U.P. Cement Ltd. Lko. vs State of U.P.

This writ petition by U.P. Cement Limited challenges the citation dated 1.10.2010 relating to the auction/sale of the movable and immovable property of the Petitioner, on the ground that in the Division Bench judgment passed in the earlier writ petition bearing No. 9080 (M/B) of 2007 in re: M/s R.D. Cement Industries Pvt. Ltd. v. State of U.P. and Ors., connected with Writ Petition No. 6345 (M/B) of 2002 in re: U.P. Cement Ltd. v. State of U.P. and Ors., decided on 17.3.2010, directions have been issued for compliance while proceeding for auctioning the property of the Petitioner for making recovery of the dues as arrears of land revenue, but without compliance of the said directions, the impugned citation has been issued and, therefore, a fresh cause of action has accrued to challenge the recovery proceedings so initiated.

Sri Vivek Raj Singh, appearing for Respondent No. 2, in response to the arguments raised by learned Counsel for the Petitioner Sri O.P. Srivastava, submitted that the Petitioner is guilty of filing successive writ petitions with respect to the recovery of the same defaulted amount of loan and for that matter, the Division Bench in the aforesaid writ petitions has imposed a costs of rupees ten lacs on the Petitioner, as the Petitioner has been habitual of abusing the process of the Court. He further submitted that despite the interim order passed by this Court in the aforesaid writ petition that the property shall not be alienated, certain properties have been alienated under the resolution of the Board by the Managing Director Mr. P. Kumar. There are other allegations also against the conduct of the Petitioner.

Sri O.P. Srivastava, learned Counsel for the Petitioner disputes the aforesaid facts and says that the Petitioner has not abused the process of the Court and the pleas raised by the learned Counsel for Respondent No. 2 are not correct. Be that as it may, the fact remains that no sale has been effected of any property of the Petitioner. Stalling the recovery proceedings now and then on mere technical grounds being raised by the borrower or guarantor would defeat the very purpose of advancement of loan and the recovery thereof. Coercive measures are taken only when the borrower fails to repay the amount of loan as per the terms of the agreement and the guarantor also does not fulfill his part of the obligation. Under such circumstances, there remains no option with the financial institution but to take recourse to the recovery proceedings and recover the amount as arrears of land revenue. Ofcourse this has to be done in accordance with the law and the rules so prescribed.

A perusal of the Division Bench''s order passed in Writ Petition No. 6345 (M/B) of 2002, besides other things, reveals that the Court took into consideration the relevant rules, namely, Rule 283 and onwards of U.P. Zamindari Abolition and Land Reforms Rules, 1952 and observed that such rules be complied with while proceeding to recovery by auction sale. Once a Division Bench of this Court has taken into consideration the relevant rules which prescribe a procedure for holding the auction of the properties mortgaged or hypothecated, there would be no occasion for this Court to issue the same directions in a subsequent writ petition, because the Petitioner is of the view that the directions of the Court have not been complied with. This plea will not be available to the Petitioner also for the reason, whether such a direction has been issued by the Court or not, the revenue authorities are legally bound to follow the rules and if there is any breach of the rules, then the remedy lies in filing the objections before the authority prescribed, may be the Commissioner of the Division.

In case any auction/sale takes place, the Petitioner would be at liberty either to take recourse to the aforesaid rules which permit the borrower to make deposit of the amount within a given time and get the property released and also the right to file objection with respect to any illegality or irregularity having been committed in such auction proceedings. The rules thus give sufficient protection to the borrower/defaulter, whose property is auctioned, by filing objection before the authority prescribed and if the authority finds that the sale/auction is affected by some illegality or irregularity within the meaning of the aforesaid rules, he would not confirm the same and rather, would set it aside.

With this scheme of the rules, we do not find it expedient to entertain the writ petition at this stage even on the ground urged by the learned Counsel for the Petitioner. This observation we have made independent of the observations by the Division Bench in the earlier Writ Petition No. 6345 (M/B) of 2002 which we have considered only for a very limited purpose, for knowing that the Court has already made observations for compliance of the statutory provisions while proceeding for auction/sale.

Learned Counsel for the Petitioner, at this juncture, on the basis of the instructions received, says that the writ petition be allowed to be dismissed as withdrawn with liberty to file objections as and when occasion arises. Sri Vivek Raj Singh and Sri H.P. Srivastava, appearing for the Respondents have no objection to it.

Accordingly, the writ petition is allowed to be withdrawn. The Petitioner is given liberty to take recourse to the appropriate remedy before the appropriate forum as and when the cause of action arises. The withdrawal of this writ petition would not come in the way of the Petitioner in pursuing the aforesaid remedy, as may be permissible.