JUDGMENT
S.K. Kulshrestha, J.
1. This petition and the connected petitions M. P, 2784/93 (Munusigh v. State of M. P. and others), M. P. No. 2 128/93 (Sabu Singh and Anr. v. State of M. P. and Ors.), M. P. No. 825/93 (Amulya Biswas and Ors. v. State and Ors.), W. P. No. 1562/95 (Gopal Jhunjhunwala v. State of M. P. and Ors.), W. P. No. 880/1997 (Mohammad Younus Farooqui v. State of M. P. and Ors.), M. P. No, 1788/1993 (Gajanan Oil Mill v. Bank of India and Ors.) and M. P. No. 3731/91 (Dinesh Chandra Mohabe v, State of M.P. and Ors.) challenge the validity and applicability of the Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam, 1987 (No, 1 of 1988) known in English as the Madhya Pradesh Public Moneys (Recovery of Dues) Act, 1987 (hereinafter referred to as the ‘Act’) and the proceedings taken thereunder. Since the petitions raise common controversy based on similar challenge to the vires of the said Act and the action taken thereunder, the petitions were heard together and are being, therefore disposed of by this common order.
2. The Modhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam, 1981 was enacted to provide for the speedy recovery of certain classes of dues payable to the State Government or to the Madhya Pradesh Financial Corporation or any other Coporation or to a Banking Company or to any Government Company or for matters connected therewith. The said Act had received the assent of the Governor on 19-5-1981 which was first published in the Madhya Pradesh Gazette (Extraordinary) dated 23-5-1981. This Act was repealed by the said Adhiniyam, 1987 (No. 1 of 1988) which received the assent of the President on the 18th December, 1987 which was published in the Madhya Pradesh Gazette (Extraordinary) dated the 2nd January, 1988. Section 7 of this Act provides for the Repeal and Validation of the earlier Act of 1981 (No. 27 of 1981) and lays down that any proceedings instituted for the recovery of any sum under the repealed Act and pending on the date of such repeal, shall be deemed to have been instituted under this Act and shall continue in accordance with the provisions of this Act. It further validates the judgment, decree or order of any Court and the action taken under the repealed Act as if the same were under the corresponding provisions of the Act notwithstanding that the repealed Act had not been reserved for the assent of the President and was not assented to by the President.
3. The Act No. l of 1988 has also been enacted for the very purpose for which the Act No. 27 of 1981 had been enacted. Section 3 of the Act provides for recovery of certain dues as arrears of land revenue in cases, inter alia, where any person is a party to any agreement relating to a loan, advance or grant given to him or relating to payment of price of goods sold to him on credit or relating to hire-purchase of goods sold to him by a Banking Company or a Government Company under a State sponsored scheme or as the case may be, under a socially desirable scheme. “Banking Company” has been defined in Section 2(b) of the Act while the “State sponsored Scheme” in Section 2(h) and “Socially Desirable Scheme” in Section 2(i) thereof. Since the petitioner challenges mainly the validity of the procedure prescribed and the restrictions contained in Section 3 of the Act, the section is reproduced hereunder for ready reference :–
5.3 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 to him or relating to payment of price of goods sold to him on credit or relating to hire-purchases of goods sold to him by the State Government or a Corporation by way of financial assistance; or
(B) to any agreement relating to loan advance or grant given to him or relating to payment of price of goods sold to him on credit or relating to hire-purchase of goods sold to him by a banking company or a Government Company under a State sponsored scheme or as the case may be, under a socially desirable scheme; or
(C) to any agreement relating to a guarantee given by the State Government or a Corporation in respect of a loan raised by an industrial concern; or
(D) to any agreement providing that any money payable thereunder to the State Government 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,–
(a) in the case of the State Government such officer as the State Government may by notification authorise in this behalf;
(b) in the case of a Corporation or a Govemment Company, the Managing Director thereof by whatever name called; and
(c) in the case of banking company, the local agent thereof by whatever name called, may send a certificate in such form as may be prescribed, and consistent with the provisions of Sub-Section (2) of Section 4, to the Collector of the district in which such person normally resides or carries on business or owns property, or to such other subordinate officer of the Collector, as the State Government or the Collector may, by an order, specify in this behalf, mentioning the sum due from such person and requesting that such sum together with the cost of proceedings and interest on the sum due at the rate specified in the agreement, up to the date of recovery, be recovered as if it were an arrear of land revenue;
Provided that a certificate issued under this sub-section may be withdrawn by the authority issuing such certificate at any time;
Provided further that the cost of proceedings shall always be calculated at the rate of three per cent of the principal sum to be recovered.
(2) The Collector or his subordinate officer specified under Sub-Section (1) on receiving the certificate shall take steps to recover the amount stated therein as arrears of land revenue under the Madhya Pradesh Land Revenue Code, 1959 (No. 20 of 1959).
(3) No suit for the recovery of any sum due as aforesaid shall lie in a Civil Court against any person in respect of whom a certificate for recovery of such sum has been issued under Sub-Section (1);
Provided that in computing the period of limitation for institution of suit for the recovery of any such sum, the period during which the recovery is barred under this Section shall be excluded.
(4) In the case of any agreement referred to in Sub-Section (1) between any person referred to in that sub-section and the State Government or a Corporation, no arbitration proceedings shall lie at the instance of either party either for recovery of any sum claimed to be due under the said subsection or for disputing the correctness of such claim;
Provided that whenever proceedings are taken against any person for the recovery of such sum he may pay the amount claimed under protest to the officer taking such proceedings, and upon such payment the proceedings shall be stayed and the person against whom such proceedings were taken may make a reference under arbitration agreement or otherwise enforce on arbitration agreement in respect of the amount so paid.
(5) Save as otherwise expressly provided in the first proviso to Sub-Section (1) and the proviso to Sub-Section (4), every certificate issued under Sub-Section (1) shall be final and shall not be called in question in any original suit, application (including any application under the Arbitration Act, 1940) or in any reference to arbitration and no injunction shall be granted by any Court or other authority in respect of any action taken or intended to be taken in pursuance of any power conferred by or under this Act.
(6) Any amount recovered under this Act shall notwithstanding anything contained in any other law for the time being in force, be applied in the following manner, namely :–
(a) firstly, towards the cost of proceedings to be shared between the State Government and the authority issuing the certificate under Sub-Section (1), in such manner as may be prescribed;
(b) secondly, towards interest to be paid to the authority;
(c) thirdly, towards the principal amount due to be paid to the authority; and
(d) the balance, if any, as far as possible in accordance with the provisions of Section 151 of the Madhya Pradesh Land Revenue Code, 1959 (No. 20 of 1959).”
The challenge of the petitioner in some cases is also founded on the argument that the transaction for which the action has been taken under the provisions of the Adhiniyam did not relate to the advance of loan under a State sponsored scheme or a Socially Desirable Scheme. The said expression in the definition in Section 2(h) and 2(i) reads as under :–
“2.(h): “State sponsored scheme” means a scheme sponsored by way of financial assistance by the State Government under which the State Government either,–
(i) advances money to a banking company or Government company for the purposes of disbursing loans, advances or grants or for the purposes of sale of goods on credit or hire purchase; or
(ii) gurantees for agress to guarantee the repayment of a loan, advance or grant or the payment of the price of goods sold on credit or hire purchase’
(i) “socially desirable scheme” means a scheme notified as such by the State Government under which a banking company advances money to any person by way of loan.”
The Banking Company has been defined by Section 2(b) as follows :–
2(b). “Banking Company” means :–
(i) abanking company as defined in the Banking Regulation Act, 1949 (No. 10 of 1949);
(ii) the State Bank of India constituted under the State Bank of India Act, 1955 (No. 23 of 1955)
(iii) a subsidiary Bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959(No. 38 of 1959);
(iv) a corresponding new Bank constituted under Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (No. 5 of 1970) or the Banking Companies (Acquisition and Transfer or Undertakings) Act, 1980 (No. 40 of 1980);
(v) a Regional Rural Bank establishing under the Regional Rural Banks Act, 1976 (No. 21 of 1976); and
(iv) a financing bank or a Central Society as defined in the Madhya Pradesh Co-operative Societies Act, 1960 (No. 17 of 1961) excluding a Co-operative Land Development Bank;
4. From the provisions as extracted above, the transactions for which recovery has been provided in Section 3 of the Act should relate to loan, advance or grant etc. by a Banking Company or a Government Company under the State sponsored scheme or under a socially desirable scheme. The said section provides that where such a party to such an agreement makes any default in repayment of the loan or advance or any instalment thereof; or otherwise fails to comply with the terms of the agreement, then in the case of Banking Company, the local agent thereof by whatever name called may send a certificates in such form as may be prescribed to the Collector of the District or to such a subordinate of the Collector, as the State Government or the Collector may, by any order, specify in this behalf, mentioning the sum due and requestesting that such sum together with the cost of proceedings and interest up to the date of recovery, be recovered as if it were an arrear of the land revenue. On such a certificate, the Collector or his subordinate is required to lake steps to recover the amount as arrear of land revenue under the Madhya Pradesh Land Revenue Code, 1959, Sub-Section (3) bars a suit for recovery in a Civil Court against any person in respect of whom a certificate, as aforesaid, has been issued, Sub-Section (4) prohibits making reference to the disputes eve if there be an arbitration agreement between a person and the State Government or a Corporation. The provison, however, permits such reference under arbitration agreement if the amount is paid under protest. Sub-Section (5) of Section 3 attaches finality to the certificate issued under Sub-Section (1) of Section 3 and bars any suit, application or proceedings calling in question, the certificate or for seeking injunction against any action taken under the Act. Section 5 of the Act, however, permits recovery of dues any other law subject to the condition that recourse shall be taken to the provision of only one law at a time for the recovery of the amount.
5. The State Government has, in exercise of the powers conferred by Section 5 of the Act, framed rules called “Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Niyam, 1988 to provide for the form in which recovery certificate is to be sent, the cost of proceedings, creation of a separate fund for such recoveries, procedure for issuing demand notices and warrants of attachment and the like matters.
6. The petitioner in M.P. No. 1601/93 had started one Oil Mills at Barwuha with the financial assistance given by the Bank of India and the State of Madhya Pradeh. The proprietor of the mill was sanctioned a cash credit limit of Rs. 1,50,000/-and on a recovery certificate having been issued, the said petitioner received notices under Section 146 of the M.P. Land Revenue Code (Annexure P/5). The said petitioner challenges the recovery under the Act on the ground that the recovery can be made only if the loan is advanced under the State sponsored scheme. The petitioner further challenges the bar created in Section 3(4) and (5) of the Act as ultra vires the ground that the same takes away the right to dispute the correctness of the demand.
7. In M.P. 2784/1993, the petitioner had been granted loan for development of agricultural land, sinking of a well and for a diesel pumping set. This petition also challenges the validity of Section 3(5) and Section 5 of the Act so also the applicability of the Act on the ground that only when loan is advanced under the State sponsored scheme, the provision, if at all, would be attracted. In M.P. No. 2128/93, the petitioners challenge that half the amount of loan was waived by the Government of Madhya Pradesh by circular dated 19-6-1984 (Annexure P/2) and the petitioner having deposited 50% if the Act amount and the interest thereon, cannot be saddled with the recovery of the amount which has already been waived. The petitioner also challenges Sub-Section (4) in addition to Sub-Section (6) of Section 4. In M.P. No. 825/93 petitioners claim to be refugess from Bangladesh who are granted agricultural loan for their livelihood. According to these petitioners, under the M.P. Krishak Rin Rahat Yojna, 1990, they were discharged from their liability on such agricultural loans up to a sum of Rs. 10,000/- but even then certificates have been issued in pursuance whereof the recovery officer has issued notices Annexures D/1 to D/30. Thus the addition to the challenge to the vires of Section 3(5), the petitioner seeks quashing of the these notices. The petitioner in W.P, No. 1562/95 challenged the recovery on the ground that the loan was not advanced under any State sponsored scheme. The validity of the Act has been challenged on the ground that no limitation has been prescribed for initiating recovery under this provisions. Reliance has also been placed on the judgment of this court in M.P. No, 809/93 (Annexure P/4) in which this Court has held that unless the recovery pertains to the loan advanced under a State sponsored scheme or under a socially desirable scheme, the provisions of the Act cannot be applied, The validity of Section 3(5)has also been challenged. The petitioner in W.P. No. 880/1997 were sanctioned “Deferred Payments Guarantees facility”. The Act Act has been challenged by this petitioner on the ground that since the matter pertains to Entry Nos. 35 and 45 in list 1 of VIIth Schedule to the Constittion of India, Parliament alone is competent under Article 246(1) of the Constitution of India to legislate on the subject. Similar challenge has been made in W.P. No. 1780/93 and M.P. No. 3731/93 in which the order passed by the Board of Revenue (Annexure K) has also been challenged.
8. The sum total of the arguments of the petitioners is that:–
“(i) Since the matter falls under Entry 35 “Public Debt” and Entry 45 “Banking”, it falls within the exclusive domain of Parliament and therefore, the State Legislature was not competent to enact such a law;
(ii) Section 3(4) and (5) of the Act create inroads in the fundamental rights of the petitioner, especially as they are violative of Article 14 in as much as they prescribe a different procedure for recovery in departure from general procedure;
(iii) No limitation has been prescribed for initiating the process with the result coercive process can be resorted to even in a case of time barred debt;
(iv) The Act cannot have retrospective application and cover transactions which had taken place prior to its enforcement;
(iv) In any case recovery is permissible only if the transaction relates to a Slate Sponsored Scheme or a socially desirable scheme and the debt waived by the State cannot be recovered.”
9. The respondent-Bank of India in M.P. No. 1601/93 has filed return. The respondent has referred to the transaction and the circumstances compelling the Branch Manager to finally determine the account and to enforce recovery under the provisions of the Act. The respondent has also taken a stand that an appeal has been provided under the M.P. Land Revenue Code against the order of the Tahsildar and it is always open to a parly to challenge his action in appeal. The respondent has referred to the various provisions of the Act and has further referred to notification dated 5-11-1988 published in Gazette dated 5-11-1988 (Annexure R/9) providing that all schemes under which Banking Companies advance loan to small scale industries shall be socially desirable schemes. The respondent has further contended that loans are advanced by the Banking Company under one or the other of the schemes sponsored by the District Industries Centre or the State Government or the Central Government and therefore the certificate could be issued in respect of the loan advanced to the petitioner.
10. The challenge with regard to the competence of the State Legislature to enact the said law need not detain us for long in view of the Judgment of the Supreme Court in State of Tamilnadu v. G.N. Venkataswamy, AIR 1995 SC 21. In the said case the Supreme Court considered the validity of similar provision contained in the Tamil Nadu Revenue Recovery Act (No. 2 of 1864) as amended by Amendment Act of 1972, and Bihar and Orissa Public Demands Recovery Act (No. 4 of 1914) as amended by Act No. 4 of the 1974. Repelling the challenge based on the legislative incompetence of the Slate Legislature their Lordships observed in paragraph 11 as follows :–
“11. It is no doubt correct that with the coming into force of Entry 11-A, List III it is no more the exclusive power of the State Legislature to legislate under the said Entry but “administration of Justice” and “constitutional and organisation of all Courts” are the subjects on which the Stale Legislalure can legislate. These expressions have been authoritatively intepreted by this court in Narothamdas’s case AIR 1951 SC 69. It is, therefore, settled that under Entry 11 -A the State Legislature has the power to make laws thereby enlarging or reducing the power of the Courts. The State Legislature can create new Courts, reorganise the existing courts, provide jurisdiction to the said Courts and also take away the existing jurisdiction if it so desires. We, therefore, see no reason why a State Legislature cannot confer additional jurisdiction on existing revenue Court to recover any public dues as arrears of land revenue.”
11. Even prior to the above decision , the matter was examined by the Supreme Court in the Director of Industries, U.P. v. Deepchand, AIR 1980 SC 801 in relation to the similar provisions contained in the U.P. Public Money (Recovery of Dues ) Act (25 of 1965). It was observed that ordinarily the State Advanced loans so as to assit the Public financially in establishing industries in the State or for the development of agricultural and the like benevolent object, it was with the object of avoiding the usual delay involved in the disposal of suits in Civil Court and providing an expeditious remedy, the Act has been enacted. Their Lordships observed that it cannot, therefore, be said that there is no reasonable basis for the classification made by the Statute and that classification does not have a reasonable relation of the object of the Statute. The Supreme Court further observed that an officer authorised by the Stale Government to issue the certificate is expected ordinarily to avail himself of a Speedier remedy provided under the Statute. In the said case, their Lordships were considering a provision similar to Section 3 of the Act and the challenge of discrimination founded on Article 14 was repelled.
12. From the above two decisions of the Apex Court, there can be no doubt the competence of the State Legislature to enact the said Act. The Act has received the assent of the President and therefore it cannot be said that the Act is ultra vires. The provision with regard to speedier recovery in connection with the U.P. Act has been approved and held to be not violativc of Article 14 of the Constitution of India. The challenge of the petitioner on the said ground cannot, therefore, be sustained.
13. This takes us to the next ground urged by the petitioner viz. that Sub-Section (4) of Section 3 of the Act bars even an arbitration proceedings based on an arbitration agreement between a person and the State Government or a Corporation, unless first amount is paid as required by the proviso and that Sub-Section (5) attaches finality to the certificate and bars a suit or proceedings to call in question the said certificate or for injunction against any action taken under the Act. To our mind, the challenge does not appear to be well founded. It is clear from the object of the Act that the provision has been enacted for speedy recovery of certain classes of outstanding dues payable to the State Government, Government Company and certain categories of Corporation and Banking Company. One cannot be oblivious of the fact that if the element of the challenge to the action to question the correctness of the certificate or to seek injunction against any action is introduced and the parties are not prevented from seeking such relief from the Civil Court, the very delay which the Act strives to avoid in the recovery of the dues of the Government or the Corporation or the Banking Companies will get reintroduced thus frustrating its very object. The Apex Court in S.P. Chengalveraya Naidu v. Jagannath, AIR 1994 SC 853 had an occasion to observe in very strong terms “we are constrained to say that more often than not, process of the Court is being abused. Property grabbers, tax-evaders, bank loan dodgers and other unscrupulous persons from all walks of life find the court process a convenient lever to retain the illegal gains indefinitely.” It is clear that it is to prevent these dilatory tactics that the said Act provides for a speedier remedy. One cannot forget that the State and its instrumentalities as also the Banking Companies need the funds in the time with a view to carry out their functions and if the recoveries are permitted to be impeded by an avoidable long drawn and protracted proceeding in Courts, recourse to normal legal remedy can be prohibited. The Banking Company entrusted with the power of issuing a recovery certificate is expected to act with a sense of responsibility and to take every prosecution against any error or omission. Such Officer can have no personal interest in the matter either to issue a certificate for an amount nor due to the Bank nor can he do so as the recovery certificate is essentially based on the record maintained by the Bank in the course of its normal banking business. This apart the bank is normally expected to apprise the party concerned about the debt outstanding and, thus, to enable the affected party to place before the Officer concerned such material as it may choose to produce in controversion of the demand including the evidence with regard to the payments already made. In any case, Sub-Section (4) of Section 3, in a case of an agreement providing for arbitration between such a person and the Government or the Corporation permits a dispute, although the same cannot be raised without first satisfying the demand. Such a course is also provided in Section 150 of the M.P. Land Revenue Code, although a Civil Suit is specifically barred.
14. The next question on behalf of the petitioner is that the Act does not provide for any period of limitation with the result, even a time barred debt can be enforced by issuing a certificate, the correctness whereof cannot be challenged. Limitation merely bars the remedy but does not destroy the right. Where the normal remedy for recovery of money is by suit and the law provides summary and concurrent remedy, such as by means of an application or a certificate as under the present Act, it cannot be the object of the law to make it possible to recover by the summary proceeding money, the recovery of which by a suit is barred by limitation. What is to be seen in such is whether there is a debt legally due from the debtor. Section 5 of the Act provides that the Act shall not debar the recovery of dues under any other law provided recourse is taken to the provision of only one law at a time for its recovery. The proviso to Sub-Section (3) of Section 3 lays down that in computing the period of limitation for institution of suit for recovery of a sum, the period during which the recovery is barred under Sub-Section (3), sahll be excluded. If the scheme of the Act is examined then the period for which recovery is barred, which is to be excluded is only the period during which a certificate issued is in force on the basis whereof steps are initiated to recover the sum as an arrear of Land Revenue under the M.P. Land Revenue Code. The fact that such period is to be excluded from the period prescribed for a suit for recovery of such amount, should an occasion arise for such a recovery through the court, by itself conveys clearly the intention of the Legislature that the recovery on the basis of the certificate under the provsion of Section 3 has to be initiated within the period prescribed for the suit for such recovery in a Civil Court. Under these circumstances, the assumption of the petitioner that recovery of a time barred debt can also be enforced under the provisions of this Act appears fallacious. If it were so, the Act would not have provided for exclusion of the period spent in enforcing a recovery through a certificate under the Act from the period of limitation for filing a suit. We have, thus, no doubt in our mind that the recovery under the Act can be only in relation to a debt which is legally due and has, therefore, to be necessarily initiated during the subsistence of the period of limitation. 15. The petitioner has also argued that the recovery can be made only in relation to the loan or the grant made under a State Sponsored Scheme or a Socially Desirable Scheme. Respondent-Bank has clearly averred that all such transactions arc covered by one or the other scheme of the State Government and therefore recovery of the amount due can be enforced by recourse to the provisions of the Act. The loans were advanced to the petitioner either on the ground that they were Small Scale Industry or agriculturists which have duly been notified to be Socially Desirable Schemes. The Bank has also appended the
notification (Annexure R/9). Even if there be some doubt, the petitioner can always raise a dispute about maintainability of an action under the provisions of the Act, after they have satisfied the demand under protest as per Sub-Section (4) of Section 3 or Section 150 of the M.P, Land Revenue Code. It has also been urged that the Act cannot have any retrospective application. The Act is essentially for a summary procedure for speedy recovery of the debts due to the Government or the Corporation or the Banking Companies. The procedure would apply with reference to the date when the recovery is enforced and not with reference to the date of the transaction. The Act being in the nature of the machinery for the recovery, steps can be taken in accordance therewith even in relation to the past transactions.
16. An argument has been advanced that in some cases of loan granted to the agriclturists, by a circular of the Government, the debt to a prescribed extent has been waived but still the certificate has been issued for recovery under the provisions of the Act. The first proviso to Section 3(1) permits withdrawal of the certificate by the Authority issuing the same, at any time. In a situation, where an objection is raised with regard to the Authority of such person to issue certificate which goes to the root of the matter such as that the debt has been waived already and no amount is recoverable and further that the debt is barred by limitation, the Authority issuing the certificate can always be approached to exercise its power of withdrawal of the certificate under the said proviso on the ground that such certificate ought not to have been issued. It is true that the provision may Act harshly in stray cases but since the recovery is enforced in relation to a debt belonging to an institution which maintains accounts, there does not appear any likelihood that a certificate for recovery would be issued by the person authorised to issue the same without due satisfaction about the existence of a debt legally due. Even in cases of an inadvertent mistake, the power to withdraw the certificate is always available. We do not en viage, indeed hope and trust, that the Authority, issuing the certificate shall not take every prosecution before issuing it in fulfillment of the trust reposed in such Authority by the Statute.
17. The matter when examined from another perspective reveals that what Sub-Section (4) of Section 3 of the Act bars is the Arbitration Proceedings when there is an arbitration agreement between such person, on one side, and the Government or the Corporation, on the other, for recovery of sum claimed under Sub-Section (1) of Section 3 of disputing the correctness of such claims unless under the proviso thereof the amount has first been deposited under protest. What the provision debars is the reference of dispute to arbitrator even if there be an agreement in this behalf, without deposit of the amount first. This provision is not attracted in case there is no agreement for referring the dispute to arbitrationl. Likewise, Sub-Section (5) of Section 3 bars original suit or application, or reference to arbitration, to call in question the certificate issued under Section 3(1) and restrains the grant of injunction against any action taken, or intended, under the Act, The Act nowhere restrains or bars raising of a dispute either before the Officer empowered to issue the recovery certificate or before the Recovery Officer with regard to the validity of demand or its maintainability. The Officer empowered to issue the recovery certificate and the ‘ Recovery Officer,’ both, discharge functions under the Statute and cannot invade the rights of the citizens without adherence to the basic principle of permitting the persons likely to be affected to represent against the intended action. The fact that Arbitration even where an arbitration agreement exists and remedy in a Civil Court are, both, barred, leads to irresistible conclusion that before the functionaries under the Act, the affected party can raise objections going to the root of the proceedings such as the debt being not legally due on account of it having become barred by the period of limitation, the transaction being not of loan or advance or grant under any ‘State Sponsored Scheme’ or under any ‘Socially Desirable Scheme” or the debt having been waived orwiped out under any provision of law or a provision enforceable unde law and the like and such officer is duty bound to consider and decide all such questions at least summarily though formal notice to show casue may not be necessary. This will check the misuse of the provision and provide the necessary safeguards.
19. In the result, while the challenge to the validity of the Act is dismissed, it is directed that in all cases where objections have been raised to the maintainability of the action under the Act, the Recovery Officer shall first decide the same before proceeding to enforce the recovery. The petitions are, thus, disposed of with no order a to costs. Counsel fee in each case No. Rs. 1000/-.