Whether commercial loan given by bank can be recovered as arrears of land revenue?

Having perused Section 3 of the Act carefully, I have
no hesitation to hold that Recovery of dues can be made as
arrears of land revenue, if debtor is a party to an agreement
relating to a loan, credit in respect of hire- purchase of goods
sold to him by the State Government or the Corporation, by
way of financial assistance; or if amount is due relating to hire-
purchase of goods sold to him, by a banking company or a
State company under a State sponsored scheme; or such debtor
is a party to an agreement relating to guarantee given by the
State Government or the Corporation in respect of loan raised
by any industrial concern; or loan agreement provides that loan
shall be recoverable as arrears of land revenue.
Undisputedly, none of the conditions of Clauses (a),
(b), (c) and (d) of Sub-Section 1 of Section 3 is present in the
present case in view of the fact that a term (commercial) loan
was granted in favour of the petitioner to establish and run the

brick-kiln and that loan was not extended under any State
sponsored scheme.
Hon’ble Apex Court in the case of Iqbal Naseer
Usmani v. Central Bank of India and others reported in
(2006) 2 SCC 241 has also held that if case does not fall within
the parameters of Section 3 of the U.P. Public Moneys
(Recovery of Dues) Act, 1972, provisions of 1972 cannot
pressed in service for the recovery of dues as arrears of land
revenue.
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
Writ Petition No. 1637 (M/S) of 2012
Micky Palta and others
versus.
State of Uttarakhand and others

Hon’ble Alok Singh, J.
Citation;AIR 2015(NOC)354 UTR

Petitioners took a term (commercial) loan from the
Panjab National Bank for establishing and running brick-kiln
in the month of October, 2010. When petitioners could not pay
the outstanding amount of the loan, recovery certificate was
issued by the bank to the Collector, Haridwar to recover the
outstanding amount along with interest as arrears of land
revenue under the U.P. Public Moneys (Recovery of Dues)
Act, 1972, whereupon a citation was issued by the Tehsildar,
Roorkee to effect the recovery against the petitioners. Feeling
aggrieved, petitioners approached this Court by way of present
writ petition.
The sole question involved in the present case is to
whether amount of term (commercial) loan can be recovered
as arrears of land revenue under the provisions of U.P. Public
Moneys (Recovery of Dues) Act, 1972?
Sub Section (1) of Section 3 of the Act, 1972 reads 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, as 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
Government
[or
there
the
under
to
Corporation]
the
State
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 authorized 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 authorized 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.”
Having perused Section 3 of the Act carefully, I have
no hesitation to hold that Recovery of dues can be made as
arrears of land revenue, if debtor is a party to an agreement
relating to a loan, credit in respect of hire- purchase of goods
sold to him by the State Government or the Corporation, by
way of financial assistance; or if amount is due relating to hire-
purchase of goods sold to him, by a banking company or a
State company under a State sponsored scheme; or such debtor
is a party to an agreement relating to guarantee given by the
State Government or the Corporation in respect of loan raised
by any industrial concern; or loan agreement provides that loan
shall be recoverable as arrears of land revenue.
Undisputedly, none of the conditions of Clauses (a),
(b), (c) and (d) of Sub-Section 1 of Section 3 is present in the
present case in view of the fact that a term (commercial) loan
was granted in favour of the petitioner to establish and run the

brick-kiln and that loan was not extended under any State
sponsored scheme.
Hon’ble Apex Court in the case of Iqbal Naseer
Usmani v. Central Bank of India and others reported in
(2006) 2 SCC 241 has also held that if case does not fall within
the parameters of Section 3 of the U.P. Public Moneys
(Recovery of Dues) Act, 1972, provisions of 1972 cannot
pressed in service for the recovery of dues as arrears of land
revenue.
Consequently, writ petition succeeds and is hereby
allowed. Citation letter dated 10.07.2012 (Annexure no. 2 to
the writ petition) is hereby quashed. However, it is clarified
that bank shall be at liberty to recover the outstanding amount
from the petitioner in accordance with law.
Deepak
(Alok Singh, J.)
17.12.2014

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