Suresh Chandra Gupta and Anr. vs Collector Kanpur Nagar & Ors.

S.R. Singh, J.

The questions that call for determination in this writ petition are four fold; First whether the U.P. Public Moneys (Recovery of Dues) Act, 1972 (hereinafter called the State Act, 1972) has been rendered void and inoperative, after the insertion of Section 32G in the State Financial Corporation Act, 1951 (in short the Central Act, 1951) in so far as it relates to recovery of debt payable to the corporation? Second, whether Section 3 of the State Act, 1972 is inconsistent with Section 32G of the Central Act, 1951 and if it is so, what is the effect? Third, whether the jurisdiction of the Collector to entertain an application of the Corporation for recovery under Section 3 of the State Act, 1972 of debt not being less than Rs. 10 lacs, is barred by Section 18 of the Recovery of Debts Due to the Bank and Financial Institutions Act, 1993 (in short the Central Act, 1993), Fourth, whether the U.P. State Financial Corporation having taken possession of the assets and properties of the borrower Company under Section 29 of the Central Act, 1951 was bound to exhaust its remedy under the said provision before initiating recovery proceeding against the sureties/guarantors?

I have had the advantage of going through the draft judgment prepared by my learned brother S.P. Mehrotra, J., I respectfully do not agree with the conclusions arrived at by my learned brother Mehrotra, J. I would, therefore, write a separate judgment.

Minimal facts necessary to highlight the issues involved in the case may be stated thus : The U.P. State Financial Corporation, party Respondent No. 3 herein sanctioned a term loan of Rs. 1.75 crores in favour of M/s. J.S. Metal (P) Ltd., an industrial concern, a registered company incorporated under the Companies Act, 1956 but out of the sanctioned loan only a sum of Rs. 1,42,48,000 is said to have been disbursed to the Company. The petitioners who happened to be the Directors of the borrower company stood as sureties and executed bonds of personal guarantees for repayment of loan. The company failed to pay the instalments whereupon the U.P. State Financial Corporation, it is said took possession of the mortgaged assets and properties of the Company and issued public notice inviting offers for sale under Section 29 of the State Financial Corporations Act, 1951 on �as is where is basis� and invoked personal guarantee against the petitioners. The petitioners failed to pay the amount due whereupon certificate of recovery was issued under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 on the basis of which the Tahsildar issued the impugned citation dated 251 2002 to the petitioners to pay Rs. 3,00,10,400.00 plus other charges or to appear personally on 1022002.

In re the first and second questions :

In order to appreciate the issue it would be necessary to give the salient features of the related provisions of the two Acts. The State Financial Corporations Act, 1951 which provides for establishment of State Financial Corporations is an enactment generally covered by Entries 43 and 44 of List of the VIIth Schedule of the Constitution. It is not disputed that while advancing loans State Financial Corporations do not act as an ordinary banker in that the loans are advanced by the Corporations by way of financial assistance to establish Industries, and for the purpose of development of agricultural or any other purpose and not with a view to earn interest like a private banker. Section 25 of the Central Act, 1951 enumerates the business which may be transacted by the Financial Corporations. Subsection (1) of Section 25, in so far as it is relevant is quoted below :

�(1) The Financial Corporation may subject to the provisions of this Act carry on and transact any of the following kinds of business, namely

(a) guaranteeing on such terms and conditions as may be agreed upon,

(i) loans raised by industrial concerns which are repayable within a period not exceeding twenty years, and are floated in the public market; and

(ii) loans raised by industrial concerns from scheduled banks or State Cooperative Banks or other financial institutions;

(b) .......

(c) .......

(d) .......

(e) .......

(f) .......

(g) granting loans or advances to or subscribing to debenture of an industrial concern repayable within a period not exceeding twenty years from the date on which they are granted or subscribed to as the case may be :

Provided that the Financial Corporation may with the prior approval of the Development Bank exceed the said limit of twenty years up to a further period of ten years :

Provided also that the Financial Corporation may in the exercise of such option, convert the amount outstanding on such debentures or loans into stock or shares of the industrial concern and may also subscribe to stock or shares of the industrial concern if such concern increases its subscribed capital by the issue of further stock or shares in accordance with and subject to the provisions of Section 81 of the Companies Act, 1956.�

Section 29 of the Central Act, 1951 confers right to Financial Corporations to take over the management or possession or both of the industrial concern as well as the right to transfer by way of lease or sale and realise the property pledged mortgaged hypothecated or assigned to the Financial Corporation where the industrial concern makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms and conditions in its agreement by the Financial Corporation. And Section 31 confers right to the Corporation to enforce its claim by moving an application before the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of the business : (a) for an order for the sale of the property pledged, mortgaged hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. Section 32 lays down the procedure to be followed by the District Judge in respect of application moved under Section 31 of the Central Act, 1951. These modes are in addition to the normal mode of recovery of loans and enforcement of claims under the general law by means of a civil suit. The Central Act, 1951 as it stood before its amendment by Act 43 of 1985 contained no provision for recovery of loans advanced by the Financial Corporation as an arrear of loan revenue but in the State of Uttar Pradesh the Corporation acquired the right to recover its dues as arrears of loan revenue under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1965. The said Act came to be struck down by this Court on the ground that Section 3 thereof infringed Article 14 of the Constitution in that it gave unguided choice to the creditor to either file a civil suit for recovery of its dues or take recourse to the drastic remedy of recovery as arrears of land revenue under Section 3 of the Act. In appeal, however, the judgment of this Court came to be set aside by the Supreme Court in Director of Industries U.P. v. Deep Chand, AIR 1980 SC 801, holding inter alia, that the Act was passed with the object of providing speedy remedy to the State Government to realise the loans advanced by it or by the Uttar Pradesh Financial Corporation and that the officer empowered to issue certificate of recovery was �expected ordinarily to avail himself of the speedier remedy provided under the Statute.� Accordingly, it was held the object sought to be achieved by the enactment provides �sufficient guidance to the officer concerned as to when he should resort to the remedy provided by it.� The Repealed Act came to be reenacted as the U.P. Public Moneys (Recovery of Dues) Act, 1972 during the pendency of appeal in the Supreme Court after removing the basis on which it was struck down by this Court. Section 3 of the State Act, 1972 provides for recovery of certain dues as arrears of land revenue. It is quoted as under :

�3. Recovery of certain dues as arrears of land revenue. (1) Where any person is party,

(a) to any agreement relating to a loan advance or grant given to him or relating to credit in respect of or relating to hire purchase of goods sold to him by the State Government or the Corporation by way of financial assistance; or

(b) to any agreement relating to a loan advance or grant given to him or relating to credit in respect of, or relating to hire purchase of goods sold to him by a banking company or a Government Company, the case may be under a State sponsored scheme; or

(c) to any agreement relating to a guarantee given by the State Government or the Corporation in respect of a loan raised by an industrial concern; or

(d) to any agreement providing that any money payable thereunder to the State Government or the Corporation shall be recoverable as arrears of land revenue; and such person

(i) makes any default in repayment of the loan or advance or any instalment thereof; or

(ii) having become liable under the conditions of the grant to refund the grant or any portion, thereof, makes any default in the refund of such grant or portion or any instalment thereof; or

(iii) otherwise fails to comply with the terms of the agreement;

then, in the case of the State Government such officer as may be authorised in that behalf by the State Government by notification in the official Gazette, and in the case of the Corporation or a Government company, the Managing Director or where there is no Managing Director then the Chairman of the Corporation, by whatever name called or such officer of the Corporation or Government company as may be authorised in that behalf by the Managing Director or the Chairman thereof and in the case of a banking company the local agent thereof, by whatever name called may send a certificate to the Collector mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrears of land revenue.

(2) The Collector on receiving the certificates shall proceed to recover the amount stated therein as an arrears of land revenue.

(3) No suit for the recovery of any sum due as aforesaid shall lie in the Civil Court against any person referred to in sub section (1).

(4) In the case of any agreement referred to in sub section (1) between any person referred to in that subsection and the State Government or the Corporation, no arbitration proceedings shall lie at the instance of either party either for recovery of any sum claimed to be due under the said subsection or for disputing the correctness of such claim:

Provided that whenever proceedings, are taken against any person for the recovery of any such sum he may pay the amount claimed under protest to the officer taking such proceedings and upon such payment the proceedings shall be stayed and the person against whom such proceedings were taken may make a reference under or otherwise enforce an arbitration agreement in respect of the amount to be paid and the provisions of Section 183 of the Uttar Pradesh Land Revenue Act, 1901 or Section 287A of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 as the case may be shall mutatis mutandis apply in relation to such reference or enforcement as they apply in relation to any suit in the Civil Court.

Save as otherwise expressly provided in the proviso to sub section (4) of this section or in Section 183 of the U.P. Land Revenue Act, 1901 or Section 287A of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 every certificate sent to the Collector under subsection (1) shall be final and shall not be called in question in any original suit application (including any application under the Arbitration Act, 1940) or in any reference to arbitration and no injunction shall granted by any Court or other authority in respect of any action taken or intended to be taken in pursuance of any power conferred by or under this Act.�

A conspectus of Section 3(1) of the State Act, 1972 would reveal that clause (a) will apply where the person proceeded against is a party to any agreement relating inter alia to a loan advance or grant given to him by the State Government or the Corporation by way of financial assistance; and clause (b) will apply where agreement inter alia relates to a loan advance or grant given �by a banking company or a Government Company as the case may be under a State sponsored scheme.� Clause (c) is attracted where the �agreement relates to� a guarantee given by the State Government or the Corporation in respect of the loan raised by an Industrial concern.� None of these clauses (a), (b) and (c) Section 3(1) of the State Act, 1972 is attracted to the facts of the present cases. If at all the State Act, 1972 is held applicable clause (d) of subsection (1) of Section 3 may apply, subject to fulfilment of other conditions in case the agreement relating to guarantee given by the petitioner who have admittedly executed bonds of personal guarantee contains any clause visualising there in that the money payable thereunder to the corporation is recoverable as arrears of land revenue. A perusal of the State Act, 1972 indicates that the enactment was made with a view to providing with retrospective effect for the speedy recovery of certain classes of dues payable to the State Government or the U.P. Financial Corporation or any other Corporation notified by the State Government in that behalf or to any nationalised or scheduled bank or to any Government company and to validate certain acts done and proceedings taken in the past under the repealed Act of 1965, and to provide for matters connected therewith. The term `industrial concern'' as defined in Section 2(d) of the State Act, 1972 has been assigned the meaning given to it in the State Financial Corporation Act, 1951, as amended from time to time. It would be evident from clause (a) and (d) of Section 3(1) of the State Act that where a person is a party to any agreement relating to a loan or grant given to him by the State Government or the Corporation by way of financial assistance; or to any agreement providing that any money payable thereunder to the State or the Corporation shall be recoverable as arrear of land revenue; and such person makes any default in payment of loan or advance or any instalment thereof or having become liable under the conditions of the grant to refund the grant or any portion thereof makes any default in the refund of such grant or portion or any instalment thereof or otherwise fails to company with the terms of the agreement; then in the case of State Government, such officer as may be authorised in the behalf by the State Government by notification in the official gazette and in the case of the Corporation or a Government company, the Managing Director or where there is no Managing Director then the Chairman of the Corporation by whatever name called or such officer of the Corporation or Government company as may be authorised in that behalf by the Managing Director or the Chairman thereof and in the case of a banking company, the local agent thereof, by whatever name called may send a certificate to the Collector mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue. On receiving the certificate it is provided in subsection (2) of Section 3 of the State Act, 1972 the Collector shall proceed to recover the amount stated therein as an arrear of land revenue i.e. in the manner provided in Section 279 of the UPZA and LR Act, 1950 (U.P. Act No. 1950 (U.P. Act No. 1 of 1951) Institution of Civil suit for recovery of any sum due as against any person referred to in sub section (1) of Section 3 is barred by subsection (3) of Section 3 of the State Act Arbitration proceeding at the instance of either party to the agreement referred to in subsection (1) either recovery of any sum claimed to be due or for disputing the correctness of such claim, in barred by subsection (4) of Section 3 and finality has been attached to certificate issued under subsection (1) in that the certificate sent to Collector under subsection (1) �shall be final and shall not be called in question in any original suit or application (including any application under the Arbitration Act, 1940) or in any reference to arbitration and no injunction hall be granted by any Court or other authority in respect of any action taken or intended to be taken in pursuance of any power conferred by or under this Act.

As noted herein before, prior to insertion therein of Section 32G by Act No. 43 of 1985 the Central Act, 1951 contained no provision to enable the Corporation to recover its dues as arrears of land revenue with a view to enabling the Corporation to recover their loans or instalments thereof as an arrear of land revenue, Section 32G came to be inserted in the Principal Act for the first time by Act No. 43 of 1985. The said provision is quoted below :

�32G. Recovery of amounts due to the Financial Corporation as an arrear of land revenue. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may, without prejudiced to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrears of land revenue.�

And Section 46B of the Central Act, 1951 as inserted by Section 24 of the State Financial Corporation (Amendment) Act, 1956 (Act 56 of 1956) which gives overriding effect to the provisions of the Statute and the rules made thereunder is quoted below :

�46B. Effect of Act on other laws. The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum of articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid the provision of this Act shall be in addition to and not in derogation of any other law for the time being applicable to an industrial concern.�

A comparison of Section 3 of the State Act, 1972 with Section 32G of the Central Act, 1951 would indicate that albeit both the provisions, enable the corporation to recover its dues as arrears of land revenue yet they are materially different in more respects than one. First, while the authority vested with the power to issue recovery certificate under Section 32G of the Central Act, 1951 is obliged to follow such procedure as may be prescribed and to issue the certificate of recovery only if it is �satisfied� that any amount is due to the corporation no such obligation is explicity cast on the authority empowered to issue recovery certificate under Section 3(1) of the State Act, 1972; Second, while Section 3 of the Act, 1972 bars not only a civil suit for recovery of any sum due as provided in subsection (1) but also any arbitration proceeding at the instance of either party to the agreement referred to in subsection (1) either for recovery of any sum claimed to be due or from disputing the correctness of such claim subject of course to the proviso to subsection (4) of Section 3. Section 32G of the Central Act, 1951 does not bar such suit or arbitration proceedings. It is no doubt true that the authority vested with the power to issue certificate of recovery under Section 3 of the State Act, 1972 exercises judicial power of the State and is, therefore, obliged to afford opportunity of showing cause to any person who is party to the agreement referred to in subsection (1) of Section 3 before issuing the certificate of recovery and to satisfy itself that such person has made default in repayment of the loan or advance or any instalment thereof or having become liable under the conditions of the grant to refund of such grant or portion or any instalment thereof failed to do so or otherwise failed to comply with the terms of the agreement. In other words in determining `the sum due from such persons'' principles of natural justice must be followed for that is an implicit obligation cast on the authority vested with the power to issue recovery certificate under subsection (1) of Section 3 of the State. To put it differently, the principle of natural justice explicit in Section 32G of the Central Act, 1951 is implicit in Section 3 of the State Act, 1972 in that it has to be read into it. S.K. Bhargava v. Collector, 1998 All CJ 1210 pr. 8. But as pointed outhere in above, there are other material procedural �inconsistencies� between the two provisions aforestated and it is not possible to reconcile or harmonise them. Section 32G of the Central Act, 1951 and Section 3 of the State Act, 1972 are thus �inconsistent� with each other and in view of Section 46B of the Central Act, 1951, the provisions of the Central Act, 1951, shall have effect �notwithstanding anything inconsistent therewith� contained in any other law for the time being in force or in the memorandum of articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than Central Act, 1951. The saving clause enacted in the latter part of Section 46B of the Central Act, 1951 may come into play and the provisions of the Central Act, 1951 may be read to be �in addition to and not in derogation of� the State Act 1972 only if the latter is found to be consistent with the provisions of the Central Act, 1951. That is the purport and import of the expression �save as aforesaid� used in the saving clause enacted in Section 46B of the Central Act, 1951. Therefore, the saving clause enacted in the latter part of Section 46B of the Central Act, 1951 would not be attracted in order to save the State Act, 1972 in its application to Financial Corporation.

It has been submitted for the petitioners that Section 3 of the State Act, 1972 in so far it is �inconsistent� with the provisions of Section 32G of the Central Act, 1951 is void also in view of Article 254 (1) of the Constitution. For the respondent Corporation on the other hand it has been submitted that Article 254 (1) of the Constitution is inapplicable to the present case for the enactments in question fall within the exclusive domain of the State Legislature or as the case may be the Parliament. Learned Counsel representing the Financial Corporation submitted that the State Act, 1972 is referable to Entry 30 of State List which read with Article 246 (3) of the Constitution confers exclusive power on the State Legislature to enact a law on `money lending'' and `money lenders'' or Entry 43 of the State List which deals with `public debt of the State''. The Central Act, 1951 on the other hand proceeds the contention is referable to Entries 43 and 44 of the Union of the Seventh Schedule. Article 254 of the Constitution, it was submitted by the learned Counsel representing the respondent Corporation would be attracted only if the conflicting laws pertain to a subject specified in the concurrent List. In order to appreciate the submission it would be apt and proper to quote Article 246 of the Constitution which deals with distribution of legislative powers as between Union and State Legislatures with reference to the different list in the Seventh Schedule and Article 254 of the Constitution as under :

�46. Subject matter of laws made by Parliament and by the Legislatures of States. (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the seventh Schedule (in this Constitution referred to as the �Union List�).

(2) Notwithstanding anything in clause (3), Parliament, and subject to clause (1) the Legislature of any State also have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the �Concurrent List�)

(3) Subject to clauses (1) and (2), Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the �State List�).

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.�

xx xx xx xx xx

Inconsistency between laws made by parliament and laws made by the Legislatures of States. (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List then subject to the provisions of clause (2) the law made by Parliament whether passed before or after the law made by the Legislature of such State or as the case may be the existing law shall prevail and the law made by the Legislature of the State shall to the extent of the repugnancy, be void.

(2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter then the law so made by the Legislature of such State shall if it has been reserved for the consideration of the President and has received his assent prevail in that State :

Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law additing to amending varying or repealing the law so made by the Legislature of the State.�

Any analysis of the Constitutional provisions extracted above would make it abundantly clear that the Union Parliament has exclusive power to legislate with respect to the matters in the Union List. The Parliament may exercise this power to legislature with respect to the matters in the Union List notwithstanding any thing in clauses (2) and (3) of Article 246. Articles 246 and 254 of the Constitution give supremacy to Union Parliament over any State Legislature in the sense that while making a law or any matter enumerated in List I, if the Parliament incidently trenches into the legislative field of State Legislature enumerated in List II such law made by Parliament will not be ultra vires the powers of the Parliament whereas if a law made by State Legislature is repugnant to any law made by Parliament which Parliament is competent to enact or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then subject to the provisions of clause (2) of Article 254, the Law made by the Parliament shall prevail. The State Legislature on the other hand has full and exclusive power to legislate with respect to matters enumerated in the State List minus the matters falling in the Union List and List III and has also the power to legislation matters falling in List III. The expression �notwithstanding anything in clauses (2) and (3)� occurring in Article 246 (1) of the Constitution lays down the principle of federal supremacy in the sense that in case of inevitable conflict between Union and State powers, the Union powers as enumerated in List I shall prevail over the State powers as enumerated in the State and Concurrent Lists i.e. Lists II and III and in case of overlapping of Concurrent List and the State List the former shall prevail. In Sudhir Chandra Nawn v. Wealth Tax Officer, AIR 1969 SC 59, the Supreme Court has held thus :

�Exclusive power to legislate conferred upon parliament is exercisable notwithstanding anything contained in clauses (2) and (3), that is made more emphatic by providing in clause (3) that the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule, but subject to clauses (1) and (2). Exclusive power of the State Legislature has, therefore, to be exercised subject to clause (1) i.e. the exclusive power which the Parliament has in respect of the matters enumerated in List I. Assuming that there is a conflict between Entry 86, List I and Entry 49 List II, which is not capable of reconciliation the power of Parliament to legislate in respect of a matter which is exclusively entrusted to it must supersede pro tanto the exercise of power of the State Legislature.�

In State of Orissa v. M. Tulloch and Company, AIR 1964 SC 1284, the Supreme Court was called upon to resolve the conflict between Act and a State Act. The Supreme Court explained �doctrine of repugnancy� in the occupied field in the following words :

�Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of one Legislature has superiority over the other then to the extent of the repugnancy the one supersedes the other.....The test of two legislations containing contradictory provisions is not however the only criterion of repugnancy for if a competent legislature with a superior efficacy expressly or impliedly evidences by its legislation an intention to cover the whole field the enactments of the other Legislature whether passed before or after would be over borne on the ground of repugnance.�

(Emphasis supplied)

The Federal Court while interpreting related provisions of the Government of India Act, 1935 in Subrahamanyam Chettiar v. Muttuswami Goundan, AIR 1941 FC 47, observed as under :

�While the Federal Legislature is given power, it is expressly provided that� a Provincial Legislature has no power to make laws with respect to any of the matters enumerated in List I� ......On a very strict interpretation of Section 100, it would necessarily follow that from all matters in List II which are exclusively assigned to Provincial Legislatures all portions which fall in List I or List III must be excluded. Similarly from fall matters falling in List III all portions which fall in List I must be excluded. The section would then mean that the Federal Legislature has full and exclusive power to legislate with respect to matters in List I, and has power to Legislate with respect to matters in List III. A Provincial Legislature has exclusive power to legislate with respect to List II, minus matters falling in List I or List III, has concurrent power to legislate with respect to matters in List III, minus matters falling in List I. In its fullest scope Section 100 would then mean that if it happens that there is any subject in List II which also falls in List I or List III, it must be taken as cut out from List II.... If a subject falls exclusively in List II and no other list then the power of the Provincial Legislatures in supreme. But if it does also fall within List I, then it must be deemed as if it is not included in List II at all. Similarly, if it also falls in List III, it must be deemed to have been excluded from List II......... . But the rigour of the literal interpretation is relaxed by the use of the words, �with respect to� which as already pointed out only signify �pith and substance� and do not forbid a mere incidental encroachment. But, even if such an incidental encroachment may be ordinarily permissible, the field may not be clean. There may be competency and yet repugnancy also. The question is how to prevent a clash if the trespass is on a field already occupied by a Central legislation.� (Emphasis supplied).

In Zaverbhai Amaidas v. State of Bombay, AIR 1941 FC 47, the Supreme Court observed that �when there is legislation covering the same ground both by the Centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.� Same principle of repugnancy has been reiterated by the Supreme Court in Deep Chand v. State of U.P. AIR 1954 SC 752.

Thus the legal principle well settled is that if the State Legislature enacts a law which is not covered exclusively by List II but relates to a subject included in the Union List, then it is a patent case of ultra vires because of Article 246 (1) of the Constitution and the question of repugnancy will not arise in such matters. On the other hand by virtue of clause (2) of Article 246 of the Constitution which confers concurrent powers upon the Union and the State Legislature to legislate with respect to the subjects included in List III and therefore, Union Parliament and the State Legislature both may make laws relating to the same concurrent subject if a conflict arises between the two enactments so made it can be resolved with the help of Article 254 (1) of the Constitution which provides that the law made by the State Legislature would be void to the extent of repugnancy or in consistency with the law made by the Union Parliament. The State Act, 1972 when enacted was essentially in respect of Entry III of the State List as it stood before Constitution (Forty Second) Amendment Act, 1976 i.e. �administration of justice; Constitution and organization of all Courts except the Supreme Court and the High Courts; officers and servants of the High Court, procedure in rent and revenue Courts; fees taken in all Courts except the Supreme Court�. It may also fall under Entry 43 of List II i.e. �public debt� and Entry 45 of List II i.e. �land revenue, including the assessment and collection of revenue, maintenance of land records, survey for revenue purposes and records of rights and alienation of revenues�; and Entry 43 of List III i.e. �recovery in a State of claims in respect of taxes and other public demands including arrears of land revenue and sums recoverable as such arrears arising outside the State.� But in `pith and substance'' the State Act 1972 is in respect of `administration of justice'' which now comes within the purview of Entry 11A of the Concurrent List as it stands amended after Constitution (Forty Second) Amendment Act, 1976. In fact the expression `administration of justice; constitution and organisation of all Courts except the Supreme Court and High Courts'' came to be omitted from Entry 3 of List II and inserted as Entry 11A in List III of the Seventh Schedule by Constitution (Forty Second) Amendment Act, 1976.

In State of T.N. v. G.N. Venkataswamy and others, AIR 1959 SC 648, the Supreme Court was confronted with the question of validity of Section 52A of Tamil Nadu Revenue Recovery Act, 1864 as inserted by Tamil Nadu Revenue Recovery (Amendment) Act, 1972 which visualized for recovery of sums due to the Tamil Nadu Agro Industries, Corporation and other Corporations as arrear of land revenue. It has been held by the Apex Court in the case aforesaid that the Collector while exercising powers under Section 52A acts as a revenue Court and exercises the judicial power of State. On the basis of the said authority I Veer around the view firstly, that Section 3 of the State Act, 1972 is now covered by Entry 11A List III of the Seventh Schedule for the Supreme Court in the case aforestated has very clearly held that with the coming into force Entry 11A List III it is no more exclusive power of the State Legislature to legislate under the said entry i.e. on �administration of justice� and �constitution and organisation of all Courts except the Supreme Court and High Courts�; and secondly, that while effecting recovery as arrears of land revenue, the Collector is conferred powers of revenue Court for the purpose of effecting recovery of `public dues as arrear of land revenue'' i.e. an additional jurisdiction existing on revenue Courts as would be evident from the following observation made by the Supreme Court :

�15. The Collector exercises powers under the Act which is an Act of the State Legislature. He is invested with the power to decide the controversy between the State and the defaulter. There is in existence a lis between the State and the defaulter. There is assertion and denial. The dispute involves the rights and obligations of the parties which are decided by the Collector. The Collector has the power to sell movable and immovable property of the defaulter. He can even arrest and detain the person up to a period of the State. The only conclusion which can be drawn is that the Collector under the Act is a revenue Court. Once it is held as we have that the Collector is a revenue Court then there is no difficulty in holding that Section 52A of the Act was enacted by the Tamil Nadu Legislature under Entry 11 A, List III, Schedule 7, Constitution of India.�

(Emphasis supplied).

It is no doubt true that Section 52A of the Tamil Nadu Recovery Act which was up for consideration before the apex Court in the case aforestated was held to be a piece of legislation on the subject of �money lending� and �money lenders� covered by Entry 30 of the State List as well. But essentially Section 3 of the State Act, 1972 clearly falls within the purview of Entry 11 A of the Concurrent List and therefore, as held by the Federal Court in Subramanayam (supra), �it must be deemed to have been excluded from List II�. The fact that it may also fall in Entries 30, 43 and 45 of the State List will make no difference. Similarly Section 32G of the Central Act, 1951 also falls within the purview of Entry 11A of the Concurrent List though the Statute as a whole is covered generally by Entries 43 and 44 of the Union List. In other words the Central Act, 1951 as a whole is albeit an enactment falling within the exclusive domain of Union Parliament but Section 32G of the said Act squarely comes within the ambit of Entry 11A of the Concurrent List and therefore, it is not a case of ultra vires covered by Article 246 of the Constitution but it being a case of repugnancy, the conflict between Section 3 of the State Act, 1972 and Section 32G of the Central Act, 1951 could be resolved with the help of Article 254 of the Constitution. Accordingly Section 3 of the State Act, 1972 in its application to Financial Corporations shall be void to the extent of repugnancy.

In M/s. Krishna Utensils, Rampur v. State Financial Corporation and others, (1994) 5 SCC 314, the Full Bench reiterated the long line of decisions of the Supreme Court as well as the Federal Court rulings and inter alia, held that (i) �the concept of repugnancy is relevant only where the laws enacted by Parliament and the State Legislature; supposed to be in conflict with each other, deal with the subjects falling in the Concurrent List, viz., List III of the Seventh Schedule of the Constitution; � (ii) Article 254 of the Constitution would not be attracted to resolve the conflict between Section 3 of the State Act, 1972 and Section 32G of the Central Act, 1951 for it was `conceded'' by the Counsel for the parties that both the Central laws and the State laws are laws enacted respectively by parliament and the State Legislature �within their exclusive and respective fields of legislation. �The Full Bench proceeded no the assumption that Section 32G of the Central Act, 1951 was �indisputably� covered by Entry 43 List I of the Seventh Schedule of Constitution and Section 3 of the State Act, 1972 by Entry 43 List II of the Seventh Schedule which provides for legislation on public debt of State. The question whether Section 3 of the State Act, 1972 and Section 32G of the Central Act, 1951 could be covered by Entry 11A of the Concurrent List, was neither raised nor decided by the Full Bench. A decision in my opinion, is quotable as a binding precedent, �in regard to its ratio and the principle� B. Shama Rao v. Union Territory of Pandicherry, AIR 1967 SC 1480, laid down there in and not �because of its conclusions� B. Shama Rao (supra) on a point which was neither raised nor considered and decided by the Court.

The Full Bench invoked the doctrine of ''occupied field'' also in upholding Section 3 of the State Act, 1972. In fact the Full Bench in applying the doctrine of ''occupied field'' relied on the observations made in ITC Ltd. v. State of Karnataka, 1985 (Supp.) SCC 476, by His Lordship Fazal Ali, J. to the effect that �when the field is completely occupied by List I, as in this case then the State Legislature is wholly incompetent to legislate and no entrenchment or encroachment, minimal or otherwise by a State Legislature is permitted.� As discussed above the subject of legislation covered by Section 3 of the State Act, 1972 and Section 32G of the Central Act, 1951 being in respect of Entry 11A of the Concurrent List, the doctrine of ''occupied field'' there will not be applicable and nor will it save the State Legislation which is otherwise void under Article 254 of the Constitution to the extent of its applicability to Financial Corporations. Even otherwise Section 3 of the State Act, 1972 being inconsistent with Section 32G of the Central Act, 1951 stood abrogated in view of Section 46B of the Central Act, 1951. The field of recovery of the dues of State Financial Corporation as arrear of land revenue is fully occupied by Section 32G of the Central Act, 1951 and, therefore, Section 3 of the State Act, 1972 which too provides for recovery of certain dues, inter alia, of the State Financial Corporation, as arrear of land revenue is rendered inoperative by virtue of Section 46B of the Central Act, 1951. The expression ''without prejudice to any other mode of recovery'' occurring in Section 32G, in my opinion refers to any mode of recovery in addition to recovery as ''arrears of land revenue'' viz., recovery by means of a suit or by taking recourse to Section 29/31 of the Central Act, 1951. The expression ''without prejudice to any other mode of recovery'' occurring in Section 32G does not control the operation of the overriding clause in Section 46B and in this context it means �without prejudice to any other mode of recovery not being inconsistent with the provisions of this Act�. Section 3 of the State Act, 1972 became inoperative, qua the dues of the Corporation, after insertion of Section 32G in view of Section 46B of the Central Act, 1951 which was albeit noticed by the Full Bench of the Court in M/s. Krishna Utensils (supra), but the significance of the term �save as aforesaid� used therein seems to have escaped the notice of the Full Bench as would be evident from the observation that the latter part of Section 46B saves the State Act, 1972 and the Corporation shall not be denied recourse to any other mode of recovery which may be conferred upon it or be available to it under any other enactment for the reason that �Section 46B expressly says that the Act is not in derogation of any other law for the time being applicable to an industrial concern.� In my considered view the provisions of the Central Act, 1951 will not be in derogation of any other law for the time being applicable to an industrial concern provided that such law is not otherwise �inconsistent� with the provisions contained in the Central Act, 1951. Though natural justice which is explicit in Section 32G of the Central Act, 1951 while it is implicit in Section 3 of the State Act, 1972 but there being other inconsistencies between the two provisions, the saving clause enacted in the latter part of Section 46B of the Central Act, 1951 would not save the State Act, 1972. True, a Full Bench decision deserves all respect and is binding unless reversed either by a larger Bench or by the Supreme Court but as discussed above the very basis on which the point in issue was decided by the Full Bench decision in M/s. Krishna Utensils (supra) stands demolished in view of the Supreme Court decision in State of T.N. (supra). But for the decision of the Supreme Court the Full Bench decision in M/s. Krishna Utensils (supra) would not have been ignored. True, �for the purpose of applying the rule of stare decisis, it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis. Waman Rao v. UOI, AIR 1981 SC 271 at p. 288 para 41, but �perpetuation of illegality is no part of doctrine of stare decisis.� (Supra) The doctrine of stare decisis will not be attracted if the earlier decision proceeded on certain erroneous assumptions based on concessions made by the Counsel for the parties. In M/s. Krishna Utensils (supra), it was ''conceded'' by the Counsel appearing for the parties therein that the State Act, 1972 was exclusively in respect of a matter enumerated in List II of the Seventh Schedule while Section 32G of the Central Act, 1951 was covered by List I. Effect of amendment of Lists by Constitution (Forty Second) Amendment Act, 1976 was to noticed.

In re. 3rd question :

In next question that calls for consideration is whether the jurisdiction of the Collector to entertain an application of any bank or financial institution for recovery of any �debt� which is in not less than ten lakh rupees under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 is barred by Section 18 of the Recovery of Debts Due to Banks and Financial. Institutions Act, 1993 (in short the Central Act, 1993). The Central Act, 1993 has been enacted with a view to provide for establishment of Tribunals and Appellate Tribunal for expeditious `adjudication'' and `recovery of dues'' to bank and financial institutions and for matters connected therewith or incidental thereto. The provisions of the enactment are not applicable as visualized by Section 1(4), where the amount of �debt� due to any bank or financial institution is less than Rs. 10 lakh or such other amount being not less than one lakh rupees, as the Central Government may by notification specify. The Central Act, 1993 is a self contained Code for `adjudication'' and `recovery of debts'' (defined in Section 2(g)), payable to the banks and financial institutions. It has been held in Allahabad Bank v. Canara Bank and another, (2000) 4 SCC 406, that prescription of an exclusive Tribunal, both for `adjudication'' and `execution'' is a procedure clearly �inconsistent� with the procedure for realisation of these debts in any other manner. That apart the Central Act, 1993 provides for appeal besides �adjudication� and �execution�. No such remedies are available under the provisions of the U.P. Public Moneys (Recovery of Dues) Act, 1972. Section 17 of the Central Act, 1993 provides that the Tribunal constituted under the Act shall exercise on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. The appellate Tribunal, as visualized by subsection (2) of Section 17 vested with the jurisdiction, powers and authority to entertain appeals against any order made or deemed to have been made by a Tribunal under the Act. Chairperson of the Appellate Tribunal is vested with the general power of superintendence and control over the Tribunal. Section 18 ousts the jurisdiction of Courts and other authorities except the Supreme Court and the High Courts exercising jurisdiction under Article 226/227 of the Constitution, in respect of the matters specified in Section 7 of the Central Act, 1993. Section 18 being relevant for the purpose of discussion is quoted below :

�18. Bar of jurisdiction. On and from the appointed day, no Court or other authority shall have, or be entitled to exercise any jurisdiction powers or authority (except the Supreme Court and a High Court exercising jurisdiction under Article 226 and 227 of the Constitution), in relation to the matters specified in Section 17.�

If Sections 17 and 18 of the Central Act, 1993 have anything to go by then the jurisdiction of the Collector to entertain the recovery certificate for recovery of the amount mentioned therein shall be barred by Section 18 inasmuch the recovery certificate is in the nature of the application requesting the Collector to recover the amount mentioned therein as arrears of land revenue and therefore, such an application being clearly covered by Section 18 would attract the bar created by Section 18 of the Central Act, 1993. Section 34 (1) of the Central Act, 1993 gives overriding effect to the provisions of the Act �save as provided in subsection (2)�. Section 34 being relevant is quoted below :

�34. Act to have overriding effect. (1) Save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act. 1984 the State Financial Corporation Act, 1951 the Unit Trust of India Act, 1963, the Industrial Reconstruction Bank of India Act, 1984 the Sick Industrial Companies (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989.�

Subsection (2) of Section 34 saves the provisions contained in the State Financial Corporation Act, 1951 besides certain other provisions referred to therein. Subsection (1) of Section 34 gives overriding effect to the provisions of the Act ''save as provided'' under subsection (2) and subsection (2) makes it abundantly clearly that the provisions contained in the Central Act, 1993 and the rules made thereunder �shall be in addition to and not in derogation�, of the provisions contained in the State Financial Corporations Act, 1951 and other enactments referred to in subsection (2) of Section 34 of the Central Act, 1993. The State Act, 1972 is not one amongst the enactments saved by sub section (2). The Central Act, 1993 manifests the latest will of the Parliament and therefore, it must prevail over the earlier one. In this view of the matter the third question is answered against the Corporation and it is held that jurisdiction of the Collector to entertain the application under Section 3 of the State Act, 1972 for recovery of dues being not less than ten lakh rupees payable to any financial Corporation is barred by Section 18 of the Central Act, 1993. The Collector shall however continue to exercise jurisdiction under Section 32G of the Central Act, 1951 which is clearly saved by subsection (2) of Section 34 of the Central Act, 1993. The decision in Civil Misc. Writ Petition No. 3738 of 2001 M/s. Unique Butyle Tube Industries (Pvt.) Ltd. v. U.P. Financial Corporation and others, decided on 2742001 on the issue in question is per incuriam in view of law laid down in State of U.P. v. Synthetic & Chemicals Ltd., (1991) 4 SCC 139.

In re : the fourth question

The fourth question as to whether the State Financial Corporation is bound to first proceed against the assets and properties of the borrower company taken by it under Section 29 of the State Financial Corporation Act, 1951 before initiating recovery proceeding against the sureties/guarantors and whether it would be unjust to proceed against the guarantors while retaining possession of the assets and properties of the borrower ''industrial concern'' may be taken up together.

In the writ petition it has been alleged that the Corporation took possession of the factory premises of the borrower company on 2932001 and posted its own guards and security personnel to protect the same but while the factory premises remained in possession of the Corporation machinery and other articles/goods were removed from the factory premises in respect of which a letter dated 3082001 was written on behalf of the company to the Corporation. The Managing Director of the Corporation, it is alleged, got an enquiry held into the theft of the machinery and other articles of the company through its own Technical Manager who submitted a detailed report to the Managing Director to the effect that some machinery and articles were stolen from the factory premises. Factory premises and immovable properties of the borrower company in possession of the Corporation has neither been sold nor given on lease to any person interested in this regard. It has been submitted by the learned Counsel appearing for the petitioner that the respondent Corporation was not justified in taking recourse to coercive measure of recovery as visualised by Section 3(1) of the State Act, 1972 recourse to which it has been submitted by Sri Sharad Malviya learned Counsel for the petitioners in the fact situation of the case is unjust and improper. For the respondent Corporation, however reliance has been placed on a Division Bench decision of this Court in U.P.F.C. v. M/s. Garion Polyfeb Industries and others, AIR 2001 Allahabad 286, in which it has been held that if the terms of guarantee stipulate that liability of guarantors could arise on demand and no condition is laid down that Financial Corporation would first initiate proceeding from the hypothecated assets of the company the Financial Corporation could straightway initiating proceeding under Section 3 of the State Act, 1972 to recover the amount from the guarantors before proceeding against the defaulter company. There is no quarrel with the proposition laid down by the Division Bench in the above mentioned case. But then the Corporation had not taken any steps under Section 29 of the Central Act, 1951 to take over the assets of the company. In fact the case aforesaid arose out of a suit in which the relief claimed was that a decree for permanent injunction be passed against the Corporation from realising any amount from the plaintiffs or their guarantors without resorting to action under Section 29 of the Central Act, 1951 i.e. by disposing of assets and primary security which had been mortgaged. In the instant case the Corporation, admittedly, took possession of the factory premises as stated earlier in this judgment and certain machineries/goods of the company are said to have been stolen after the Corporation took possession of the factory premises. In Govind Prasad and anther v. U.P. Financial Corporation and others,1990 AWC 627, A Division Bench of this Court has very clearly held that if the Corporation proceeded to recover the dues from the borrower company by taking recourse to Section 29 of the Central Act, 1951, then it would be unfair and unjust for the Corporation to proceed against persons who stood as guarantors for the repayment of the loan granted to the borrower company without attempting to sell the assets seized from the borrowers. The Corporation it has been held in that case must at all times act reasonably and fairly and therefore, either sell the property and recover the balance, if any from the petitioners or it may release the property in favour of the company and then proceed against the guarantors. It would be apt and proper to quote the relevant observations made by the Court :

�The learned Counsel is clearly right we think that the Corporation could not legally and at any rate ought not in all fairness to proceed against the petitioners while keeping the property mortgaged with them under its control. The Corporation having decided to proceed against the borrowers and having taken possession of their assets, could not turn around and proceed against the petitioners without attempting to sell the assets seized from the borrowers. It should not be forgotten that the Corporation is an instrumentality of the State. It must therefore, at all times act reasonably and fairly. There is nothing to indicate that value of property seized by the Corporation is less than the amount remaining due from the borrowers. The impugned action against the petitioners is hence plainly unjust and unfair.�

There is no denying the fact that liability of the guarantors is coextensive with that of the borrower company but the Corporation having seized the factory premises, it would not be just and fair on its part to retain possession of the factory premises and proceed against the guarantors. Learned Counsel appearing for the Corporation placed reliance on the decision of the Supreme Court in State Bank of India v. Indexport Registered and others, AIR 1992 SC 174 in support of his contention that the Corporation can simultaneously proceed under Section 3 of the State Act, 1972 and Section 29 of the Central Act, 1951. In that case the decree sought to be executed was both, a personal decree as well as a mortgage decree passed against the borrower as well as the guarantor. The apex Court held that the liability of the surety being coextensive with that of the principal debtor and the decree being a composite one i.e. to say a personal decree as well as a mortgage decree passed jointly and severally against all the defendants including guarantor the decree holder �cannot be forced to first exhaust the remedy by way of execution of the mortgaged decree alone and told that only if the amount recovered is insufficient, he cane be permitted to be permitted to take recourse to the execution of the personal decree.� The decision relied on by the learned Counsel in my opinion does not whittle down the proposition laid down by the Division Bench of this Court in Govind Prasad and another v. U.P. Financial Corporation and others (supra). The next case relied on by the learned Counsel appearing for the Corporation is another decision of the Supreme Court in Andhra Pradesh State Financial Corporation v. M/s. G.A.R. Rerolling Mills and another, AIR 1994 SC 2151. In that case the question was whether the financial Corporation could simultaneously proceed under Sections 29 and 31 of the Central Act, 1951. The apex Court held that the Corporation has the choice for availing its remedy under Section 29 for Section 31 of the Central Act, 1951 and the defaulting concern has no say whatsoever in the matter, as to which remedy should be taken recourse to by the Corporation for effecting the recovery. The right vested in the Corporation under Section 29 of the Act, it was observed by the Supreme Court is �besides the right already possessed at the common law to institute a suit or the right available to it under Section 29 of the Act.� The Corporation, it was further held by the Apex Court, �can withdraw from the Court its proceedings under Section 31 of the Act of any stage.... even after obtaining order in its favour and take recourse to the proceedings under Section 29 of the Act without pursuing the proceedings under Section 31 of the Act any further.� The decision relied on by the learned Counsel, in my opinion does not in any manner water doun the Division Bench decision of this Court in Govind Prasad and another v. U.P. Financial Corporation and others (supra), that it would be unjust and unfair on the part of the Corporation to retain the assets and properties of the industrial concern and at the same time proceed against the guarantor without there being anything to indicate that the value of the property seized by the Corporation is less than the amount remaining due from the principal borrowers. The decisions relied on by the learned Counsel appearing for the Corporation only lay down that the Corporation has the choice to pursue one of the several remedies open to it and to recover its money and the defaulting party cannot compel the Corporation to take recourse to any particular remedy and further that the Corporation having taken recourse to any one of the remedies available to it may, at any time, given up that remedy and pursue another remedy. This is what has been held by the Division Bench of this Court in Govind Prasad and another v. U.P. Financial Corporation and others (supra). If the Corporation wants to proceed against the guarantors then it must return the assets of the borrower company for would it be unjust and unfair on its part to retain the assets and properties of the industrial concern particularly when there is nothing to indicate that the value of the assets and properties retained by the Corporation is less than the outstanding amount of dues payable to the Corporation.

The only question that remains to be addressed is as to whether the Court should exercise its discretion under Article 226 of the Constitution in the matter like the one in hand in Smt. Sharda Devi v. State of U.P. and others, 2001 (2) JCLR 915 (All) (FB); AIR 2002 Alld 1, a Full Bench of this Court has held as under :

�It is true that exercise of jurisdiction under Article 226 of the Constitution is discretionary in nature and the Court may refuse to exercise discretion in favour of a person if it finds that equity against him or it will result in miscarriage of justice. While exercising its powers, the Court must keep in mind the well settled principles on which such high prerogative writs are issued. At the same time it must be kept in mind that we are governed by rule of law and all actions taken must be supported by law. It cannot, therefore, be laid down as a principle of universal application that even though the proceedings initiated for recovery of the loan as arrears of land revenue are without jurisdiction as the loan does not fall within the purview of the Act yet the Court would shut its eyes and decline to exercise jurisdiction under Article 226 of the Constitution only on the ground that the borrower owes money to the bank. In a proper case the Court would not hesitate to issue appropriate writ as the facts and circumstances of the case may justify.�

In view of the above authority I am of the view that if Section 3 of the State Act, 1972 is no longer available to the State Financial Corporation recourse to the said provision will be without jurisdiction and therefore, the Court may interfere with the proceedings under Section 3 of the State Act, 1972.

The conclusions deducible from the above discussion may be summed up as under :

(1) In its content and character, Section 32G of the Central Act, 1951 is essentially a piece of legislation on the subject ''administration of justice'' covered by Entry 11A of List III and so is Section 3 of the State Act, 1972 albeit when enacted the latter provision was exclusively covered by the State List. The two provisions occupy one and the same field i.e. ''recovery of dues as arrears of land revenue'' but in certain respects Section 3 of the State Act, 1972 is inconsistent with or repugnant to Section 32G of the Central Act, 1951 and that being so Section 3 of the State Act, 1972 in its application to U.P. State Financial Corporation became void by operation of Article 254 (1) of the Constitution, after insertion of Section 32G in the Central Act, 1951 by Act No. 43 of 1985;

(2) Even otherwise provisions of Section 3 of the State Act, 1972 in their application to U.P. Financial Corporation became in inoperative and stood abrogated after insertion of Section 32G in view of the overriding clause contained in Section 46B of the Central Act, 1972;

(3) Proceeding for recovery of dues not being less than Rs. 10 lakhs rupees under Section 3 of the State Act, 1972 would be barred by Section 18 of the Central Act, 1993. The Corporation is now left with the choice to proceed under Sections 29, 31 and 32 G of the Central Act, 1951 or under the provisions of the Central Act, 1993. If however the Financial Corporation in exercise of its rights conferred on it by virtue of Section 29 of the Central Act, 1951 takes possession of the assets and properties of the borrower company, it would be unjust and unfair to proceed against the guarantors properties until it is found, on sale of the assets of the borrower company in possession of the Corporation that the sale proceeds fall short of meeting out the outstanding dues sought to be recovered. In other words if the Corporation has taken possession of the assets and properties of the borrower company under Section 29 of the Central Act, 1951 then it can proceed against the guarantors only after the properties of the Company are either returned to it or after sale thereof it is found that sale consideration is not sufficient to meet the outstanding dues;

(4) Section 32G of the Central Act, 1951 might be referable to incidental powers of Parliament under Entry 43 and 44 of the Union List but once it is specifically referable to Entry 11A of List III the rule of interpretation which visualises that specific provision prevails over the general provisions will be attracted. Even otherwise when a subject of legislation enumerated in List I or List II finds place in List III of the 7th Schedule, then it shall be deemed to have been omitted from List I or List II, as the case may be; and

(5) The Rule of stare decisis will be in applicable in case the earlier decision on the basis of which the rule of stare decisis is sought to be invoked was decided no erroneous concession or assumption or in ignorance of relevant Constitutional provision. Such decision even if old may be ignored as per incuriam :

However, since we have differed in our opinion it would be apt and proper not to pass final order either allowing or dismissing Km. Mamta Johri v. State of U.P., 1998 Alld. CJ 1523 (FB), the writ petition and rather we should direct the record of the writ petition to be placed before Hon''ble the Chief Justice for nominating a larger Bench of consisting three or more Hon''ble Judges for �authoritatively� Jaisri Sahu v. Rajdeen Dubey, AIR 1962 SC 8, pr. 10, deciding the issues involved in the case as set out in the beginning of this judgment. It is ordered accordingly.

S.P. Mehrotra, J. This writ petition has been filed by the petitioners under Article 226 of the Constitution of India inter alia praying for issuance of writ order or direction in the nature of certiorari quashing the citations dated 2512002 (Annexure Nos. 4 and 5 to the writ petition) and further for issuance of writ order or direction in the nature of mandamus directing the Respondent Nos. 1 to 3 not to realize the amount of citations along with interest and other charges.

It is alleged by the petitioners that the respondent No. 4 M/s. J.S. Metal (P) Limited is a company incorporated under the Companies Act, 1956, having its registered office at 76/77, Coolie Bazar, Kanpur Nagar and that the Respondent No. 3 (U.P. Financial Corporation) sanctioned a Term Loan to the tune of Rs. 1.75 crore in favour of the Respondent No. 4 and that out of the sanctioned amount of Rs. 1.75 crore, the Respondent No. 3 disbursed to the Respondent No. 4 only a sum of Rs. 1,42,48,000 in instalments and last of such instalment was paid by the Respondent No. 3 on 1771998. It is inter alia alleged by the petitioners that the petitioner being the Directors of the Company/Respondent No. 4 also executed their personal guarantees for repayment of the dues of the Corporation.

It is inter alia further alleged by the petitioners that in the year 2000, the Respondent No. 3 issued a notice directing the Respondent No. 4 to repay the entire dues outstanding against it failing which the Respondent No. 3 would have no option but to take recourse under Section 29 of the State Financial Corporation Act and take possession of the factory premises. Thereupon the Company/Respondent No. 4 filed a suit in the Court of Civil Judge (Senior Division), Allahabad being Case No. 638 of 2000, inter alia seeking permanent injunction against the U.P. Financial Corporation and other defendants in the suit restraining the latter from taking any coercive action against the company/Respondent No. 4 under Section 29 of the State Financial Corporation Act or under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972. On an application filed by the Company/Respondent No. 4 for temporary injunction in the said suit, the learned Civil Judge (Senior Division) Allahabad by this order dated 1622001 granted temporary injunction in favour of the Company/Respondent No. 4 against the said order dated 1622001, the Respondent No. 3 filed First Appeal From Order No. 374 of 2001 before this Court. In the meanwhile it appears that the learned Civil Judge (Senior Division), Allahabad by his order dated 2632001 recalled his earlier order dated 1622001.

It is inter alia further alleged by the petitioners that after recall of the said temporary injunction order dated 1622001 the Respondent No. 3 (U.P. Financial Corporation) on 2932001 took possession of the factory premises of the Company/Respondent No. 4 and posted its guards over the same. After taking possession of the factory premises of the Respondent No. 4 the Corporation issued advertisement in the newspaper ''Dainik Jagran''. However it is alleged till date the factory premises and other immovable properties of the Respondent No. 4 have neither been sold nor give on lease to any person interested in this behalf.

In the meanwhile, it appears that the Respondent No. 3 initiated proceeding against the petitioners as guarantors under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 for recovery of dues due against the Company/Respondent No. 4. Pursuant thereto the citations dated 2512002 (Annexure Nos. 4 and 5) were issued to the petitioners requiring them to deposit the amounts mentioned therein.

The petitioners have filed the present writ petition challenging the said citations dated 2512002. It appears that the petitioners had earlier filed writ petition being Civil Misc. Writ Petition No. 6422 of 2002. It is alleged in paragraph 1 of the writ petition under consideration that the said Civil Misc. Writ Petition No. 6422 of 2002 was dismissed on 2022002 with the liberty to file fresh writ petition for the present cause of action.

I have heard Sri Sharad Malviya, learned Counsel for the petitioners Sri Satish Chaturvedi and Sri H.R. Mishra, learned Counsel representing the U.P. Financial Corporation as well as learned Standing Counsel representing Respondent Nos. 1 and 2 Sri N.C. Raivanshi and Sri U.N. Sharma, learned Counsel who are appearing in certain other writ petition in which similar questions are involved have also been heard in support of the case of the petitioners.

The first contention raised on behalf of the petitioners is that the Respondent No. 3 was bound to follow the procedure prescribed under Section 32G of the State Financial Corporation Act, 1951, and it was not open to the Respondent No. 3 to take recourse to issuance of Recovery Certificate under Section 3 of the U.P. Public Money''s (Recovery of Dues) Act, 1972. As the procedure laid down in Section 32G of the State Financial Corporation Act, 1951 has not been followed the contention proceeds the recovery proceedings against the petitioners were vitiated. In reply, it was contended on behalf of the U.P. Financial Corporation that the said question is concluded by the Full Bench decision in M/s. Krishna Utensils, Rampur v. State Financial Corporation and others, 1989 AWC 971. It was further contended on behalf of the Corporation that long standing precedent should not be disturbed.

I have considered the submission raised on behalf of the petitioners, and in my opinion the same cannot be accepted Section 32G was inserted in the State Financial Corporation Act, 1951 by Act No. 43 of 1985. Section 32G provides as follows :

�32G. Recovery of amount due to the Financial Corporation as an arrears of land revenue. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may without prejudice to any other mode of recovery make an application to the State Government for the recover of the amount due to it and if the State Government or such authority as that Government may specify in this behalf is satisfied after following such procedure as may be prescribed that any amount is so due it may issue a certificate for the amount to the Collector and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue.�

It is thus evident that the mode of recovery provided for in Section 32G of the State Financial Corporation Act is without prejudice to any other mode of recovery. Therefore, the mode of recovery available to the U.P. Financial Corporation under Section of the U.P. Public Moneys (Recovery of Dues Act, 1972 continued and still continues to remain available to the U.P. Financial Corporation despite insertion of Section 32G in 1985 in the State Financial Corporation Act, 1951. This question was considered by a Full Bench of this Court in M/s. Krishna Utensils, Rampur v. State Financial Corporation and others, (supra). The Full Bench held as follows (Paragraph 14 of the said AWC).

�44. The question then is whether Section 32G has the effect of occupying the entire field with respect to recovery of the dues of Financial Corporation as arrears of land revenue. The language of Section 32G is explicit and unambiguous. It provides that the remedy being conferred under Section 32G is �without prejudice to any other mode of recovery� such a language is wholly inconsistent with the legislative intent to occupy the entire field. The words `without prejudice to any other mode of recovery'' indicate in the clearest terms the intention of the Legislature, which was to preserve all other remedies, which the Financial Corporation already possessed for recovery of its dues. Prior to the insertion of Section 32G there was no specific provision in the Central Act arming the Financial Corporations with the power to recover its dues as arrears of land revenue. The State Corporation, however, acquired that power under State laws such as the U.P. Public Moneys (Recovery of Dues) Act as a result of the saving clause enacted in the latter part of Section 46B. It is possible that in some States there was no law corresponding to the U.P. Public Moneys (Recovery of Dues) Act. It appears therefore, that in order to fill this gap arising from a possible absence of a provision in any State law for recovery of the dues the Central Legislature thought it necessary to insert Section 32 G. But while doing so the Central Legislature expressly declared that the remedy provided under Section 32G was without prejudice to any other mode of recovery already possessed by the Financial Corporation. This was made explicit by the use of the words ``without prejudice to any other mode of recovery.�

It was further held by the Full Bench (paragraph 15 of the said AWC) :

�15. Upon the plain terms of the Statute (Section 32G therefore, we have not the slightest hesitation in holding that far from attempting to occupy the entire field, the Central Legislature expressly manifested an intention to leave the other modes already possessed by the Financial Corporation under other enactments untouched. In short, the Central Legislature did not purport to occupy the entire field. We have already found above that prior to the insertion of Section 32G, the U.P. Financial Corporation did have available to it the mode of recovery enacted under Section 3 of U.P. Public Moneys (Recovery of Dues) Act. That remedy is not lost to the Financial Corporations by the insertion of Section 32G.�

The Full Bench further observed (paragraph 16 of the said AWC) :

�16. ............Further the words `any other mode of recovery'' are words of the widest possible amplitude and we find no valid ground for whittling them down to mean only the modes of recovery provided under Sections 29 and 31 of the Act. As already observed acceptance of the learned Counsel submission would mean that the Financial Corporation would stand deprived even of the remedy of a civil suit. Such a result could not have been in the contemplation of the Legislature.�

It was further observed by the Full Bench (paragraph 18 of the said AWC) :

�18. It will thus be seen that the State law merely advances, promotes and supplements the remedy conferred on the State Financial Corporation under Section 32G. There is no conflict or collision between the two except that the remedy provided under Section 32G is slightly more circuitous and perhaps time consuming. In the case of Messrs Ram Chandra Mewalal Varanasi v. State of U.P., 1984 ALJ 235 (paragraph 51) : 1984 (Supp) SCC 28. The Supreme Court considering a somewhat identical problem held that where the State Law merely promotes the real object of the Central law and is supplementary to the Central law, it cannot be invalidated on the ground of lack of legislative competence. In any case the legislative intent behind Section 32G being explicit and unambiguous we cannot accept the contention that the State law has been rendered void and inoperative qua the dues of the Financial Corporation after the insertion of Section 32G.�

It is thus evident that the first submission raised on behalf of the petitioners stands concluded by the aforesaid Full Bench decision. It is thus open to the U.P. Financial Corporation to take recourse to Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 and it is not necessary for the U.P. Financial Corporation to proceed only under Section 32G of the State Financial Corporation Act, 1951. Both the modes of recovery are thus available to the U.P. Financial Corporation. The first contention raised on behalf of the petitioners thus fails.

It was next contended on behalf of the petitioners that the amount sought to be recovered against the petitioners being more than Rupees Ten Lacs, the recovery could be made by the U.P. Financial Corporation against the petitioners in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, (in short �1993 Act�) in view of the provisions of Section 1(4) of the said Act. It was not open to the U.P. financial Corporation (Respondent No. 3) to take recourse to Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972. It was contended that in view of the provisions of Sections 17 and 18 of the 1993 Act the Tribunal constituted under the 1993 Act would have exclusive jurisdiction in relation to the matters specified in Section 17 of the 1993 Act. It was further contended that in view of the provision of Section 34 (1) of the 1993 Act, the 1993 Act would have overriding effect over the U.P. Public Moneys (Recovery of Dues) Act, 1972. It is contended that while the 1993 Act provided an elaborate procedure for Adjudication and Recovery of Debts, the procedure laid down in the U.P. Public Moneys (Recovery of Dues) Act, 1972 was a summary procedure and as such there was inconsistency between the two Acts, and consequently the 1993 Act would have overriding effect over the U.P. Public Moneys (Recovery of Dues) Act, 1972. The reliance is placed on the decision of the apex Court in Allahabad Bank v. Canara Bank and another, (2000) 4 SCC 406, and in State Bank of Bikaner & Jaipur v. Ballabh Das & Company and others, AIR 1999 SC 3408.

It is also contended on behalf of the petitioners that the U.P. Public Moneys (Recovery of Dues) Act, 1972 is relatable to Entry No. 43 of List III (Concurrent List) in view of the decision of Karnataka High Court in M.A. Kamath v. Karnataka State Financial Corporation, AIR 1981 Karnataka 193.

In reply, it was contended on behalf o the U.P. Financial Corporation that the provision of the 1993 Act were not inconsistent with the provisions of the U.P. Public Moneys (Recovery of Dues) Act, 1972, and as such Section 34(1) of the 1993 Act was not attracted. It was emphasized by the learned Counsel for the Corporation that the object of both the Acts being speedy and expeditious recovery of dues due to the Financial Corporation, there was no question of any inconsistency. It was further contended that while the 1993 Act was with respect to the subject enumerated in Entry 45 of List I (Union List) of the Seventh Schedule to the Constitution of India, the U.P. Public Moneys (Recovery of Dues) Act, 1972 was with respect to Entry 43 or Entry 30 of List II (State List) of the Seventh Schedule to the Constitution of India. Every effort, the contention proceeds, should be made to give harmonious construction to the provisions of the two Acts so that both may coexist and any apparent inconsistency between the two is avoided.

It was further contended on behalf of the Corporation that this question was concluded by the Division Bench decision in Civil Misc. Writ Petition No. 13738 of 2001, M/s. Unique Butyle Tube Industries Private Limited v. U.P. Financial Corporation, 14/88, Civil Lines, Kanpur and others, decided on 2742001. It is also pointed out that the validity of the U.P. Public Moneys (Recovery of Dues) Act, 1965 which proceeded the U.P. Public Moneys (Recovery of Dues) Act, 1972 was upheld by the Supreme Court in Director of Industries, U.P. v. Deep Chand, AIR 1980 Supreme Court 801.

I have examined the second contention raised on behalf of the petitioners and in my opinion this contention again has no force.

As regards the submission made on behalf of the petitioners that the U.P. Public Moneys (Recovery of Dues) Act, 1972 is covered by Entry No. 43 of List III (Concurrent List) of Schedule VII of the Constitution of India, it is pertinent to quote the said Entry, which is as follows.

�43. Recovery in a State of claims in respect of taxes and other public demands including arrears of land revenue and sums recoverable as such arrears arising outside that State.�

A reading of this Entry makes it clear that it deals with the recovery in a particular State of claims in respect of taxes and other public demands, including arrears of land revenue and sums recoverable as such arrears which arise outside that State. In other word'' if claims in respect of taxes etc. arise outside a State say ''A'' and recovery in respect of those claims is made in the State ''A'' then this will be covered in Entry No. 43 of List III. For example, if claim in respect of taxes etc. arises in a State say ''B'' and recovery in respect of those claims is made in a State say ''A'' then Entry No. 43 of List III would be applicable. Evidently this Entry will not cover a case where claims in respect of taxes etc. arise in a State say ''A'' and recovery in respect of those claims is also made in the same State ''A''.

The U.P. Public Moneys (Recovery of Dues) Act, 1972 deals with the recovery of dues in Uttar Pradesh and these dues are such dues, which arise in Uttar Pradesh itself hence the U.P. Public Moneys (Recovery of Dues) Act, 1972 is not covered by Entry No. 43 of List III (concurrent list) of Schedule VII to the Constitution of India.

The decision of Karnataka High Court in M.A. Kamath case laid down that Karnataka Public Moneys (Recovery of Dues) Act, (16 of 1980) was covered by Entry No. 43 in List III of Schedule VII to the Constitution of India. With deep respect'' I am unable to agree with the said proposition. As noted above Entry No. 43 of List III is not applicable to a case where recovery is being made in the same State in which claims in respect of taxes etc. have arisen.

In Krishna Utensils v. State Financial Corporation (supra) (paragraph 4 of the said AWC) the Full Bench of our Court was of the view that the U.P. Public Moneys (Recovery of Dues) Act, 1972 is covered by Entry 43 of List II of the Seventh Schedule to the Constitution of India, which provides ''Public Debt of the State''. However in State of Tamil Nadu v. G.N. Venkataswamy and others, (1994) 5 SCC 314, the apex Court while considering the provisions of the Tamil Nadu Revenue Recovery Act, 1864 was of the view that the State Legislation is directly related to Entry 30 of List II of the Seventh Schedule to the Constitution of India (see paragraph 19 of the said SCC).

In any case, it is evident that the U.P. Public Moneys (Recovery of Dues) Act, 1972 is relatable to List II (State List) of the Seventh Schedule to the Constitution of India (either Entry 43 or Entry 30 thereof). On the other hand in view of the decision of the Supreme Court in Union of India and another v. Delhi High Court Bar Association and others, JT 2002 (3) SC 131'' the 1993 Act enacted by the Parliament is relatable to Entry 45 of List (Union List) of the Seventh Schedule to the Constitution of India.

It is thus evident that while the 1993 Act is relatable to List I (Union List) of the Seventh Schedule to the Constitution of India, the U.P. Public Moneys (Recovery of Dues) Act, 1972 is relatable to List II (State List) hence Article 254 of the Constitution of India is not attracted in such a situation. However, the principle of predominance of the power of Parliament may be attracted in such a situation if it is shown that there is inconsistency between the law made by the Parliament with respect to subject in the Union List and the law made by the State Legislature with respect to subject in the State List. This is because there is nonobstante clause in clause (1) of Article 246 of the Constitution of India. Further, Clause (3) of the said Article is �subject to clauses (1) and (2)� of the said Article.

It is well established that the Court should make effort to harmoniously construe the provisions of the Parliamentary Legislation and the provisions of the State Legislation so that both may coexist, and any apparent inconsistency may be avoided. However, if such harmonious construction is not possible and there is irreconcilable inconsistency between the Parliamentary Legislation and the State Legislation then Parliamentary Legislation will prevail over the State Legislation.

Section 34 of the 1993 Act provides as follows :

�34. Act to have overriding effect. (1) Save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for time being in force or in any instrument having effect by virtue of any law other than this Act.

(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of the Industrial Finance Corporation Act, 1948 (15 of 1948) the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (52 of 1984) (the Sick Industrial Companies (Special Provisions) Act, 1985 and the Small Industries Development Bank of India Act, 1989 (39 of 1989)).�

A perusal of subsection (1) of Section 34 of the 1993 Act shows that in case there is inconsistency between the provisions of the 1993 Act and the provisions of any other law for time being in force then the provisions of the 1993 Act would prevail. Therefore, the question to be considered is as to whether there is inconsistency between the provision of the 1993 Act and the provisions of U.P. Public Money''s (Recovery of Dues) Act, 1972. The preamble to the 1993 Act reads as follows :

�An Act to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto.�

The preamble to U.P. Public Moneys (Recovery of Dues) Act, 1972 reads as follows :

�An Act to provide, with retrospective effect, for the speedy recovery of certain classes of dues payable to the State Government or the Uttar Pradesh Financial Corporation or any other Corporation notified by the State Government in that behalf or to any nationalized or other Scheduled Bank or to a Government Company and to validate certain acts done and proceedings taken in the past and to provide for matters connected therewith.�

Thus, both the legislations have been enacted with the object of expeditious and speedy recovery of dues due to the Financial Institutions etc. Both the legislations have been enacted for the benefit of Financial Institutions etc.

While the 1993 Act applies to ''debt'' as defined in Section 2(g) of the said Act the U.P. Public Moneys (Recovery of Dues) Act, 1972 applies to recovery of only certain class of dues. The provisions of U.P. Public Moneys (Recovery of Dues) Act, 1972 can be resorted to only when there is an agreement of the kind mentioned in Section 3 of the said Act and further the conditions mentioned in the said section are fulfilled.

Section 25 of the 1993 Act provides modes of recovery of debt on the basis of the recovery certificate issued by the Tribunal. These modes of recovery are similar to the modes adopted when the recovery is made as arrears of land revenue under the provisions of the U.P. Public Money''s (Recovery of Dues) Act, 1972.

It is thus evident that the scope of the U.P. Public Money''s (Recovery of Dues) Act, 1972 is limited only to certain classes of dues and its applicability is dependent on the fulfillment of conditions of Section 3 of the said Act. On the other hand the 1993 Act applies to Debts Due to Banks and Financial Institutions and a wide definition of the word �debt� has been given in Section 2(g) of the said Act. Therefore, the two Acts can co exist, and there is no inconsistency between the two so as to attract Section 34 (1) of the 1993 Act.

It is true that the 1993 Act deals with adjudication as well as recovery of debts and claborate procedure for adjudication has been provided. In my opinion'' this cannot be a ground for holding that the provisions of the 1993 Act are inconsistent with the provisions of the U.P. Public Moneys (Recovery of Dues) Act, 1972.

In this connection, it is noteworthy that the Courts have upheld the coexistence of two remedies one onerous and summary in nature and the other detailed and elaborate in nature provided there are sufficient guidelines for the concerned officer to decide as to which of the remedies is to be chosen. In the Director of Industries U.P. v. Deep Chand (supra), the Supreme Court while upholding the validity of the U.P. Public Moneys (Recovery of Dues) Act, 1965 laid down as follows : (Paragraph 7 of the said AIR).

�7. It is also argued that the impugned Act does not provide any guidelines to the authorities concerned regarding the circumstances under which the amounts could be realized by resorting to the procedure prescribed for recovering arrears of land revenue. It is no doubt true that there is no express, provision in the Act containing such guidelines. That however in the circumstances of the case is not sufficient to hold that Section 3 of the impugned Act confers arbitrary power on the State Government and makes a hostile discrimination. Under Section 3 of the Act the Collector can proceed to realize the amount due as arrears of land revenue only on the basis of a certificate issued by an officer as may be authorized in that behalf by the State Government mentioning the sum due from any person referred to therein. Such officer is expected ordinarily to avail himself of the speedier remedy provided under the statute. We are of the view that the Act which is passed with the object of providing a speedier remedy itself provides sufficient guidance to the officer concerned as to when he should resort to the remedy provided by it. As observed by this Court in Maganlal Chhagganlal (Pvt.) Ltd.''s case (supra), one expects the officer concerned to avail himself of the procedure prescribed by the Act and not to resort to the dilatory procedure of the ordinary civil Court. In that case, the legality of the provisions of the Bombay Government Premises (Eviction) Act, 1955 and the provisions contained in Chapter VA of the Bombay Municipal Corporation Act, 1888 which provided a speedier remedy to recover possession of premises belonging to the State Government and the Bombay Municipal Corporation which were in unauthorized occupation of any person was questioned on the ground that the remedies under the said provisions were more onerous than the remedy by way of a suit which was also available to the State Government and the Corporation. While upholding the above provisions Alagiriswami, J. who spoke for the majority observed thus :

�The statute itself in the two classes of cases before us clearly lays down the purpose behind them, that is premises belongs to the Corporation and the Government should be subject to speedy procedure in the matter of evicting unauthorized persons occupying them. This is a sufficient guidance for the authorities on whom the power has been conferred. With such an indication clearly given in the statutes one expects the officers concerned to avail themselves of the procedures prescribed by the Acts and not resort to the dilatory procedure of the ordinary Civil Court. Even normally one cannot imagine an officer having the choice of two procedures, one which enables him to get possession of the property quickly and the other which would be a prolonged one to resort to the latter. Administrative Officers no less than the Courts do not function in a vacuum. It would be extremely unreal to hold that an administrative officer would be in taking proceedings for eviction of unauthorized occupants of Government property or Municipal property resort to the procedure prescribed by the two Acts in one case and to the ordinary Civil Court in the other. The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion. In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal. It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. This is not one of those cases where discrimination is writ large on the face of the statute. Discrimination may be possible but is very improbable. And if there is discrimination in actual practice this Court is not powerless. Furthermore, the fact that the Legislature considered that the ordinary proceeding is insufficient or ineffective in evicting unauthorized occupants of Government and Corporation property and provided a special speedy procedure, therefore, is a clear guidance of the authorities charged with the duty of evicting unauthorized occupants. We, therefore, find ourselves unable to agree with the majority in the Northern India Caterers''s case.�

The question may be examined from another angle. The subject matter of 1993 Act is twofold (i) adjudication and (ii) recovery of debts.

On the other hand the subjectmatter of the U.P. Public Moneys (Recovery of Dues) Act, 1972 is only recovery of dues.

Therefore, the question of inconsistency will have to be examined with reference to subject matter which is common to both the aforesaid Acts, namely, recovery.

As noted above there is no inconsistency between the two Acts as regards the subjectmatter of recovery of debts/dues and the two Acts can coexist.

Coming now to the decision of the Supreme Court in Allahabad Bank v. Canara Bank (supra), relied upon by the learned Counsel for the petitioners the said decision dealt with the question as to whether there was inconsistency between the provisions of the 1993 Act and the provisions of the Companies Act, 1956 in cases where application for winding up of a company had been filed. The question of inconsistency arose in the context of the provisions of the 1993 Act visavis Sections 442, 446 and 537 of the Companies Act. After examining the provisions of the two statutes and relying upon subsection (I) of Section 34 of the 1993 Act, the apex Court held that Sections 442, 446 and 537 of the Companies Act cannot be applied against the Tribunal constituted under the 1993 Act. Therefore, the provisions of the Companies Act, 1956 regarding Leave of Comany Court, stay of suit and proceedings etc. will not apply to the Tribunal constituted under the 1993 Act.

This, this decision of the Supreme Court is distinguishable as there was clear inconsistency between the 1993 Act and the Companies Act, 1956. On the other hand in the present case, as seen above there is no such inconsistency between the provisions of the 1993 Act and those of U.P. Public Money''s (Recovery of Dues) Act, 1972.

It is noteworthy that the Supreme Court in Allahabad Bank v. Canara Bank (supra), observed that by the 1993 Act. �it was intended that there should be a speedy and summary remedy for recovery of thousands of crores which were due to the banks and to financial institutions so that the delays occurring in winding up proceedings could be avoided.� (see para 34 of the said SCC).

As regards the decision of the apex Court in State Bank of Bikaner and Jaipur (supra), the said decision dealt with the meaning of the word ''Debt'' as defied in Section 2(g) of the 1993 Act and the transfer of pending suits and proceedings from Courts to Tribunal constituted under the 1993 Act in view of Section 31 of the said Act. The said decision is not applicable to the controversy involved in the present case under consideration.

The controversy involved in the present case may be considered from another angle also. Even if it is assumed that there is inconsistency between the 1993 Act and the U.P. Public Money''s (Recovery of Dues) Act, 1972, and as such subsection (1) of Section 34 is attracted still the two Acts can coexist by virtue of subsection (2) of Section 34 of the 1993 Act. It in noteworthy that subsection (1) of Section 34 of the 1993 Act itself says �Save as provided under subsection (2) �of that section.

The question as to whether it is open to the U.P. Financial Corporation to take recourse to Section 3 of the U.P. Public Money''s (Recovery of Dues) Act, 1972 after coming into force of the 1993 Act stands concluded by the Division Bench decision in M/s. Unique Butyle Tube Industries Private Limited v. U.P. Financial Corporation (supra). The Division Bench of our Court considered the arguments of the leaned Counsel for the petitioners therein that in view of the provisions contained in the 1993 Act, the proceedings under the U.P. Public Money''s (Recovery of Dues) Act, 1972 were not maintainable and the Division Bench held as follows :

�The argument of Sri R.N. Singh could have been acceptable had the provision of subsection (2) of Section 34 of the DRT Act not been there Section 32G of the SFC Act came into force in the year 1985 by amending Act 43 of 1985 whereas Section 34 in the DRT Act came to be enacted for the first time in the year 1993. Consequently. It is to be held that the Legislature was fully aware of the provisions as exist in Section 32G of the SFC Act while enacting Section 34 in the DRT Act. Now, therefore, the exception carved out by subsection (2) of Section 34 of DRT Act leaves no manner of doubt that the provisions in the DRT Act are in addition to the provisions existing in the SFC Act, 1951 and are not in derogation thereof. Even the provisions contained in the Sick Industrial Companies (Special Provisions) Act, 1985 have been excepted.�

After quoting Section 34 of the 1993 Act the Division further observed :

�The choice is clearly left open to the Financial Corporation which may proceed under the DRT Act or may proceed under the other modes of recovering the debts as are permissible under the SFC Act i.e. it can proceed under the provisions of U.P. Public Moneys (Recovery of Dues) Act.�

�Section 32G of SFC Act stands well explained by Full Bench decision of this Court in M/s. Krishna Kumar, (supra). The full bench has with great respect rightly observed that there may have been some states where provisions akin to U.P. Public Moneys (Recovery of Dues) Act, 1972 may not exist and therefore, the specific power stood conferred by Section 32G to the financial corporation to make recovery as arrears of land revenue. This being the correct legal position the State Financial Corporation having already been notified as a financial institution within the meaning of the U.P. Public Moneys (Recovery of Dues) Act, 1972, its power to recover debts as arrears of land revenue already exists.�

�Before adverting to other decision cited by Sri R.N. Singh, it should be specifically mentioned that there cannot be envisaged a faster recovery method than what exists in the U.P. Public Moneys (Recovery of Dues) Act, 1972. The State enactment permits recovery as arrears of land revenue. The validity of the said enactment has already been upheld by Hon''ble Supreme Court in Deep Chand''s case AIR 980 SC page 277.�

The Division Bench noticed the decision of the apex Court in Allahabad Bank v. Canara Bank (supra), and observed as follows :

�In view of the aforesaid discussion, it is distinctly clear in Allahabad Bank v. Canara Bank (supra), that the dispute arose about execution of some orders already passed by the recovering officials appointed under the Act. Further winding up proceeding initiated before the Company Court was the basis of the parallel proceeding initiated by the other bank which was one of the other creditors. It is in this view of the matter that their Lordships emphasized much upon the expression �adjudication�, formed in the said case due to different orders. The question of adjudication became relevant. In this view of the matter on facts the aforesaid ruling does not support at all the contention of Sri R.N. Singh. On the contrary the language of subsection (2) of Section 34 of the DRT Act was not all commented upon rather the Supreme Court specifically confined its concluding observation with reference to the provisions existing in subsection (1) of Section 34 of the DRT Act.�

I am in respectful agreement with the decision of the Division Bench following the said decision I hold that it is open to the U.P. Financial Corporation to take proceedings under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 even after coming into force of the 1993 Act. It is not necessary for the U.P. Financial Corporation to take recourse to only the 1993 Act, if the amount of debt is Rupees Ten Lacs or more. It is open to the U.P. Financial Corporation even in such cases to take recourse to the provisions of Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972, provided conditions laid down in the said Section 3 are fulfilled.

It is noteworthy that subsection (2) of the Section 34 lays down that the provisions of the 1993 Act or the Rules made thereunder shall be in addition to and not in derogation of the State Financial Corporation Act, 1951. Therefore, the modes of recovery of dues permissible under the State Financial Corporation Act, 1951 continued to remain available to the U.P. Financial Corporation even after coming into force of the 1993 Act. As held by the Full Bench in M/s. Krishna Utensils, Rampur v. State Financial Corporation and others (supra), in view of the specific words occurring in Section 32G of the State Financial Corporation Act, 1951, namely �without prejudice to any other mode of recovery�, the remedy under the U.P. Public Moneys (Recovery of Dues) Act, 1972 continued to remain available to the U.P. Financial Corporation even after the insertion of Section 32G by Act No. 43 of the 1985. In fact the specific words occurring in Section 32G of the State Financial Corporation Act, 1951 permitted and saved the continued availability of the mode of recovery under the U.P. Public Moneys (Recovery of Dues) Act, 1972 to the U.P. Financial Corporation. As the provisions of the 1993 Act are in addition to and not in derogation of the provisions of the State Financial Corporation Act, 1951, the modes of recovery permitted and saved by the State Financial Corporation Act, 1951 will continue to remain available to the U.P. Financial Corporation in view of the provisions of subsection (2) of Section 34 of the 1993 Act. Thus, second contention raised on behalf of the petitioners also fails.

Learned Counsel for the petitioners next contended that as the Respondent No. 3 (U.P. Financial Corporation) had already taken possession of the factory premises of the company/Respondent No. 4 on 2932001 under Section 29 of the State Financial Corporation Act, it was not open to the Respondent No. 3 to take proceedings against the petitioners as guarantors under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 of recovery of dues due against the company/Respondent No. 4. Learned Counsel has placed reliance upon Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972. Learned Counsel has also placed reliance upon a decision in Govind Prasad and another v. U.P. Financial Corporation, Kanpur and others, 1990 AWC 527.

In order to appreciate this contention, it is relevant to reproduce Section 4 of the UP. Public Moneys (Recovery of Dues) Act, 1972 :

�Section 4 Savings. (1) Nothing in Section 3, shall,

(a) affect any interest of the State Government, the Corporation, a Government company or any banking company, in any property created by any mortgage charge, pledge or other encumbrance; or

(b) bar a suit or affect any other right or remedy against any person there than a person referred to in that section, in respect of a contract of indemnity or guarantee entered into a relation to an agreement referred to in that section or in respect of any interest referred to in clause (a)

(2) Where the property of any person referred to in Section 3 is subject to any mortgage, charge, pledge or other encumbrance in favour of the State Government, or Corporation, a Government company or banking company, then

(a) in every case of pledge of goods, proceedings shall first be taken for sale of the thing pledged, and if the proceeds of such sale are less than the sum due then proceedings shall be taken for recovery of the balance as if it were an arrear of land revenue:

Provided that where the State Government is of opinion that it is necessary to do so for safeguarding the recovery of the sum due to it or to the Corporation, Government company or banking company, as the case may be it may for reasons to be recorded, direct proceedings to be taken for recovery of the sum, due as if it were an arrear of land revenue before or at the same time as proceedings are taken for sale of the thing pledge;

(b) in every case of a mortgage, charge or other encumbrance on immovable property, such property or, as the case may be the interest of the defaulter therein shall first be sold in proceedings for recovery of the sum due from that person as if it were an arrear of land revenue and any other proceeding may be taken thereafter only if the Collector certifies that there is no prospect of realization of the entire sum due through the first mentioned process within a reasonable time.�

A reading of Section 4 (2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972 shows that if the immovable property of a person referred to in Section 3 of the said Act is subject to any mortgage, charge or other encumbrance in favour of the U.P. Financial Corporation and if proceedings for recovery of the sum due �from that person� as arrears of land revenue are taken against that person then the immovable property of that person which is subject to mortgage, charge or other encumbrance shall first be sold. Any other proceedings against that persons may be taken thereafter only if the Collector certifies that there is no prospect of realization of the entire sum due through the first mentioned process within a reasonable time.

It is thus evident that Section 4(2)(b) applies only to such cases where the immovable property of the persons against whom the proceedings are being taken for recovery of the sum due as arrears of land revenue, is subject to mortgage, charge or other encumbrance. For example if immovable property of a person �A'' is subject to mortgage charge or other encumbrance and proceedings for recovery of the sum due against that person �A� as arrears of land revenue are being taken, then such immovable property of that person �A� will first be proceeded against, and only thereafter any other proceedings against that person �A� will be taken. However if immovable property of a person �A� is subject to mortgage, charge or encumbrance and proceedings for recovery of the sum due as arrears of land revenue are being taken against another person �B�, then such a person �B� cannot insist that proceedings should first be taken against the property �A� which is subject to mortgage charge or other encumbrance.

In the present case, possession of the unit of the company has already been taken over by the U.P. Financial Corporation. However, the U.P. Financial Corporation has started recovery proceedings against the petitioners as guarantors for the loan given to the company and recovery certificate and citation have already been issued against the petitioners. Question is as to whether the petitioners can insist that in view of Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972, the U.P. Financial Corporation should first proceed against the assets of the company and only thereafter the proceedings be taken against the petitioners. In my opinion, the petitioners as guarantors cannot insist that the U.P. Financial Corporation should first proceed against the assets of the company, and only thereafter, the U.P. Financial Corporation should proceed against the petitioners under the U.P. Public Moneys (Recovery of Dues) Act, 1972. No property of the petitioners as guarantors is mortgaged or charged with the U.P. Financial Corporation as a security for loan given to the company. Therefore, Section 4(2)(b) the U.P. Public Moneys (Recovery of Dues) Act, 1972 cannot be relied upon by the petitioners. Had any immovable property of the petitioners been mortgaged or charged etc. with the U.P. Financial Corporation as security for loan given to the company, the petitioners could have insisted that first their such immovable property be proceeded against, and then only any other proceedings be taken against the petitioners. However, this is not the case here. No property of the petitioners is subject to mortgage or charge etc. as security for loan given to the company. Therefore, Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972 has no application to the present case where proceedings are being taken against the petitioners as guarantors under Section 3 of the said Act.

Certain decisions may also be considered in this regard. In State Bank of India v. M/s. Indexport Registered and others, AIR 1992 SC 1740, Supreme Court held as follows (paragraph 13 of the said AIR) :

�13. In the present case before us the decree does not postpone the execution. The decree is simultaneous and it is jointly and severally against all the defendants including the guarantors. It is the right of the decree holder to proceed with it in a way he likes. Section 128 of the India Contract Act itself provides that �the liability of the sureties is co extensive with that of the principal debtor unless it is otherwise provided by the contract.�

The Supreme Court further held (paragraph 18 of the said AIR)

�18. It will be noticed that the guarantor alone could have been sued; without even suing the principal debtor, so long as the creditor satisfies the Court that the principal debtor is in default.�

The apex Court further observed (paragraph 22 of the said AIR) :

�22. The decree for moneys is a simple decree against the judgment debtors including the guarantor and in no way subject to the execution of the mortgage decree against the judgment debtor No. 2. If on principle a guarantor could be sued without even suing the principal debtor there is no reasons, even if the decretal amount is covered by the mortgaged decree, to force the decree holder to proceed against the mortgaged property first and then to proceed against guarantor.....................But if the composite decree is a decree which is both a personal decree as well as a mortgage decree without any limitation on its execution the decree holder in principle cannot be forced to first exhaust the remedy by way of execution of the mortgage decree alone and told that only if the amount recovered is insufficient he can be permitted to take recourse to the execution of the personal decree...............................�

In view of this decision of the Supreme Court, it is evident that the petitioners as guarantors cannot insist that the U.P. Financial Corporation must first proceed against the company i.e. principal borrower.

In Andhra Pradesh State Financial Corporation v. M/s. GAR ReRolling Mills and another, AIR 1994 Supreme Court 2151, the Supreme Court was dealing with the remedies available to the State Financial Corporation under Sections 29 and 31 of the State Financial Corporation Act, 1951. The Supreme Court held as follows (paragraph No. 13 of the said AIR) :

�13. On a conjoint reading of Sections 29 and 31 of the Act it appears to us that in case of default in repayment of loan or any instalment or any advance or breach of an agreement the Corporation has two remedies available to it against the defaulting industrial concern one under Section 29 and another under Section 31 of the Act. The choice of availing the remedy under Section 29 or Section 31 of the Act is that of the Financial Corporation alone and the defaulting concern has no say whatsoever in the matter as to which remedy should be taken recourse to by the Corporation against it for effecting the recovery. The expression �without prejudice to the provisions of Section 29 of this Act� as appearing in Section 31 of the Act clearly demonstrates that the Legislature did not intend to confine the Corporation to take recourse to only a particular remedy against the defaulting industrial concern for recovery of the amount due to it. It left the choice to the Corporation to act in the first instance under Section 31 of the Act and save its rights and remedies under Section 29 of the Act to be availed at later stage, with the sole object of enabling the Corporation to recover its dues. It is not however obligatory on the part of the Financial Corporation to invoke the special provision of Section 31 of the Act, it can even without taking recourse to the provisions of the said section invoke the procedure prescribed under Section 29 of the Act for realization of its dues.�

The Supreme Court further observed (paragraph 17 of the said AIR)

�17.. �................Similarly, if in a given, case the Corporation has taken recourse to the provisions of Section 29 of the Act, there is no bar for it without taking those proceeding to their logical conclusion to abandon them and approach the Court under Section 31 of the Act to seek one or more of the reliefs available to it under that section where, the defaulting party fails to honour the order or decree of the Court made under Section 31 of the Act it has neither any legal nor even a moral right to object to the Corporation from taking recourse to the provision of Section 29 of the Act only on the grounds the it has obtained a proper relief under Section 31 of the Act which relief it does not wish to pursue any further...............�

The Supreme Court further observed (paragraph 18 of the said AIR)

There is no equity in favour of a defaulting party which may justify interference by the Courts in exercise of its equitable extraordinary jurisdiction under Article 226 of the Constitution of India to assist it in not repaying its debts. The aim of equity is to promote honesty and not to frustrate the legitimate rights of the Corporation which after advancing the loan takes steps to recover its dues from the defaulting party. Thus, the intention of the legislature in using the expression �without prejudice to the provisions of Section 29 of the Act'' clearly appears to be that recourse to the provisions of Section 29 of the Act is not prohibited, where an order or decree under Section 31 of the Act obtained by the Corporation has not been complied with or honoured by the defaulting concern or its is otherwise insufficient to satisfy the dues of the Corporation and the Corporation withdraws and abandons to pursue further proceedings under Section 31 of the Act. Passing a money decree for recovery of the outstanding dues, not being within the jurisdiction of the Court under Section 31 of the Act the Corporation retains its right to recover its dues by invoking the provisions of Section 29 of the Act in the manner prescribed therein notwithstanding any order final or interim obtained by it under Section 31 of the Act by withdrawing from and abandoning those provisions at any stage of the proceedings. A Court of equity, when exercising its equitable jurisdiction under Article 226 of the Constitution must so act as to prevent perpetration of a local fraud and the Courts are obliged to do justice by promotion of good faith as far as it lies within their power equity is always known to defend the law from clefty evasions and new subtleties intend to evade law. Since the legislature enacted Sections 29 and 31 with a view to aid the Corporation to recover its legitimate dues etc. from the defaulting party, the saving clause in Section 31 of the Act, preserving the rights under Section 29 of the Act by giving up the pursuit under Section 31 at any stage of the proceedings is available to the Corporation. The two provisions must be so harmonized as to facilitate the Corporation to recover its dues from the defaulting party. ..................�

The Supreme Court further held (paragraph 19 of the said AIR)

�19. The right vested in the Corporation under Section 29 of the Act is besides the right already possessed at common law to institute a suit or the right available to it under Section 31 of the Act. Since, the Corporation can withdraw from the Court its proceedings under Section 31 of the Act at any stage, it would imply that it has the right to withdraw from further proceedings under Sections 31 and 32 of the Act even after obtaining an order in its favour and take recourse to the proceedings under Section 29 of the Act without pursuing the proceedings under Section 31 of the Act any further. The Corporation cannot indeed, executed the order under Section 31 of the Act and yet simultaneously taken recourse to proceeding under Section 29 of the Act for the same relief. The position may also be different if the claim of the Corporation is negatived on fact by the Court in the proceedings under Section 31 of the Act. In that event depending upon the facts of each case, it may be permissible to hold that fair play and justice demand that the Corporation is not allowed to take recourse to the provisions of Section 29 of the Act.�

From this decision it is evident that if there are several remedies available to the State Financial Corporation, it is the choice of the Corporation as to which remedy it would pursue and the defaulting party cannot compel the State Financial Corporation to take recourse to any particular remedy.

In view of this decision the petitioners as guarantors in the present case cannot compel the U.P. Financial Corporation to first proceed against the assets of the company taken over under Section 29 of the State Financial Corporation Act, 1951, and only thereafter, to proceed against the petitioners. It is the choice of the U.P. Financial Corporation as to which of the remedies it would pursue and against which of the parties it would proceed.

In U.P. Financial Corporation v. M/s. Garlon Polyfeb Industries and others, 2001 (2) JCLR 557 (All); AIR 2001 All 286, a Division Bench of this Court was considering the legality of an injunction order issued by the learned Civil Judge (Senior Division) Kanpur Nagar whereby the U.P. Financial Corporation (defendant appellant) was directed to take recourse to proceedings under Section 29 of the State Financial Corporation Act, 1951 and to recover the amount by enforcing the personal liability only if entire amount due is not recovered in the aforesaid manner. The Division Bench relied upon the decision of the apex Court in Andhra Pradesh State Financial Corporation (supra), and held as follows (paragraph 10 of the said AIR) :

�10..............................This authoritative pronouncement shows clearly that it is open to the U.P. Financial Corporation to recover the amount in any manner. If the law permits several modes to recover the amount, the debtor cannot dictate which mode should be adopted by the creditor. It is therefore, not permissible for a Court to issue an injunction directing U.P. Financial Corporation to first proceed under Section 29 of the Act. Such an order is wholly against the provision of the State Financial Corporation Act and also the Contract Act. The impugned order dated 612001, therefore, cannot be sustained and has to be set aside.�

Applying this principle to the present case, it is held that even though the U.P. Financial Corporation has already taken possession of the assets of the company, still it is open to the U.P. Financial Corporation to proceed against the petitioners on the basis of their guarantees.

In Bank of Bihar Limited v. Dr. Damodar Prasad and another, AIR 1969 Supreme Court 297 laid down as follows (paragraph 3, 4 and 5 of the AIR):

�3. The demand for payment of the liability of the principal debtor was the only condition for the enforcement of the bond. That condition was fulfilled. Neither the principal debtor nor the surety discharged the admitted liability of the principal debtor in spite of demand. Under Section 128 of the Indian Contract Act, save as provided in the contract the liability of the surety is coextensive with that of the principal debtor. The surety became liable to pay the entire amount. His liability was immediate. It was not deferred until the creditor exhausted his remedies against the principal debtor.

Before payment the surety has no right to dictate terms to the creditor and ask him to pursue his remedies against the principal in the first instance. As Lord Eldon observed in Wight v. Simpson, (1802) 6 Ves Jun 714 at p. 73431 ER 1272 at p. 1282. �But the surety is a guarantee and it is his business to see whether the principal pays, and not that of creditor.� In the absence of some special equity the surety has no right to restrain an action against him by the creditor on the ground that the principal is solvent or that the creditor may have relief against the principal in some other proceedings.

Likewise where the creditor has obtained a decree against the surety and the principal the surety has no right to restrain execution against him until the creditor has exhausted his remedies against the principal. In Lachhman Joharimal v. Bapu Khandu, (1869) 6 Bom HCR 241, the judge of the Court of Small Causes, Ahmednagar, solicited the opinion of the Bombay High Court on the subject of the liability of sureties. The creditors having obtained decree in two suits in the Court of Small Causes against the principals and sureties presented applications for the imprisonment of the sureties before levying execution against the principals. The judge stated that the practice of his Court had been to restrain a judgmentcreditor from recovering from a surety until he had exhausted his remedy against the principal but in his view the surety should belable to imprisonment while the principal was at large. Couch, CJ and Melvill, J. agreed with this opinion and observed :

�The Court is of opinion that a creditor is not bound to exhaust his remedy against the principal debtor before suing the surety and that when a decree is obtained against a surety it may be enforced in the same manner as a decree for any other debt.�

This decision thus supports the conclusion that if there are several remedies available to the State Financial Corporation, it is the choice of the Corporation as to which remedy it would pursue and the defaulting party cannot compel the State Financial Corporation to take recourse to any particular remedy. Even though the U.P. Financial Corporation has already taken possession of the assets of the Company still it is open to the U.P. Financial Corporation to proceed against the petitioners on the basis of their guarantees.

Let us now consider the decision in Govind Prasad (supra) relied upon by the learned Counsel for the petitioners. In this case a Division Bench of this Court held as follows :

(Paragraphs 3 and 4 of the said AWC):

�3. The learned Counsel is clearly right. We think that the Corporation could not legally and at any rate ought not in all fairness to proceed against the petitioners while keeping the property mortgaged with them under its control. The Corporation having decided to proceed against the borrowers and having taken possession of their assets, could not turn around and proceed against the petitioners without attempting to sell the assets seized from the borrowers. It should not be forgotten that the Corporation is an instrumentality of the State. It must, therefore, at all times act reasonably and fairly. There is nothing to indicate that value of the property seized by the Corporation is less than the amount remaining due from the borrowers. The impugned action against the petitioners is hence plainly unjust and unfair.

The upshot of the foregoing discussion is that so long as the property in possession of the Corporation is not sold or released by the Corporation, it would be unfair and unjust for the Financial Corporation to proceed against the petitioners. The Corporation may, therefore, either sell the properties and recover the balance from the petitioners or it may release the property and proceed against the petitioners.�

This decision, as is apparent from the passages quoted above proceeded on the ground that the U.P. Financial Corporation should act in a fair and just manner. Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972 was not considered in this case.

To decide as to whether the U.P. Financial corporation is acting in fair and just manner in proceeding against the guarantors while it has already taken possession of the assets of the company under Section 29 of the State Financial Corporation Act, 1951 it will be necessary to examine the facts and circumstances of each case. There can be no doubt that in view of the provisions of Section 128 of the Indian Contract Act, liability of the guarantor is coextensive with that of the principal borrower. It is also evident from the aforesaid discussions that if no property of the guarantor is mortgaged or charged to secure the loan given to the principal borrower then Section 4(2)(b) of the U.P. Public Moneys (Recovery of Dues) Act, 1972 will not be applicable.

In view of the said provisions and in view of the various decisions discussed above it is evident that even though the U.P. Financial Corporation has already taken possession of the assets of the company under Section 29 of the State Financial Corporation Act, 1951 still it is legally permissible for the U.P. Financial Corporation to proceed against the guarantors on the basis of their guarantees. It is the choice of the U.P. Financial Corporation as to which of the remedies it would pursue and against which of the parties it would proceed.

Therefore, the question which would come up for consideration in each case would be as to whether the U.P. Financial Corporation has acted in a fair and just manner in deciding to proceed against the guarantors while keeping the assets of the company in its possession.

Keeping in view this position, let me examine the facts of the present case which have already been narrated in detail in the earlier part of this judgment. As per the own showing of the petitioners in the writ petition, the Respondent No. 3 issued a notice in the year 2000 to the Respondent No. 4 threatening to take recourse under Section 29 of the State Financial Corporation Act and take possession of the factory premises. Thereupon, the company/Respondent No. 4 filed a suit for injunction against the U.P. Financial Corporation and others. On an application filed by the company/Respondent No. 4 for temporary injunction in the said suit, temporary injunction was granted in favour of the company/Respondent No. 4 by the order of the learned Civil Judge Senior Division, Allahabad dated 1622001. Against the said order dated 1622001, the Respondent No. 3 (U.P. Financial Corporation) filed First Appeal From Order No. 374 of 2001 before this Court. In the meanwhile it appears that the learned Civil Judge (Senior Division) Allahabad by his order dated 2632001 recalled his earlier order dated 1622001. After recalling of the said temporary injunction order dated 1622001, the Respondent No. 3 (U.P. Financial Corporation) on 2932001 took possession of the factory premises of the company/Respondent No. 4 and posted its gurads over the same. After taking possession of the factory premises of the Respondent No. 4 the Corporation issued advertisement in the newspaper Dainik Jagran, a copy whereof has been filed as Annexure No., 3 to the writ petition. However, it appears that the sale of the factory premises and other immovable properties of the Respondent No. 4 has not so far taken place.

In the meanwhile, it appears that recovery proceedings were initiated against the petitioners as guarantors and the citations dated 2512001 (Annexure Nos. 4 and 5) were issued to the petitioners.

In view of the facts narrated above, it cannot be said that the Respondent No. 3 (U.P. Financial Corporation) is acting in any unfair manner in taking proceedings against the petitioners as guarantors. The company/Respondent No. 4 has been creating hurdles in the recovery of loan since the issuance of notice under Section 29 of the State Financial Corporation Act, 1951. In the circumstances, the Respondent No. 3 (U.P. Financial Corporation) was justified in proceeding against the petitioners as guarantors. The action taken by the U.P. Financial Corporation cannot be termed to be unfair or unjust. Thus the third contention raised on behalf of the petitioners also fails.

In view of the aforesaid discussions, I am of the view that the writ petition filed by the petitioners lacks merit, and the same is liable to be dismissed. However, as there is difference of opinion between us and the matter is to be referred to a larger Bench. I am not passing any order dismissing the writ petition.

By the Court. Accordingly registry is directed to place the record of this writ petition before Hon''ble the Chief Justice for nominating the Larger Bench for an authoritative decision of the issues as framed in the first paragraph of the judgment of one of us (S.R. Singh, J.). Pending decision of the writ petition interim order dated 1932002 is modified to the extent that the Corporation may take recourse to the provisions of Sections 29, 31 and 32G of the State Financial Corporation Act or it may move an application before the Debt Recovery Tribunal under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for the recovery of its dues against the petitioner.

Matter referred to larger bench.