STATE OF PUNJAB & ORS. versus S. DHARAM SINGH (DEAD) BY SUCCESSOR DESA SINGH.& ANR.

Citation: [1985] SUPP. 2 S.C.R. 705 · Decided: 29-08-1985 · Supreme Court of India · Bench: E.S. VENKATARAMIAH · Disposal: Dismissed

Judgment (excerpt)

STATE OF PUNJAll & ORS , 
v. 
s. DHARAM SINGH (DEAD) BY 
SUCCESSOR DESA SINGH.& ANR. 
AUGUST 29, 1985 
[E.S. VENKATARAMIAH AND R.B. MISRA, JJ.j 
70) 
Punjab Land Revenue Act, section 67(b), scope of - Arrest 
and detention of the borrowers' person to realise the loan amount 
when can be resorted to under clause (b) of section 67 of Punjab· 
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Land Revenue Act - Whether could be resorted to by-passing the 
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contractual remedy open under the loan Agreement. 
Respondent No.2 a registered House Building Society with 32 
members entered into an agreement with the Government of Punjab 
whereunder the Government agreed to advance a loan of Rs. 
1,02,000 to its members under the lower income group housing 
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scheme for the purpose of constructing residential houses in Dera 
Baba Nanak. As per the written agreement the loan advance was 
payable in three instalements. The first instalment of Rs. 20400 
· was to be paid by the Govt. on the execution of the deed of 
agreement, the second instalment of Rs. 51000 to be paid on the 
completion of the houses to the plinth level and the last instal-
ment of Rs. 30, 600 on the completion of the house to the roof 
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level. The society on the other hand had to mortgage the sites 
together with the houses erected or to be erected thereon to the 
govt. as security for the repayment of loan and 
the amount of 
loan was to be paid ·back in several instalments. Pursuant to the 
agreement the Government issued a cheque for Rs.71,400 towards 
the first and second instalments. The third instalment was not 
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paid for failure to furnish the required certificate that the 
houses had reached the roof level. The members of the society 
also failed to repay the loan. ln the situation, a notice was 
issued by the Collector of the District to the members of the 
society to deposit the overdue ins.talments of loan and to appear 
before the Deputy commissioner, Gurdaspur on August 24, 1964 to 
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show cause why the entire amount should not be recovered from 
them by means of arrest and detention. The society challenged the 
\ notice by filing a writ petition in the High Court. Its stand was 
tbat in the absence of any such stipulation in the loan agreement 
the amount could ::wt be recovered by arrest of the members of the 
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706 
SUPREME COURT REPORTS 
[1985] SUPP.2 s.c.R. 
society in the first instance. The writ petition remained pending 
for more than six years but no instalments had been paid by the 
members of the society to the government during that period. 
The Writ Petition was allowed by the learned Single Judge 
by his judgment dated 17th March, 1971 holding that the govern-
ment IilU6t resort to the contractual remedy which it reserved to 
itself while entering into the loan agreement. The State preferr-
ed a letters patent appeal which was summarily dismissed. Hence 
the appeal by special leave. 
Dismissing the appeal, the Court, 
llELl.l: 
A bare reading of clause 4 of the agreement makes it 
evidently clear that the Government has first to proceed against 
the property mortgaged and sell the property. Only in case the 
entire amount could not be realised that the Government could 
proceed against the borrower personally. The government is as 
much bound by the agreement aa the borrower and, therefore, the 
government has first to proceed against the mortgaged property. 
In other words, the government must resort to the contractual 
remedy which it reserved to itself when entering into the loan 
agreement before resorting to clause (b) of section 67 of the 
Punjab Laud Revenue Act. [709 B-C, 706 H, 710] 
llam Barayan Agarwal etc. v. State of u.P. & Ors. [1983] 
3 S.C,R 684 explained and distinguished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 625 .of 1972. 
From.the Judgment and Order dated 13.9.1971 of the Punjab.& 
Haryana High Court in L.P.A. No. 254 of 1971. 
' 
S.K. Bagga, for the Appellants• 
The ~udgment of the Court was delivered by 
MISRA, J. The present appeal by special leave is directed 
against the judgment of a Division Bench of the High Court of 
Punjab and Haryana dated 13th September, 1971 dismissing ·the 
letters patent appeal against the judgment of a learned Single 
Judge dated 17th March, 1971 allowing the writ petition filed by 
the respondents. 
The short question that falls for consideration in the 
present appeal is whether the amount of loan in question can be 
STATE v. S .DHARAM SINGH [MISRA, J. J 
707 
recovered as arrear

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