revenue and such person 
makes any default in repayn1ent of the Joan. or advance or any instalment 
thereof then the arrear due and payable by hin.1 may be recovered as if it 
G 
were an arrear of land revenue by issuing a certificate to 
the 
Collector. 1 
The remedy of the State Government to recover the amount by instituting a 
<Uit also remains unaffected by the Act. 
[l019G-Hl 
(b) There is reasonable basis for the classification made by the statute 
and that the classification does haVe a reasonable relation to the object 
of 
the statute. The Act is passed with the object of providing a speedier remedy 
to the State Government to realize the loans advanced by 
it ' or by 
the 
ff 
~Jttar Pradesh Financial Corporation. 
The State Government while advancing 
loans does not act as an ordinary banker with a view 
to 
earning interest. 
A 
B 
c 
0 
E 
1016 
SUPREME COURT REPORTS 
(1980] 2 S.C.R 
Ordinarily it advances Joans in order to assist the people financially in esta-
blishing an industry in the State or for 
the 
development 
of 
agriculture,. 
anima1 husbandry and for such oth;:r purposes 
which 
would, 
advance 
the 
economic well-being of the people. 
The amounts so advanced are repayable 
in easy instalments with interest which would ordinarily be lower than the 
rate of interest payable on loans .advanced by banking institutions which are 
run on commercial lines. 
The loans are advanced from out of the 
funds 
of the State in \Vhich all the people of the 
State 
are 
vitally 
interested. 
Moneys advanced by the Statt: 'Government have got to be recovered expedi-
tiously so that' fresh advances may be made to others who ha.ve 
not~ yet 
received finar.cial assistance from the State Government. 
If the State Govern-
ment should resort to a remedy by way of a suit on the ·mortgage deeds or 
~onds executed in its favour, the realization of the amounts 
due 
to 
the 
Government is bound to be dela.yed resulting in 
non~availability of sufficient 
funds in the. hands of the State Government for advancing fresh loans. It 
is with the object of avoiding the usual delay involved in the disposal 
of 
suits in civil Courts and providing for an expeditious remedy, th€ Act has 
been enacted. In the instant case, the mort

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