ORDER
M.Y. Eqbal, J.
1. In this writ application the petitioner-State Bank of India, has challenged the order dated 24.9.1988 passed by the Certificate Officer, Hazaribagh cancelling the certificate and dismissing the Certificate Case No. 2/79-88 filed by the petitioner-Bank against the borrower and after the death of borrower proceeded against his heirs respondent Nos. 1, 2 and 3 and also the order dated 11.03.1994 passed by the Deputy Commissioner, Hazaribagh dismissing the Certificate Appeal No. 85/88 preferred by the petitioner and also the order dated 6.9.1999 passed by the Commissioner, North Chotanagpur Division, Hazaribagh in Certificate Revision No. 67/94 preferred by the petitioner against the respondent Nos. 1, 2 and 3.
2. The petitioners’ case is that the original borrower namely, Nurul Arfin Gandhi, borrowed loan time to time from the petitioner-Bank from 1970-75 by executing
various loan agreements and other documents. The said borrower was also allowed cash credit facility against the pledged stock. In 1979 the liability of the borrower exceeded beyond the stock and pledged limit of Rs. 60,000/- and cash credit limit of Rs. 20,000/-and accordingly the petitioner-Bank filed a certificate case against the borrower Nurul Arfin Gandhi for recovery of Rs. 1,07,853.48 paise. Pursuant to the notice issued under Section 7 of the Public Demands Recovery Act the borrower appeared and filed his show cause on 25.8.1980. In the meantime, the original certificate debtor namely Nurul Arfin died on 27.5.1983 and respondent Nos. 1, 2 and 3 were substituted in his place. The certificate Officer issued distress warrant against the respondent Nos. 1, 2 and 3, which was challenged by the said respondents in CWJC No. 651/85 (R). The matter was heard by a learned single Judge of the Ranchi Bench of the Patna High Court and writ petition was disposed of on 11.7.1986 with a direction to the said respondents to file their objection under Section 9 of the said Act and the Certificate Officer will dispose of the objection in accordance with law. The Certificate Officer, after hearing the parties on the objection filed by the respondents, passed final order on 24.9.1988 under Section 10 of the said Act and cancelled the certificate holding that the certificate case became barred by limitation and the said heirs of the original certificate debtor have no liability for payment of certificate dues. Being aggrieved by the said order passed by the Certificate Officer, the petitioner-Bank moved in appeal under Section 60 of the said Act before the Deputy Commissioner, Ranchi, who by order dated 11.3.1994 dismissed the appeal by confirming the order passed by the Certificate Officer. The petitioner then challenged the said order in Revision before the Commissioner, North Chotanagpur Division, Hazaribagh. who finally dismissed the revision application holding that as on 15.7.1975 only a sum of Rs. 20,000/- was borrowed by the borrower Nurul Arfin and therefore, only that amount can be recovered on the basis of agreement executed by him in favour of the Bank.
3. Mr. Kameshwar Prasad, learned Sr. Counsel appearing for the petitioner-Bank, assailed the impugned orders passed by the Certificate Officer, the Deputy Commissioner and the Commissioner as being illegal and
contrary to law and evidence on record. Learned counsel submitted that the Commissioner having expressly and impliedly held that the certificate demand to the extent of Rs. 20,000/- was maintainable, fell into an error of law and committed an error of jurisdiction in holding the liability of the borrower only to the extent of Rs. 20,000/- by misconstruing the agreement creating liability under the PDR Act to the extent of Rs. 60,000/- learned Counsel further submitted that when the substitution application was duly filed within 5 months and accepted by the Court and also by the High Court, the Certificate Officer committed serious illegality in holding that the substitution petition has not been filed within time, the certificate proceeding became barred against heirs of the original borrower. Learned counsel then submitted that when the demand was not cancelled by the Deputy Commissioner or by the Certificate Officer on the ground of limitation, the Revisional Court has no jurisdiction to reject the demand on the ground of limitation. Learned counsel put heavy reliance on the decision of the Supreme Court in the case of Punjab National Bank v. Surendra Prasad Sinha. (1993) 1 Supp SCC 499 and United Bank of India v. Naresh Kumar, AIR 1997 SC 3,
4. Mr. P.K. Prasad, learned counsel appearing for the respondents, on the other hand, submitted that admittedly the loan amount excluding Rs. 20,000/- was granted to the original borrower prior to 11.7.1975 when there was no provision for recovery of the loan amount under Public Demands Recovery Act. It was only by virtue of amendment made in 1974, the Bank’s loan have been included in the schedule of the said Act. According to the learned counsel, any transaction made prior to the amendment cannot be recovered as public demand and any acknowledgement made by the original borrower cannot be given retrospective effect. Learned counsel further submitted that under Section 52(2) and the proviso to Section 52 the concerned respondents cannot be held liable to pay the dues without ascertaining the property inherited by them.
5. Before appreciating the rival contentions made by the learned counsel for the parties, it would first refer some of the undisputed relevant facts of the case. The original certificate debtor, namely. Nun(sic)
time to time borrowed loan from the petitioner-Bank from 1970 to 1975 against execution of various documents. The last documents executed by the said borrower are dated 11.7.1975. One of such document is Annexure 1 to the writ application, whereby the borrower agreed for recovery of the bank dues under the provisions of Public Demands Recovery Act. The relevant portion of the said agreement dated 11.7.1975 is quoted herein below :–
“In pursuance of which I/We have executed several documents detailed hereunder to record the terms and conditions of the said advance/loan and have bound myself/ourselves to repay the said advance/loan and in consideration of which the Bank has advanced or agreed to advance a sum of Rupees sixty thousand only to me/us. I/we agree that any sum remaining due to the Bank with accrued interest and payable by me/us in accordance with the documents noted hereunder, or in accordance with any documents which I/We may execute in future in connection with the said advance/ loan or the repayment thereof, shall be recoverable from me/us as a Public Demand in terms of the Bihar and Orissa Public Demands Recovery Act, 1914 (Bihar-Orissa Act IV of 1914) as amended by the Bihar Public Demands Recovery (II Amendment) Ordinance, 1973.
I/We further agree that I/We shall be debarred from raising any plea of jurisdiction of the certificate court in the certificate proceedings if and when instituted to raise the said dues under the said Bihar & Orissa Public Demands Recovery Act.
Dated at the 11th day of July 1975
Signature(s) of the Borrower(s).”
6. It is worth to notice here that in the said agreement details of loan time to time taken by the borrower from 1970 to 1975 has been mentioned, which comes to about Rs. 60,000/-.
7. The Certificate Officer in the impugned order dated 24.9.1988 recorded a finding that there is no document to show that dues could be recovered as Public Demand save and except the PDR Agreement dated 11.7.1975 which cannot be given retrospective effect. The Certificate Officer, however, has not recorded any finding that the heirs of the original borrower namely, respondent
Nos. 1, 2 and 3 have been wrongly substituted on the basis of time barred application. The appellate authority has not recorded its own finding rather simply affirmed the order passed by the Certificate Officer. The Commissioner in his order passed in revision, has held that the amendment made in the PDR Act in 1974 cannot be given retrospective effect and, therefore, the loan granted to the borrower prior to 11.7.1975 does not come under the purview of the said Act. The Commissioner further held that the certificate case was barred by limitation and the application for substitution of legal representatives was also barred by limitation.
8. The Bihar and Orissa Public Demands Recovery Act, 1914 was amended by Act IV of 1974 thereby incorporating “any money payable to the State Bank of India” within the list of Public Demand has been set out in Schedule-I to the said Act. The said Act was challenged before the Supreme Court in the case of H.T. Refractories Pvt. Ltd. v. Certificate Officer, (1994) 2 PLJR 72, on the ground that Bihar Legislature had no legislative competence to enact law providing for recovery of Bank dues as arrears of land revenue. Their Lordships, after discussing the law, approved the decision of the Calcutta High Court and the Patna High Court and held that dues of State Bank of India can be recovered as arrears of land revenue and such a provision even if it incidentally trenches upon “Banking under Entry 45 of list ‘I’ is well within the legislative competence of the State Legislature as it falls within Entry 11A and 13 of List III of 7th Schedule of the Constitution of India.
9. The only question, therefore, falls for consideration is whether the petitioner-Bank is entitled to recover the dues as public demand on the basis of PDR agreement executed by the borrower on 11.7.1975. As noticed above, admittedly the original borrower executed PDR agreement on 11.7.1975 (Annexure 1) agreeing, inter alia, that all the advances made by the Bank and lying due together with interest shall be recoverable from him as a public demand in terms of the said Act. By the said agreement dated 11.7.1975, the relevant portion of which has been quoted hereinabove, the borrower not only acknowledged his total liability but also agreed that all the dues shall be recoverable
under the provisions of the Public Demands Recovery Act.
10. Section 3(6) of the said Act defines the word ‘Public Demand’ as under :–
‘Public Demand means any arrear or money mentioned or referred to in the Schedule I and includes any interest which may, by law be chargeable thereof upto the date on which the certificate is signed under Part II’.
11. Entry 15 of Schedule-I very clearly provides that any money payable to State Bank of India shall be recovered as Public Demand. From reading Section 3(6) of the Act together with Entry 15 of Schedule I, its clear that if a debtor agrees in writing that any dues or arrears of dues can be recovered as Public Demand then it can not be held that the loan amount granted prior to amendment of the Act can not be recovered as Public Demand. Such narrow interpretation will defeat the very purpose of the amendment made in the Act.
12. In the case of United Bank of India v. Naresh Kumar and Ors., AIR 1997 SC 3 the Supreme Court took the view that where the courts come to a conclusion that money had been taken by certain parties from the Bank and that the claims of the Bank are justified, it will be travesty of justice if the Bank is to be non-suited for a technical reason and the public interest can not be permitted to be defeated on a mere technicality.
13. In the case of Dhrup Jee Prasad and Ors. v. State of Bihar and Ors., 2000 (4) PLJR 432, the Division Bench of the Patna High Court while considering a similar question observed as under :–
‘The appellants have approached the High Court in its equity jurisdiction. The initial submission as was made before the Court was that the debt is time barred. The High Court is not impressed with this submission as what the appellants have taken as a loan is a public debt and if the contention of the appellants is accepted then it will be a bad precedent that persons like the appellants will take out loans from public banks and public finance institutions and tailor a situation that the loan is not paid and take protection under the statute of limitation that it is beyond recovery. The situation then will amount to a circumstance that persons like the
appellants will contribute to deficit financing of nation’s economy of undischarged debts and the State then would take recourse to make up this deficit have nothing to do with bad debts.
The debt is admitted. The hypothecation of assets against the debt was given lies on record and the appellants have been ill- advised to continue the proceedings to avoid the discharge of the loan. The appellants are obliged to discharge their loan forthwith.”
14. The Commissioner in his order has committed serious errors of law in holding that any loan given prior to 11.7.1975 does riot come under the purview of Public Demands Recovery Act when the borrower in an unequivocal term has agreed that all dues shall be recovered as Public Demand. The Commissioner has further committed serious illegality in so far as he held that the substitution application was time barred in view of the finding recorded by him that part of the loan amount could be recovered as Public Demand. The impugned orders passed by the respondents, therefore, cannot be sustained in law.
15. This writ application is therefore allowed and the impugned orders passed by the Certificate Officer, Deputy Commissioner and the Commissioner are set aside. The matter is remitted back to the Certificate Officer to proceed against the substituted heirs of the original certificate Debtor for the recovery of the dues in accordance with law.