HIMACHAL PRADESH FINANCIAL CORPORATIONversusANIL GARG AND OTHERS

                            (2017] 2 S.C.R. 984



         HIMACHAL PRADESH FINANCIAL CORPORATION
                                     v.

                       ANIL GARG AND OTHERS
                       (Civil Appeal No. 661 of2008)
B                            MARCH 28, 20 I 7
             [RANJAN GOGOi AND NAVIN SINHA, JJ.)
    Himachal Pradesh Public Moneys (Recovery of Dues) Act, 1973:
           s.J(l)(d)(iv) and s.85 - Withdrawal of suit if amounts to
c   abandonment of claim - Respondent availed loans but failed to
    repay - Recovery suit by appella11t subsequently withdrawn to
    initiate fresh recovery proceedings under the Act - Writ petition by
    responde111 challenging such proceedings - High Cour/ field that
    the suit having been withdraw11 without any liberty for initiating
    appropriate legal proceedings, the claim was abandoned by the
D
    appellant and hence proceedings under the Act were barred - On
    appeal, held: Whether there has been an abandonmenl of the ;:/aim
    by withdrawal of the suit is a mixed question of law a11d fact -
    Language of the order for withdrawal will not always be
    determinative - The application for withdrawal of suit stated that it
E   was being done to pursue remedies under the Act as the proceedings
    under the Act are more expeditious for recovery as compared to a
    suit - Therefore, there was no abandonment of claim by the appellant
    - Further, s. J(l)(d)(iv) provided !hat the remedy available t•nder
    the Act was without prejudice to any other remedy available under
    any other law- Withdrawal ofthe suit was lhus, no bar to proceedings
F
    under the Act - Himacha/ Pradesh Public Moneys (Recovery af
    Dues) Act, 2000 - State Finance Corporation Act, 1951 - s.29.
          Recovery proceedings under the Act - Distinction from
    proceedings in a suit - Held: Proceedings in a suit and recov.ery
    under the Ac/ are under different laws governed by different
G   procedures and thus cannot be equated - A suit is instituted in a
    Court of law and is governed by CPC, while proceedings under the
    Act are before the executive authority statutorily empowered - Code
    of Civil Procedure, 1908.
          Doctrines/Principles - Public policy - Principle of - High
H
                                  984
 HlMACHAL PRADESH FINANCIAL CORPORATION v. ANIL                           985
               GARG AND OTHERS

Court restrained recovery of a public loan applying principle of           A
public policy - Held: The phrase ~Jublic policy' is not capable of
precise definition - Broadly it means what is in the larger interest of
the society involving questions of righteousness, good conscience
and equity upholding the law and not a retrograde interpretation -
It cannot be invoked to facilitate a loanee to avoid legal obligation
                                                                           B
for repayment of a loan.
      Words & Phrases - "Public policy" - Meaning of - Discussed.
      Code o.f Civil Procedure, 1908 - Or. 23, r. 1 - Bar under -
When applicable - Held: Bar u/Or. 23, r. 1 would apply only to a
fresh suit and not proceedings under the Act.                              c
      Allowing the appeal, the Court
       HELD: L The factum of loan is not in dispute. No
explanation was furnished by the respondent why the installments
were not repaid and the loan closed. A pittance was repaid. The
loan was disbursed from public funds of the tax payers· money.             D
The Respondent was a trustee for the loan amount. It could not
become a windfall for him. All attempts by the Appellant for
recovery.were successfully thwarted by the Respondent hy either
filing a Snit or successive writ petitions. The sanguine confidence
of the Respondent is also reflected by his failure to appen in the         E
present proceedings despite valid service of notice. [Para 12]
[989-G-H; 990-A]
      2.1 The question whether there has been an abandonment
of the claim by withdrawal of the Suit is a mixed qnestion of law
and fact. The language of the order for withdrawal will not always
                                                                           F
be determinative. The background facts will necessarily have to
be examined for a proper and just decision. [Para 13] [!190-B]
      Sarguja Transport Service v. State Transport Appellate
      Tribunal AIR 1987 SC 88 : [1987] 1 SCR 200 - held
      inapplicable.
                                                                           G
      Ramesh Chandra Sank/a v. Vikram Cement (2008) 14
      SCC 58 : [2008] 10 SCR 243 - relied on.
     2.2 The a11plication for withdrawal stated that it was being
done to pursue remedies under the llimachal Pradesh Public
                                                                     "     H
986            SUPREME COURT REPORTS                       (2017] 2 S C.R.


A     Moneys (Recovery of Dues) Act, 1973. Undoubtedly, the
      11roceedings under the Act are more expeditious for recovery as
      compared to a Suit, which after decree is required to be followed
      by execution proceedings. Section 3(1)(d)(iv) of the Act provided
      that the remedy under it was without prejudice to any other remedy
      available under any other law. The Appellant, therefore, never
B
      intended to abandon its claim by withdrawing the Suit. [Pam 14)
      [990-D-EJ
            2.3 The bar under Order 23 Rule 1 would apply only to a
      fresh Suit and not proceedings under the Act. [Para 15) [990-EJ
c            2.4 The Act provides for recovery of certain dues as arrears
      of land revenue by sending a certificate to the Collector,
      mentioning the sum due requesting that the sum together with
      costs may be recovered. The High Court erred in holding that
      the H.P. Public Moneys (Recovery of Dues) Act, 2000 repealing
      the Himachal Pradesh Public Moneys (Recovery of Dues) Act,
D     1973 did not contain any provision that the remedy was wi:hout
      prejudice to the rights under any other law. The proceedings in a
      Suit and recovery under the Act as arrears of land revenue are
      under different laws governed by different procedures. A Suit is
      instituted in a Court of law and is governed by the Code of Civil
E     Procedure while the proceedings under the Act are before the
      executive statutorily empowered. The proceedings in a Suit cannot
      not be equated with a certificate proceeding. !Paras17, 18) 1.991-
      D-E, GJ
            ES/ Corp11. v. C.C. San1hakumar (2007) 1 SCC 584 :
F           [2006] 9 Suppl. SCR 212 - relied on.
              2.5 The phrase •public policy' is not capable of precise
      definition. Broadly, it means what is in the larger interest of the
      society involving questions of righteousness, good conscience
      and equity upholding the law and not a retrograde interpretation.
G     It cannot be invoked to facilitate a Ioanee to avoid legal oblig'ltion
      for repayment of a loan. The Ioanee has a pious duty to abide by
      his promise and repay. Timely repayment ensures facilitatiun of
      the loan to others who may be needy. Public policy cannot be
      invoked to effectively prevent a loanec from repayment
      unjustifiably abusing the law. [Para 19] (992-A-C]
H
 HIMACHAL PRADESH FINANCIAL CORPORATION v. ANIL                             987
               GARG AND OTHERS

      2.6 In conclusion, it is held that the proceedings in a Suit          A
are essentially different from proceedings under the Act. The
withdrawal of the Suit was no bar to proceedings under the Act.
l'here bad been no abandonment of claim by the Appellant. It
would be contrnry to public policy to prevent the Appellant from
recovering the loan. [Para 21] [992-D-E]
                                                                             B
      Sarva Shramik Sanghataiia v. State of Maharasht.•a
      (2008) 1 sec 494 : [2007] 12 SCR 645; C.C.E. v.
      Ramdev Tobacco Company (1991) 2 SCC 119;
      P Rathinam v. Union Of India (1994) 3 SCC 394 -
      relied on.
                         Case Law Reference
                                                                             c
[1987] 1 SCR 200                 held inapplicable           Para 11
[2008] 10 SCR 243                relied 011                  Para 13
[2007] 12 SCR 645                relied 011                  Para 15
                                                                             D
[2006] 9 Suppl. SCR 212          relied on                   Para 17
(1991) 2 sec tJ9                 relied on                   Para 17
(1994) 3 sec 394                 relied on                   Para 19
        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 661 of
2008.                                                                        E

     From the Judgment and Order dated 04.10.2005 of the High Court
ofHimachal Pradesh at Shim la in C. W. P. No. 136 of2005.
      J. S. Attri, Sr. Adv., Balraj Dewan, Chandra Nand Jha, Advs. for
the Appellant.
                                                                             F
        The Judgment of the Court was delivered by
        NAVIN SINHA, J. I. The Appellant is aggrieved by order dated
4.10.2005 allowing the writ petition of the Respondent, setting aside the
auction notice under Section 85 of the Himachal Pradesh Public Moneys
(Recovery of Dues) Act, 1973 (hereinafter be referred to'as "the Act")       G
issued consequent to his failure to repay the two loans availed for
purchase of a truck and establishing an industry for manufacture of
steel trunks.
      2. The Respondent has remained unrepresented despite valid
service of notice.                                                           H
988            SUPREME COURT REPORTS                          [2017] 2 S.C.R.


A            3. Learned Senior Counsel Shri J.S. Attri, on behalf of the
      Appellant, submits that the High Court has erred by inferring abandonment
      of the claim by withdrawal of the Suit. The withdrawal was m&de to
      initiate fresh proceedings under the Act, as it provided for a more speedy
      and effective remedy, under a special law. The absence of any liberty in
      the withdrawal order is not relevant. There was no bar under the Act to
B
      the proceedings. The remedy under Section 3(1)(d)(iv) of the Act was
      independent and without prejudice to any other mode ofrecovery under
      any law for the time being in force, and which will include a Suit. The
      High Court had wrongly applied the principle of'public policy' to re,train
      recovery of a public loan. The doctrine of election had no application in
c     the facts of the case.
                                    II
              4. The High Court erred on facts in holding that the proceedings
      under the Act for recovery of the trunk loan was initiated only in the
      year 2003, and that nothing had been done by the Appellant from 1996
      till 2002 thus making the claim time barred. The recovery certificate had
D     been issued by the Collector as far as back 3.9.1994. It was stall.!d by
      the Respondent filing writ petitions before the High Court. The High
      Court had granted liberty to the Appellant for proceeding afresh in
      accordance with law.
            5. We have considered the .aubmissions, as also perused the
E     materials on record.
             6. The Respondent applied for a loan of Rs.1.90 lakhs in 1989 to
      purchase a Swaraz Mazda truck and executed a hypothecation deed.
      Repayment schedule commenced from I 0.1.1990 culminatir.g on
      10.7.1994. Rs.10,000/- only was repaid on 6.3.1991. The vehicle was
 F    seized on 6.5.1991 under Section 29 of the State Finance Corporation
      Act, 1951 and auction sold on 4.9.1991 for a sum of Rs.1.46 lakhs. A
      Money Suit was filed before the Senior Sub Judge, Shim la for recovery
      of the balance ofRs.1,25,270/- along with future interest and costs. The
      Suit was withdrawn on 12.12.1995 under Order 23, Rule I of the Code
      of Civil Procedure stating that the Appellant desired to proceed under
G     the Act. The Suit was dismissed as withdrawn. Recovery Certificate
      was then issued under the Act on 19.4.1996 for a sum of Rs.1,94,283/-
      followed by a warrant of arrest.
              7. The Respondent thwarted the Certificate proceedings by filing
      ·a Suit before the Senior Sub Judge, Shim la contending that the fresh
H
 HIMACHAL PRADESH FINANCIAL CORPORATION v. ANIL                              989
        GARG AND OTHERS [NAVIN SINHA, J.]

proceedings were barred due to withdrawal of the Suit without any liberty,   A
and that the claim was time barred. An interim-order was obtained, but
ultimately the Suit was dismissed for non-prosecution on 21.5.7.00 I.
         8. Another loan ofRs.30,000/-was availed by the Respondent on
I 5 .12. 1988 for a trunk industry and a hypothecation-deed executed in
respect of property bearing Khata/Khatuni No. I 02/34 7, Khasra No. I 014.    B
The last installment of the loan was payable on 10.1.1996. The
Respondent remitted Rs.4,000/- in May 1991 and Rs.1,000/- in N.ovember
1991. A request was made before the Collector for recovery certificate
on 12.11.1992, and the Certificate was issued on 3.9.1994. The
Respondent objected that no prior notice was given and that the
proceedings were time barred.
                                                                              c
      9. The Respondent instituted C.W.P. No. 1102 of2002 before the
High Court questioning both the recovery proceedings. The writ petition
was allowed on technical grounds with liberty to the Appellant for
proceeding afresh in accordance with law. Fresh show cause notices
were then issued in respect of the two loans on 26.11.2002 and 2.11.2002      D
respectively, followed by fresh recovery certificates on 10.3.2003 for
recovery of Rs.5,50, 165/- and Rs.61,503.92/- respectively.
      I 0. The Respondent again filed C.W.P. No.136 of2005 pursuant
to which the impugned order came to be passed.
                                                                              E
       11. The High Court relying on S11r1:ujtt Transport Service vs.
State Tr111u-port Appel/11te Tribu1111/, AIR 1987 SC 88, held that the
Suit having been withdrawn unconditionally for inexplicable reasons, and
without any liberty granted under Order 23 Rule I of the Code of Civil
Procedure for initiating appropriate legal proceedings, it amounted to
abandonment of the claim for the truck loan. It would be contrary to          F
public policy and abuse of the process oflawto allow any fresh proceeding
for the same cause of action. The doctrine of election was also invoked.
The loan with regard to the trunk industry was held to be time harred as
no action was taken for recovery from 1996 till 2002.
       12. The factum of loan is not in dispute. No explanation was           G
furnished why the installments were not repaid and the loan dosed. A
pittance was repaid. The loan was disbursed from public funds of the
tax payers' money. The Respondent was a trustee for the loan amount.
It could not become a windfall for him. All attempts by the Appellant for
recovery were successfully thwa1ted by the Respondent by either filing
                                                                              H
990            SUPREME COURT REPORTS                           [2017] 2 S.C.R.



A     a Suit or successive writ petitions. The sanguine confidence of the
      Respondent is also reflected by his failure to appear in the present
      proceedings despite valid service ofnotice.

             13. The question whether !_here has been an abandonment of the
      claim by withdrawal of the Suit is a mixed question of law and fact as
B     held in Rameslt Clumdru St1nkh1 vs. Vikram Cement, (2008) 14 SCC
      58. The language of the order for withdrawal will not always be
      determinative. The background facts will necessarily have to be examined
      for a proper and just decision. Sarguja Transport Service (supra) cannot
      be applied as an abstract proposition or the ratio applied sans the facts
      ofa case. The extract below is considered relevant observing as follows:-
c
            "9 ...... While the withdrawal ofa writ petition tiled in a High Court
            without permission to tile a fresh writ petition may not bar other
            remedies like a suit.. ......"                               ·
             14. The application for withdrawal stated that it was being done
D     to pursue remedies under the Act. Undoubtedly the proceedings under
      the Act are more expeditious for recovery as compared to a Suit, which
      after decree is required to be followed by Execution proceedings. Section
      3{l)(d)(iv) of the Act provided that the remedy under it was without
      prejudice to any other remedy available under any other law. The
E     Appellant, therefore, never intended to abandon its claim by withdrawing
      the Suit. The language of the withdrawal order cannot be determinative
      without considering the background facts.
              15. The bar under Order 23 Rule 1 would apply only to a fresh
      Suit and not proceedings under the Act. In St1rva Slm1mik Sm1glwtana
F     vs. St11te of M11/umu-/1tm, (2008) I SCC 494, the application under
      Section 25-0 of the Industrial Disputes Act, 194 7 for closure of
      undertaking was withdrawn as attempts were made for settlement of
      the matter. Settlement not having been possible, the Management tiled a
      fresh application. It was opposed as barred under Order 23 of the Code
      of Civil Procedure since the earlier application was withdrawn
G     unconditionally with no liberty granted, relying on Sarguja Trar1sport
      Service (supra). The argument was repelled holding that the proceedings
      under the Industrial Disputes Act were not a Suit and that withdrawal
      was bonafide to explore amicable settlement. It was not a withdrawal
      made malafide or for Bench hunting holding as follows:-
H
 HIMACHAL PRADESH FINANCIAL CORPORATION v. ANIL                                  991
        GARG AND OTHERS [NAVIN SINHA, J.]

      "22. No doubt, Order 23 Rule 1(4) CPC states that where the                 A
      plaintiff withdraws a suit without permission of the court, he is
      precluded from instituting any fresh suit in respect of the same
      subject-matter. However, in our opinion, this provision will apply
      only to suits. An application under Section 25-0( I) is 11ot a suit,
      and hence, the said provision will not apply to such an application."
                                                                                  B
      16. In Vikram Ceme11t (supra) the earlier petition was dismissed
as not pressed and the second application was opposeci as not
maintainable. Dismissing the objection it was observed as follows:-
      "65. It is thus clear that it was not a case of abandonment or
      giving up of claim by the Company. But, in view of tbe office               c
      objection, practical difficulty and logistical problems, the petitioner
      Company did not proceed with an "omnibus" and composite petition
      against several workmen and filed separate petitions as suggested
      by the Registry of the High Court."
       17. The Act provides for recovery of certain dues as a;·rears of           D
land revenue by sending a certificate to the Collector, mentioning the
sum due requesting that the sum together with costs may be recovered.·
The High Court erred in holding that the H.P. Public Moneys (Recovery
of Dues) Act, 2000 repealing the earlier Act did not contain any provision
that the remedy was without prejudice to the rights under any other law.
The proceedings in a Suit and recovery under the Act as arrears ofland            E
revenue are under different laws governed by different procedures. A
Suit is instituted in a Court oflaw and is governed by the Code of Civil
Procedure while the proceedings under the Act are before the executive
statutorily empowered. In C.C.E. vs. Rtmulev Toh11cco Comp1111y,
(1991 )(2)SCC 119, the distinction was noticed as follows:-                       F
       "6 ....... There can be no doubt that 'suit' or 'prosecution' are those
      judicial or legal proceedings which are lodged in a court of law
      and not before any executive authority, even if a statutory one ......"
        18. That the proceedings in a Suit could not be equated with a
certificate proceeding was further noticed in ES! Corp11. vs. C.C.                G
S1111t/111kumar, (2007) 1 SCC 584, observing:-
      "25 .......Therefore, it cannot be said that a proceeding for recovery
      as arrears ofland revenue by issuing a certificate cou Id be equated
      to e.ither a suit, appeal or application in the court ...... " .
                                                             •                    H
992             SUPREME COURT REPORTS                          [2017] 2 S.C.R.


A            19. The phrase 'public policy' is not capable of precise definition.
      In P. Rutliinum v. Union OfJ11diu, (1994) 3 SCC 394, it was observed:-
             "92. The concept of public policy is, however, illusive, varying and
             uncertain. It has also been described as "untrustworthy guide",
             ''unruly horse" etc .... "
B            Broadly it will mean wlJat is in the larger interest of the suciety
      involving questions of righteousness, good conscience and equity
      upholding the law and not a retrograde interpretation. It cannot be invoked
      to facilitate a loanee to avoid legal obligation for repayment of a loan.
      The loanee has a pious duty to abide by his promise and repay. Timely
c     repayment ensures facilitation of the loan to others who may be n.eedy.
      Public policy cannot be invoked to effectively prevent a loanee from
      repayment unjustifiably abusing the law. Invocation of the princitJle of
      doctrine of election in the facts of the case was completely misconceived.
             20. The High Court factually erred in holding that the trunk loan
D     was time barred because the Appellant took no steps for recovery of the
      dues from 1996 till 2002 overlooking the Ce1tificate dated 3.9.1994.
             21. In conclusion, it is held that the. proceedings in a Suit are
      essentially different from proceedings under the Act. The withdrawal
      of the Suit was no bar to proceedings under the Act. There was no bar
E     under the Act to the proceedings. There had been no abandonment of
      claim by the Appellant. It would be contrary to public policy to prevent
      the Appellant from recovering the loan. The recovery proceedings were
      not time barred. The order of the High Court is held to be unsustainable
      and is set aside. The auction notice dated 13.0 l .2005/15.0 l .2005 under
      Section 85 of the Act shall now proceed in accordance with law and be
 F    concluded at the earliest expeditiously.
             22. The appeal is allowed.


      Divya Pandey                                                  Appeal allowed.