LexM/S. A.P.T. ISPAT PVT. LTD. versus U.P. SMALL INDUSTRIES CORPORATION LTD. & ANR.
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A B [2010] 5 S.C.R. 150 M/S. A.P.T. ISPAT PVT. LTD. v. U.P. SMALL INDUSTRIES CORPORATION LTD. & ANR. (Civil Appeal No. 663 of 2003) APRIL 23, 2010 [AFTAB ALAM AND SWATANTER KUMAR, JJ.] Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972 - ss. 2 and 3 - Non-payment of dues, for the goods C purchased from the financial Corporatjon - Corpora_tion issuing recovery certificates uls. 3 and ajso filing FIR al~eging . offences under /PC - Challenge t91recovery certificate, · dismissed by High Court - On appeal, held: The recovery certificates are illegal - Such certificates should be based on D tarigible agreement - Sale of good is not 'financial assistance', hence s. 3 not applicable - In view of FIR, goods were ·taken away in the course of criminal action - The Act is not intended to recover value of goods taken away in the course of criminal · action - After coming into force of Debt Recovery Act, E recourse cannot be taken to the U.P. Act - Recovery of Debts due to Financial Institutions Act, 1993 - s. 34 (2). Managing Director of respondent-Corporation issued. two recovery certificate in exercise of power uls. 3 of U.P. Public Moneys (Recovery of Dues) Act, 1972, alleging F therein that the directors of the appellant-company had not made payments for the goods purchased from one of the Depots of the Corporation. It also lodged FIR in this regard giving rise to a s-i.ilistantial criminal case, under G 'H various Sections of the Penal Code, 1860. Appellant challenged the recovery certificates by filing a writ petition, which was dismissed by High Court. Hence the present appeal. 150 A.P.T. ISPAT PVT.LTD. v. U.P. SMALL INDUSTRIES 151 CORPORATION LTD. & ANR. Allowing the appeal, the Court A HELD: 1.1. The High Court has stretched the meaning of "financial assistance" as defined in Section 2 and the scope of Section 3 of U.P. Public Moneys (Recovery of Dues) Act, 1972 beyond reasonable limits. From a bare reading of Section 3 it is evident that the dues must arise from an agreement to which the. person from whom recovery is to be made is a party. In the scheme of the Act, there is no provision for any adjudication. Once there is any default under an agreement, the designated authority is authorized to C issue a recovery certificate and send it to the Collector who is obliged to recover the certificate, amount together with interest from the certificate debtor as arrears of land revenue. At no stage, the certificate debtor is given an opportunity to put up his case. Such being the legal D position, the recovery certificate must be based on a tangible agreement and it should even prima facie appear that the dues arise from a breach of the terms of the agreement. A proceeding u/s. 3 of the Act cannot be sustained by piling up assumptions in favour of the certificate-holder and against the judgment-debtor. [Para B E 14) [161-F-H; 162-A] 1.2. The appellant-company was purchasing wire rods as raw material from the Corporation. The sale of the F goods would not become financial assistance rendered to the appellant unless it is shown that the supply of the goods was as a loan or grant or by way of hire purchase in terms of some agreement. [Para 13) [161-A-B] 1.3. In the facts of this case the-two impugned G recovery certificates are quite illegal and untenable. It is evident that the dues of which recovery is sought by the impugned certificates do not pertain to any loan, advance or grant given to the appellant or to any credit concerning any hire purchase of goods sold to the appellant by the H 152 SUPREME COURT REPORTS [2010] 5 S.C.R. ii A Corporation under any agreement, express or implied. · The dues do not relate to any financial assistance. [Paras 15 and 17] [162-E-F; B] 1.4. ,In the present case, the so called supplies were B not even made in the normal course of business. A reference to the FIR makes it clear that according to the Corporation the goods were taken away by the appellant in a criminal action constituting a nuiriber of offences under the Penal Code. The U.P. Public Moneys (Recovery of Dues) Act, 1972 was clearly not intend.ad to recover the C goods or the monetary value of goods taken away in course of theft or dacoify or lost as a result of dishonest appropriation or any other alleged criminal action. [Paras 16) [162-C~DJ D . 2. After the coming into force· of the Recovery of Debts Due to Banks and Financi
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