RAM KRIPAL SINGH versus STATE OF U.P. AND ORS.

Citation: [2007] 6 S.C.R. 1187 · Decided: 16-05-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed
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Judgment (excerpt)

' 
RAM KRIPAL SINGH 
A 
v. 
STATE OF U.P. AND ORS. 
MAY 16, 2007 
[DR. ARIJIT PASA YAT AND LOKESHWAR SINGH PANT A, JJ.] 
B 
State Financial Corporation Act, 1951-s.29-Debtor-Company wound 
up-Recovery citation against the guarantor-Citation challenged by the 
guarantor in Writ Petition, on the ground thal he could not be proceeded 
against, unless and until property of the debtor was not sold-Writ Petition C 
dismissed by High Court-On appeal, held: Recovery proceedings against 
the guarantor was correct-If a company-debtor is wound up, ~late Financial 
Corporation has no right to unilaterally exercise its power to realize the 
mortg~d property without consent of Official Liquidator-Uttar Pradesh 
Public Money's Recovery of Dues Act, 1972. 
D 
Recovery proceedings were initiated against the debtor-company. The 
same was under challenge in another Writ Petition. The Company was wound 
up. Thereafter recovery proceedings were initiated against the appellant-
Guarantor under Uttar Pradesh Public Money's Recovery of Dues Act, 1972. 
The recovery citation was challenged by the appellant in Writ Petition on the E 
ground that the proceedings were without jurisdiction as the guarantor could 
not be proceeded against unless and until the property of the principal debtor 
is sold. High Court dismissed the petition holding that proceedings against 
the guarantor was right as the debtor-company had been wound up. Hence 
the present appeal. 
Dismissing the appeal, the Court 
HELD: 1. In the present case, the principal debtors-Company has already 
been wound up and official liquidator has been appointed. The position would 
F 
be different ifthe company is under liquidation. The right of State Financial 
Corporation (SFC) unilaterally exercisable under Section 29 of the State G 
Financial Corporation Act, 1951 is available against a debtor, ifa company, 
only so long as there is no order of winding up. SFCs cannot unilaterally act 
to realize the mortgaged properties without the consent of the official 
liquidator. [Paras 6, 7, 9 and 10111189-D, G; ll90-A, BJ 
1187 
H 
1188 
SUPREME COURT REPORTS 
[2007] 6 S.C.R. 
A 
International Coach Builders Ltd. v. Karnataka State Financial 
Corporation, (20031 10 SCC 482, relied on. 
Pawan Kumar Jain v. Pradeshiya Industrial and Investment 
Corporation of U.P., (2004) 6 SCC 758, distinguished. 
B 
2. It appears to be a classic case where the efforts for recovery of the 
amounts have been frustrated on some pretext or other. A recalcitrant 
defaulters' case deserves to be dealt with sternly. 
(Para 81 (1189-G, H; 1190-AI 
Orissa State Financial Corporation and Anr. v. Hotel Jogendra, 119961 
c 5 sec 357, relied on. 
D 
E 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2675 of2007. 
From the final Judgment and Order dated 05.05.2005 of the High Court 
of Judicature at Allahabad in Writ Petition No. I I 12 of 2005. 
Satya Mitra, Dhirendra Pandey and Sanjay R. Hedge for the Appellant. 
T.N. Singh, Rajeev Dubey, Kamlendra Mishra, Aarohi Bhalla, Sunil Kumar 
Singh and Sujata Kurdukar for the Respondents. 
The Judgment of the Court was delivered by 
DR. ARIJIT PASA Y AT, J. I. Leave granted. 
2. Challenge in this appeal is to the order passed by a Division Bench 
of the Allahabad High Court dismissing the writ petition filed by the appellant. 
Challenge in the writ petition was to the recovery proceedings initiated 
F against him under Uttar Pradesh Public Money's recovery of Dues Act, 1972 
(in short the 'Act'). Prayer was to quash the citation ·issued by the Tehsildar 
principally on the ground that the proceedings are without jurisdiction as the 
respondent cannot proceed against the appellant as a guarantor unless and 
until the property of the principal debtor is sold. 
Since the recovery 
G proceedings were initiated in the year 1993, recovery citation during the 
pendency of the earlier writ petition was illegal and therefore the appellant 
was entitled to get protection in view of what has been stated by this Court 
in Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation 
of U.P., (2004] 6 sec 758. 
H 
3. Respondents on the other hand supported the action taken relying 
' 
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RAMKRIPALSINGHv. STATEOFU.P.[PASAYAT,J.J 
1189 
on a decision of this Court in Kai/ash Nath Agrawal v. Pradeshiya Industrial A 
and Investment Corporation of U.P., [2003] 4 SCC 305. It was also pointed 
out that the decision in Pawan Kumar's case (supra) is not applicable as the 
company had been wou
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