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

                                                                 70)


                        STATE OF PUNJAll & ORS ,                       A
                                  v.
                      s. DHARAM SINGH (DEAD) BY
                     SUCCESSOR DESA SINGH.& ANR.

                           AUGUST 29, 1985
                                                                       ll
              [E.S. VENKATARAMIAH AND R.B. MISRA, JJ.j

      Punjab Land Revenue Act, section 67(b), scope of - Arrest
 and detention of the borrowers' person to realise the loan amount
 when can be resorted to under clause (b) of section 67 of Punjab·
 Land Revenue Act - Whether could be resorted to by-passing the        c
 contractual remedy open under the loan Agreement.

       Respondent No.2 a registered House Building Society with 32
  members entered into an agreement with the Government of Punjab
  whereunder the Government agreed to advance a loan of Rs.
  1,02,000 to its members under the lower income group housing         D
  scheme for the purpose of constructing residential houses in Dera
  Baba Nanak. As per the written agreement the loan advance was
  payable in three instalements. The first instalment of Rs. 20400
· was to be paid by the Govt. on the execution of the deed of
  agreement, the second instalment of Rs. 51000 to be paid on the
  completion of the houses to the plinth level and the last instal-
  ment of Rs. 30, 600 on the completion of the house to the roof       E
  level. The society on the other hand had to mortgage the sites
  together with the houses erected or to be erected thereon to the
  govt. as security for the repayment of loan and the amount of
  loan was to be paid ·back in several instalments. Pursuant to the
  agreement the Government issued a cheque for Rs.71,400 towards
  the first and second instalments. The third instalment was not       F
  paid for failure to furnish the required certificate that the
  houses had reached the roof level. The members of the society
  also failed to repay the loan. ln the situation, a notice was
  issued by the Collector of the District to the members of the
 society to deposit the overdue ins.talments of loan and to appear
  before the Deputy commissioner, Gurdaspur on August 24, 1964 to      G
  show cause why the entire amount should not be recovered from
  them by means of arrest and detention. The society challenged the
\ notice by filing a writ petition in the High Court. Its stand was
  tbat in the absence of any such stipulation in the loan agreement
  the amount could ::wt be recovered by arrest of the members of the
                                                                       H
    706            SUPREME COURT REPORTS              [1985] SUPP.2 s.c.R.


    society in the first instance. The writ petition remained pending
A   for more than six years but no instalments had been paid by the
    members of the society to the government during that period.

          The Writ Petition was allowed by the learned Single Judge
    by his judgment dated 17th March, 1971 holding that the govern-
    ment IilU6t resort to the contractual remedy which it reserved to
B   itself while entering into the loan agreement. The State preferr-
    ed a letters patent appeal which was summarily dismissed. Hence
    the appeal by special leave.

          Dismissing the appeal, the Court,

         llELl.l: A bare reading of clause 4 of the agreement makes it
c   evidently clear that the Government has first to proceed against
    the property mortgaged and sell the property. Only in case the
    entire amount could not be realised that the Government could
    proceed against the borrower personally. The government is as
    much bound by the agreement aa the borrower and, therefore, the
    government has first to proceed against the mortgaged property.
    In other words, the government must resort to the contractual
D
    remedy which it reserved to itself when entering into the loan
    agreement before resorting to clause (b) of section 67 of the
    Punjab Laud Revenue Act. [709 B-C, 706 H, 710]

          llam Barayan Agarwal etc.   v.      State of u.P. & Ors. [1983]
    3 S.C,R 684 explained and distinguished.
E
          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 625 .of 1972.

         From.the Judgment and Order dated 13.9.1971 of the Punjab.&
    Haryana High Court in L.P.A. No. 254 of 1971.
F         S.K. ' Bagga, for the Appellants•

          The ~udgment of the Court was delivered by

         MISRA, J. The present appeal by special leave is directed
    against the judgment of a Division Bench of the High Court of
G   Punjab and Haryana dated 13th September, 1971 dismissing ·the
    letters patent appeal against the judgment of a learned Single
    Judge dated 17th March, 1971 allowing the writ petition filed by
    the respondents.

         The short question that falls for consideration in the
H   present appeal is whether the amount of loan in question can be
                 STATE v. S .DHARAM SINGH [MISRA, J. J             707


 recovered as arrears of land revenue by arrest and detention in          A
 view of cl. 4 of the loan agreement.

         Dera Baba Nanak Co-operative House Building Society Ltd.,
  respondent No. 2, was a registered society. It had 32 members to
  start with. The society entered into an agreement with the
  Government of PUnjab whereunder the Government agreed to advance        B
· a loan· of Rs. 1,02,000 to its members under the lower income
  group housing scheme for the purpose of constructing residential
  houses on the site measuring 35, 100 sq.ft. in Dera Baba Nanak.
  The agreement was evidenced by a written document. Under the
  terms of the agreement the Govt. was to advance the loan in three
  instalments - the first instalment of Rs. 20,400 was to be paid         c
  by the government on the execution of the deed of agreement, the
  second instalment 'of Rs. 51,000 was to be paid on the completion
  of the house to the plinth level and the last instalment of Rs.
  30,600 on the completion of the house to the roof level. The
  members of the society on the other hand had to repay the loan
  advanced with interest in thirty annual instalments, the first          D
  instal.Dient was to become due twelve months after the date of
  sanctioning the first instalment of loan. It was further stipula-
  ted that the society would mortgage the said sites Ugether with
 houses erected or to ·be erected ,thereon thereafter tr·,. the govern-
ment as security for the repayment of the said loan and interest.
The loan agreement further contemplated that the government would
recover the amount of loan 'first from the property mortgaged and         E
if there was a shortfall then the government shall be entitled to
 recover the same personally from the borrowers as well as from
 the Diovable or other      i1Illll0vable property belonging to    the
 borrowers.

       The society pursuant to the terms ~f the agreement exeeuted        F
  the mortgage. The government in their turn issued a cheque for
  Rs. 71,400 as payment towards the first two instalments .on 24th
  of March, 1956. The third instalment of Rs. 30,600 was, however,
  not paid by the government to the society on the ground that it
  had not furnished the required certificate that the houses had
  reached the roof level. The members of the society also failed to       G
  repay the loan as stipulated. In the sl tuation a .notice was
  issued by the Collector of the District to the members of the
  society to deposit the overdue instalments of loan and to appear
  before the Deputy Commissioner, Gurdaspur on August 24, 1964 to
  show cause why the entire amount should not be recovered from
  them by means of arrest and detention. The society challenged the       H
' notice by filing a writ petition in the High Court. Its stand was
    708           SUPREME COURT REPORTS          [1985] SUPP.2 s.c.R.


A   that in the absence of any such stipulation in the loan agreement
    the amount could not be recovered by arrest of the members of the
    society in the first instance. The writ petition remained pending
    for more than six years but no instalments had been paid by the
    members of the society to the government during that period.

B        The claim was resisted by the government. The writ petition
    was, however, allowed by the learned Single Judge by his judgment
    dated 17th March, 1971 holding that the government DDJSt re•ort to
    the contractual remedy which it reserved to itself when entering
    into the loan agreement. The State preferred a letters patent
    appeal which was slllllll8rily dismissed. The state has now
    approached this court by special leave.
c
         The learned counsel appearing for the State relied upon cl.
    (b) of s. 67 of the Punjab Land Revenue Act. This section
    provides the process for the recovery of arrears of land revenue
    and one of the modes prescribed by cl. (b) of s. 67 is by arrest
    and detention of the borrower's person. Reliance was also placed
    on s. 98 of the said Act which enumerates what sums are recover-
D   able as arrears of land revenue and cl. ( dd) of s. 98 includes a
    loan advanced by the State Government towards the cost of the
    house or site under the govenunent sponsored housing scheme
    together with interest chargeable thereon and costs, if any,'in
    making or recovering the same as land revenue. The counsel for
    the respondents on the other hand strenuously relies upon cl. 4
E   of the agreement of loan and contends that in view of the agree-
    ment between the · parties the government has to proceed first
    against the property mortgaged and in case of a shortfall other
    methods could be resorted to. It will be pertinent at this stage
    to refer to cl. 4 of the loan agreement which reads:

F              "4; For the consideration aforesaid and as security
               for the repayment to the Government of the said loan
               and interest, the borrower hereby transfers to the
               Government the said sites together with houses now
               erected or hereafter to be erected thereon, to the
               intent that the same shall remain and be charged by
G              way of mortgage in the manner following, namely, that
               for the purpose of recovering the said loan and
               interest, and any other sum as may become due by the
               borrower to the Government by virtue of these
               presents, the Government may, at its option, either
               sell the said sites and the houses erected or
H              hereafter to be erected thereon or any part thereof
                 STATE v. s.DHARAM SINGH [MISRA, J.]                   709


           without the       intervention of any Court or enforce            A
           against the said property all or any of the remedies
           of simple mortgage and in case the realisation from
           the property ~entioned above falls short of the amount
           due    to   the   Govermnant    under   these   pre&ents,   the
           Government shall be entitled to recover the same
           personally from the borrower as well as from the                  B
           movable or other immovable property belonging to the
           borrower."

     A bare reading of c. 4 of the agreement makes it evidently
clear that the Government has first to proceed against the
property mortgaged and sell the property. Only in case the entire            C
amount could not be realised that the Government could proceed
against the brrower personally. The goveroment is as much bound
by the agreement as the borrwer and, therefore, the government ·
has first to proceed against the mortgaged property.

     During the course of argument celiance was placed upon Ram              D
Narayan Agarwal etc. v. State of u.P. & Ors. [1983] 3 s.c.R. 684.
In that ease the petitioners had comnitted default in payment of
the tax payable by them under the U.P., Sales Tax Act, 1948. The
amount due was sought to be recovered as arrears of land revenue.
The procedure for such a recovery was provided by ss. 279 and 281
of the U.P. Zamindari Abolition and Land Reforms Act, 1950 read
with rr. 246, 247A, 247B and 251 of the U.P.Z.A. and L.R. Rules,             E
1952. Clause (b) of sub s. (1) of s. 279 of the U.P.z.A. and L.R.
Act contemplates of recovery of the amount due by resort to
arrest and detention of       the person       concerned. The procedure
contained in U.P.Z.A. and L.R;. Act and the rules made thereunder
was challenged on the ground that they are violative of Arts. 14,
19(1) (g) and 21 of the Constitution but this contention was                 F
overruled and it'was defiuitely held that the impugned procedure
contained in the U.P .z .A. and L.R; Act and the rules made there-
under were not violative of Arts. 14, 19 (1) (d) and 21 of the
Constitution. The writ petitions were, however, allowed in the
case on the ground that there was         non-compliance with   Rule   251
of the Rules which obligates an enquiry to be made by the officer            G
who issued the warrant into the questioil whether the detention of
the defaulter would compel him to pay the arrear or a substantial
portion thereof and admittedly no such enquiry was held in any,of
those cases and in these circumstances it was held that the
petitioners could not be detained pursuant to any warrants
already issued. Such is not the position in this case and,                   H
therefore, that case is not of nruch assistance.
    710           SUPREME COURT REPORTS          [1985] SUPP.2 s.c.R.


A
         For the reasons given above we do not find any fault with
    the judgment of the learned Single Judge as confirmed by t.he High
    Court in letters patent appeal. The appeal, is, therefore,
B   dismissed. There is, however, no order as to costs.'




    s.R.                                           Appeal dismissed.




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