Case: Jujhar Singh S/o Gurcharan Singh Vs State of U.P. through Secretary Revenue and Ors.. High Court of Allahabad (India)
| Judges | Janardan Sahai, J. |
| Issue | Companies Act, 1956 - Sections 19, 442, 446, 529A, 537; Constitution of India - Articles 226, 246, 254; Essential Commodities Act, 1955 - Sections 1, 3; Maharashtra Co - Operative Societies Act, Maharashtra Co - Operative 1960; Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 - Sections 2, 4, , 18, 34 |
| Citation | 2007 (2) ADJ 115, 2007 (IV) BC 190, 2007 (102) RD 321, 2007 (2) UPLBEC 1571 |
| Judgement Date | December 19, 2006 |
| Court | High Court of Allahabad (India) |
Judgment:
Janardan Sahai, J.
1. The petitioner is the guarantor of a loan taken by the respondent No. 6 from the Bank of Baroda. The loan was taken for poultry farming. It appears that the respondent No. 6 defaulted and consequently recovery proceedings were initiated against the petitioner as well as against the respondent No. 6 by means of a recovery certificate issued on 22.9.1998. This certificate was issued by the Bank and sent to the Collector under the provisions of Section 11-A of the U.P. Agricultural Credit Act for recovery of the dues as arrears of land revenue. The Parliament has also passed an Act known as the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the R.D.B. Act). This Act applies to recovery of debts of not less than Rs. 10 lacs due to a bank or a financial institution. Section 17 of the Act provides for the establishment of a Tribunal to entertain and decide applications of banks and financial institutions in respect of recovery of debts. Section 18 of the Act provides that no other court or authority except the Supreme Court and High Court under Article 226 would have jurisdiction, power or authority over a matter for which relief can be granted by the tribunal under Section 17 of the Act. Section 34 of the Act gives overriding effect to the provisions of this Act over all other laws except the enactments listed in Sub-section 2 of that Section. The U.P. Agricultural Credit Act is not included in that list.
2. The guarantor has filed this writ petition challenging the recovery proceedings against him on the ground that after the Parliament has passed the R.D.B. Act the bank can only recover its dues by moving under the provisions of that Act and the recovery proceedings under the U.P. Agricultural Credit Act are not maintainable. It has been held by the Apex Court in Allahabad Bank v. Canara Bank [2000]2SCR1102 that the jurisdiction of the tribunal under the R.D.B. Act is exclusive. If therefore the application for recovery can be entertained by the tribunal it is the tribunal alone which can order recovery. It has not been disputed by the counsel for the parties that the tribunal under the R.D.B. Act had been constituted when the recovery certificate was issued.
3. The R.D.B. Act provides for recovery of debts. Debts have been defined under Section 2(g) as follows;
2 (g) "debt' means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application.
4. This definition is a very wide one and it does not make any distinction between a debt relating to an agricultural loan or other debts if the debt is due to a Bank or other Financial Institution. Under the U.P. Agricultural Credit Act it is the recovery of an amount given as financial assistance, which can be made. 'Financial assistance' has been defined under Section 2 (e) of the U.P. Agricultural Credit Act as "assistance given by way of loan, advance, guarantee or otherwise to an agriculturist or cooperative society....". The loans granted by the Bank as financial assistance would also be covered within the wide definition of debt under the R.D.B. Act. For this reason if the R. D. B. Act is found to have primacy over the Agricultural Credit Act the jurisdiction of the tribunal under the R.D.B. Act would be exclusive.
5. The question whether primacy is to be given to the R.D.B. Act or to the U.P. Agricultural Credit Act has to be decided in the light of the Constitutional provisions. Article 246(1) of the Constitution provides that 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 of the seventh Schedule. Article 246(2) empowers the Parliament and subject to Clause (1) the State Legislature to make laws on subjects covered under List III. Article 246(3) gives to the State legislature, subject to Clauses (1) and (2), exclusive power to make laws on subjects covered under List II. It is clear from the provisions of Article 246 that primacy has been given to the law made by Parliament and the power of legislation of the State Legislature to make laws on subjects enumerated in List II is subject to the power of Parliament. As regards legislation over subjects in List III (concurrent list) the power of the State legislature is subject to Clause (1). Article 254(1) of the Constitution further provides in regard to matters covered under the concurrent list that if the State Law conflicts with the law made by Parliament the State law shall to the extent of the inconsistency be repugnant and void. Exception to this rule is contained in article 254(2), which provides that if the State Act is a later Act and has received the assent of the President the State law would prevail. There again if the Parliament makes a law after the State law it is again the Parliamentary legislation, which would prevail. In view of the language of Article 254 decided cases have held that the question of repugnancy is relevant only to the legislation under List III. The question of repugnancy under Article 254 is not relevant in regard to legislation made by Parliament on subjects under List I and by the State Legislature on subjects in List II in exercise of their respective powers under Article 246(1) and 246(3) vide Krishna Utensils Rampur v. State Financial Corporation FB. AIR1989All226.
6. It has therefore to be first determined under which of the three lists the R.D.B. Act and the U.P. Agricultural Credit Act have been enacted. In Union of India v. Delhi Bar Association [2002]2SCR450 the apex court has held that the R.D.B. Act is a legislation on 'Banking' Entry 45 of List I. Para 14 of the report is extracted below;
14. The Delhi High Court and the Guwahati High Court have held that the source of the power of Parliament to enact a law relating to the establishment of the Debt Recovery Tribunal is Entry 11-A of List III, which pertains to "administration of justice; Constitution and...
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