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Judgment
JASGURPREET SINGH PURI, J. (Oral)
The present Civil Writ Petition has been filed under Articles 226/227 of the Constitution of India seeking issuance of a writ in the nature of certiorari for quashing the intimation letter dated 14.11.2021 (Annexure P-4), the Memo dated 14.09.2021 (Annexure P-5) and the Recovery Certificate dated 01.09.2021 (Annexure P-6).
Learned counsel for the petitioner submitted that it is a case where the petitioner for the purpose of establishing an industrial unit had applied for grant of subsidy from the respondent-State. Although the State was required to give the subsidy of Rs. 30 lakhs to respondent No. 3–Punjab State Industrial Development Corporation (PSIDC), as the loan was advanced by the respondent-PSIDC to the petitioner and this was the procedure which was followed but the State had transferred the aforesaid subsidy amount of Rs.30 lakhs to the petitioner. He submitted that in this way, even assuming that the subsidy was wrongly given to the petitioner and the State was required to recover or have it refunded, the procedure was required to have been followed which required ascertaining the liability of the petitioner and thereafter invoking the provisions of the Punjab Public Moneys (Recovery of Dues) Act, 1983 but in this case, a Recovery Certificate dated 01.09.2021 (Annexure P-6) is straightaway issued for recovery of the amount as arrears of land revenue, which was not permissible under the law. He referred to Section 3 of the Punjab Public Moneys (Recovery of Dues) Act, 1983 and submitted that a Recovery Certificate could not have been issued without first ascertaining the liability of the petitioner.
On the other hand, Ms. Shruti, learned Assistant Advocate General, Punjab, submitted that the amount has been ascertained in the Recovery Certificate and therefore, there is no procedural lapse. She further submitted that One Time Settlement (OTS) Policy has not been challenged and the guarantor, who had paid an amount of Rs. 43 lakhs to the PSIDC, is not a party to the present petition.
Mr. Vikas Mohan Gupta, learned counsel for respondent-PSIDC, submitted that the subsidy amount was required to be given by the State to the PSIDC because it was PSIDC that had advanced the loan to the petitioner and therefore, the procedure adopted by the State was not in accordance with law.
We have heard the learned counsels for the parties.
The only issue involved in the present case is whether the Recovery Certificate dated 01.09.2021 (Annexure P-6) has been issued in accordance with law or not. During the course of arguments, learned counsel for the petitioner has confined the scope of the present petition to the extent that the procedure for recovery of the amount as arrears of land revenue in pursuance of the Punjab Public Moneys (Recovery of Dues) Act, 1983, has not been complied with. Section 3 of the said Act is reproduced as under:-
“3.Recovery of certain dues as arrears of land revenue.
(1)Where any person is a party—
(a)to any agreement, relating to a loan, advance or grant given, or relating to credit in respect of, or relating to hire-purchase of goods sold by the State Government, a banking company, a Corporation or a Government company, as the case may be, under a State-sponsored scheme; or
(b)to any agreement relating to a guarantee given by the State Government, a banking company, a Corporation or a Government company in respect of a loan raised by an Industrial Concern; or
(c)to any agreement providing that any money payable thereunder to the State Government shall be recoverable as an arrear 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 any portion 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, and in the case of a banking company, a Corporation or a Government Company, the Managing Director 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.
(2)A certificate sent under sub-section (1) shall be conclusive proof of the matter stated therein, and the Collector, on receiving such certificate, shall proceed to recover the amount stated therein as an arrear of land revenue.
(3)Where the property of any person referred to in sub-section (1) is subject to any mortgage, charge, pledge or other encumbrance in favour of the State Government, a banking company, a Corporation or a Government company, as the case may be, then-
(a)in every case of a pledge of goods, proceedings shall first be taken for the sale of the goods so pledged, and if the proceeds of such sale are less than the sum due, then proceedings shall be taken for recovery of the balance:
Provided that where the State Government is of opinion that it is necessary so to do for safeguarding the recovery of the sum due to it, a banking company, a Corporation or a Government company, as the case may be, it may, for reasons to be recorded in writing, direct proceedings to be taken for recovery of the sum due before or at the same time as the proceedings are taken for sale of the goods pledged;
(b)in every case of a mortgage, charge or other encumbrance on immovable property, such property or, as the case may be, the interest therein of the person referred to in sub-section (1) shall first be sold in proceedings for recovery of the sum due from that person, and any other proceedings may be taken only if the Collector certifies that there is no prospect of realisation of the sum due through the first-mentioned process within a reasonable time.”
A perusal of the aforesaid provision would show that where a grant has been made by the State (in the present case, a subsidy of Rs. 30 lakhs was given by the State to the petitioner), when such person having become liable under the conditions of the aforesaid grant to refund the grant or any portion thereof, makes default in the refund of such grant, then in that situation a certificate may be sent to the Collector mentioning the sum due from such person for the purpose of recovering as arrears of land revenue.
When notice of motion was issued in the present case by a Co-ordinate Bench of this Court on 01.02.2022, the following order was passed:-
“Notice of motion.
Mr. V.M. Gupta, Advocate takes notice for respondent No.3 and seeks time to file reply. May do so on or before the next date with advance copy to the counsel opposite.
List on 26.04.2022.
Prima facie, there cannot be any recovery against the petitioner pursuant to the recovery certificate dt. 01.09.2021 (P-6) issued by respondent No.1, since such recovery is being done without considering petitioner’s explanation dt. 01.09.2020 (P-19) to the show cause notice (P-18) issued by the Director of Industries and Commerce, State of Punjab, and without there being any adjudication of the liability of the petitioner by any forum, such recovery cannot be made. Therefore there shall stay on all further proceeding pursuant to the said recovery certificate dt. 01.09.2021 (P-6) issued by respondent No.1.”
During the course of hearing, we specifically put a query to learned State counsel, who on instructions from Mr. Anmoldeep Sidhu, Assistant Director, Department of Industries and Commerce, Punjab, present in Court submitted that there is no order on the file on the basis of which it can be said that any liability was fastened upon the petitioner prior to the issuance of the Recovery Certificate by the competent authority.
We are of the considered view that in the absence of any order passed by the competent authority fastening any liability upon the petitioner before issuing the Recovery Certificate and quantifying how much amount was to be recovered and whether any liability existed or not, the recovery certificate could not have been issued to the petitioner straightaway.
11 So far as the plea taken by the learned State counsel that the guarantor, who had paid an amount of Rs. 43 lakhs to the PSIDC, is not a party to the present petition is concerned, we are of the considered view that for the purpose of adjudication of the limited issue involved in the present case, such an objection would not be sustainable.
In view of the above and the limited prayer made by the learned counsel for the petitioner, the present petition is allowed. The impugned Recovery Certificate dated 01.09.2021 (Annexure P-6) is hereby set aside.
At this stage, learned State counsel has submitted on instructions that the State now wishes to proceed against the petitioner in accordance with law.
Learned counsel for the petitioner submitted that the petitioner will cooperate in all the proceedings before the State authorities or any other authority.
In view of the above, the petitioner shall appear before the Secretary, Department of Industries and Commerce, Punjab on 24.08.2026 at 11:00 A.M., who after hearing the petitioner and all other stakeholders, will pass a speaking order and thereafter may proceed further if so required and warranted under law.