PETITIONER:
M. P. MITTAL
Vs.
RESPONDENT:
STATE OF HARYANA AND ORS.
DATE OF JUDGMENT10/10/1984
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
THAKKAR, M.P. (J)
CITATION:
1984 AIR 1888 1985 SCR (1) 940
1984 SCC (4) 371 1984 SCALE (2)555
ACT:
Constitution of India, Articles 32 and 226-Whether
Court can decline relief if its grant would defeat the
interests of justice.
Dividend due and payable-Whether can be recovered as an
arrear of land revenue including the mode of detention where
such right is founded in private agreement.
HEADNOTE:
The Haryana State Industrial Development Corporation
Limited (for short, the Corporation) underwrote some
preference shares of M/s. Depro Foods Limited. The appellant
Managing Director of M/s . Depro Foods Ltd. guaranteed by an
agreement in his personal capacity the payment of the
dividend income due in respect of the aforesaid shares to
the Corporation. One of the provisions in the guarantee
agreement declared "that the dues on account of this
guarantee will be recoverable in the manner in which land
revenue is collected by the Government." The Corporation
applied to the Assist and Collector for instituting recover
proceedings, against the appellant because M/s. Depro Foods
Ltd. failed to pay Rs, 1,96,961 representing the dividend
payable by it. The Assistant Collector issued a warrant for
the arrest of the appellant since he made no effort to pay
up the amount due from him. The appellant filed a writ
petition in the High Court against the recovery proceedings
which was dismissed in limine. Hence this appeal by special
leave.
Dismissing the appeal,
^
HELD: (1) This Court always has power to refuse relief
where the petitioner seeks to invoke its writ jurisdiction
in order to secure a dishonest advantages or perpetuate an
unjust gain. Under art. 226 of the Constitution, it is open
to the High Court to consider whether, in the exercise of
its undoubted discretionary jurisdiction, it should decline
relief to such petitioner if the grant of relief would
defeat the interests of justice, The High Court was fully
justified in refusing relief to the petitioner. [943C; B]
941
(2) In the instant case the appellant knowingly and
deliberately entered into the Guarantee Agreement, and is
liable as Guarantor to make payment of the dividend due from
Messrs Depro Foods Limited. It was not contended that the
appellant in fact does not possess sufficient funds or
cannot avail of sufficient personal property for the purpose
of discharging the liability. The record also shows that the
appellant made no attempt to discharge the liability. When
that is so he is not entitled to relief in these
proceedings. [942H; 943A-B]
(3) It is desirable that the High Court, when
dismissing a writ petition in limine should set forth a
brief statement of the reasons for its order instead of
disposing of the proceedings by the single word 'dismissed'
especially in those cases where the matter in controversy in
the subject of judicial examination for the first time and
has not been processed earlier by an inferior judicial or
quasi judicial authority. [943E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1936 of
1978.
Appeal by Special leave from the Judgment and order
dated the 2nd August, 1978 of the Punjab & Haryana High
Court in Civil Writ Petition No. 3272 of 1978.
K.K. Jain, S.K. Gupta, P. Dayal and Arun D. Sauger for
the Appellant.
Harbans Lal, Ms. Kailash Mehta and R.N. Poddar or the
Respondent.
The Judgment of the Court was delivered by
PATHAK, J This appeal by special leave is directed
against the judgment and order of the High Court of Punjab
and Haryana dismissing a writ petition in limine.
Messrs. Depro Foods Limited entered into a contract
with the Haryana State Industrial Development Corporation
Limited, whereby the said Corporation underwrote preference
shares of Messrs. [, Depro Foods Limited of Rs. 100 each for
a total value of Rs. 3.6 lacs on which a dividend of 9.5%
per annum was payable. The appellant who was apparently, at
the relevant time, the Managing Director of Messrs. Depro
Foods Limited, executed an agreement under which he
guaranteed in his personal capacity the payment of the
dividend income due in respect of the aforesaid shares to
the said Corporation. It is not disputed that Messrs. Depro
Foods Limited did not pay Rs. 1,96,961 representing the
dividend payable to the said Corporation, and therefore the
appellant became personally liable as Guarantor to pay that
amount. lt seems that on the failure of the appellant to
make payment, the said Corporation invoked a provision in
the Guarantee agreement which declares:
942
“5. That the dues on account of this guarantee
will be recoverable in the manner in which land revenue
is collected by the Government”.
Consequently it applied to the Assistant Collector,
Sonepat, for instituting recovery proceedings. The Assistant
Collector commenced coercive measures, which included the
issue of a warrant for the arrest of the appellant. The
appellant filed a writ petition in the High Court but a
Division Bench of the High Court passed an order on August
2, l 978 summarily dismissing the writ petition
At one stage during the hearing of this appeal it
appeared possible that the dispute could be resolved if even
now after a lapse of six years the appellant was prepared to
discharge his liability as Guarantor by making payment to
the Corporation of the amount sought to be recovered, if
necessary in accordance with a convenient time schedule of
instalments, but Shri K.K. Jain, learned counsel for the
appellant, stated frankly that in spite of repeated
communications to his client he had not received any reply
from him.
The questions have been raised by learned counsel for
the appellant. Both questions arise on the assumption that
the appellant is liable to pay the amount due from him. The
first question is: Whether the amount can be recovered as an
arrear of land revenue, including the mode by detention,
where such right is founded in private agreement ? The other
questions is: If the recovery is made by reference to clause
(bb) of s. 98 of the Punjab Land Revenue Act, 1887 which
speaks of:-
“(bb) Dividend payable to the Government on 1.
Cumulative Redeemable Preference Shares subscribed by
or on behalf of the Government”.
Can that clause be employed for recovering dividend
payable to Haryana State Industrial Development Corporation
Limited ?
Now there is no dispute that the appellant knowingly
and deliberately entered into the Guarantee agreement, and
is liable as Guarantor to make payment of the dividend due
from Messrs Depro Foods Limited. Nor is it disputed that the
amount due, with interest, stands at 2,02,166 in respect of
the period ending with the year 1977. It was not contended
that the appellant in fact does not possess sufficient funds
or cannot avail of sufficient per-
943
sonal property for the purpose of discharging the liability.
The record also shows that before instituting coercive
proceedings, the Assistant Collector provided the appellant
an opportunity to pay up the amount due from him, and that
the appellant make no attempt to discharge the liability.
When that is so, we are of opinion that he is not entitled
to relief in these proceedings. The appeal arises out of a
writ petition, and it is well settled that when a petitioner
invokes the jurisdiction of the High Court under Article 226
of the Constitution, it is open to the High Court to
consider whether, in the exercise of its undoubted
discretionary jurisdiction, it should decline relief to such
petitioner if the grant of relief would defeat the interests
of justice. The Court always has power to refuse relief
where the petitioner seeks to invoke its writ jurisdiction
in order to secure a dishonest advantage or perpetuate an
unjust gain. This is a case where the High Court was fully
justified in refusing relief. On that ground alone, the
appeal must fail.
Before parting with this case, we think it appropriate
to point out that it would be beneficial to the general
administration of justice if in certain cases where the High
Court disposes of a writ petition in limine it does so by an
order incorporating the reasons for such order. Where a case
is admitted to final hearing, the judgment of the High Court
disposing of the appeal almost invariably sets forth the
reasons for its decision; We think it desirable that even
when a writ petition is dismissed in limine the High Court
should set out its reasons, however briefly, for doing so,
especially in those cases where the matter in controversy is
the subject of judicial examination for the first time and
has not been processed earlier by an inferior judicial or
quasi judicial authority. It is of some importance p that
party should know from the court of first instance the
reasons for an adverse decision received by it, for that
promotes acceptance of the judgment and thereby ensures
credibility and public confidence in the judicial
institution. It must be remembered that the High Court
exercises original jurisdiction under Article 226 of the
Constitution, and it is only appropriate that a petitioner
whose writ petition is dismissed in limine should know what
are the precise reasons for the adverse order, whether the
writ petition has been rejected on the ground of laches or
other preliminary ground or on the merits of the
controversy, and what are the reasons of the High Court
therefor. We may add that a brief statement of reasons
rendered by the High Court, when dismissing the writ
944
petition in limine, is of great assistance also to this
Court when the judgment and order of the High Court are
sought to he brought here by a petition for special leave to
appeal. To sum up, we think it desirable that the High
Court, when dismissing in limine, should set forth a brief
statement of the reasons for its order instead of disposing
of the proceeding by the single word “dismissed”.
Upon the considerations set forth earlier, we dismiss
the appeal but without any order as to costs.
M.L.A. Appeal dismissed.
945