Rana Gurjeet Singh & Ors v. Punjab Energy Development Agency & Ors

CWP-25954-2015o(O&M).o o -1-o o 2023:PHHC:080187o INoTHEoPUNJABoANDoHARYANAoHIGHoCOURToATo CHANDIGARHo o 208o o o o o o o o o o CWP-25954-2015o(O&M).o o o o o o o Reservedoon:o02.05.2023.o DateoofoDecision:o01.06.2023o o o RANAoGURJEEToSINGHoANDoOTHERSo ..oPetitionerso o Versuso o PUNJABoENERGYoDEVELOPMENToAGENCYoANDoOTHERSo o ...oRespondentso o CORAM:oHON'BLEoMR.oJUSTICEoVINODoS.oBHARDWAJ.o o Present:oo Mr.oRajivoPartapoAtmaoRam,oSr.oAdvocate,owithoo o o Mr.oRahuloSharma,oAdvocate,oo o o o forotheopetitioners.o o o o Mr.oAdityaoGrover,oAdvocate,oo o o fororespondentoNo.1.oo o o o o Mr.oAvinitoAvasthi,oAAG,oPunjab.ooo oo VINODoS.oBHARDWAJ,oJ.oo o o Challengeo ino theo presento writo petitiono iso too theo Recoveryo Certificateo datedo 19.11.2015o (Annexureo P-6)o ando theo Notificationo datedo

21.09.2015o (Annexureo P-3)o wherebyo theo respondentso haveo initiatedo theo processofororecoveryoofooutstandingoduesounderotheoPunjaboPublicoMoneyso (RecoveryoofoDues)oAct,o1983o(hereinafteroreferredotooaso'theoActoofo1983')o byoappointingoanoAuthorizedoOfficerofororecoveryoofodues.oo FACTSoANDoPLEADINGSoOFoPETITIONERoo o o TheopetitionersoareotheopromotersoofoM/soRanaoSugarsoLimitedo andohadoenteredointooaoTripartiteoFinancialoCollaborationoAgreementodatedo CWP-25954-2015o(O&M).o o -2-o o 2023:PHHC:080187o

28.03.2000owithotheoCompanyonamelyoM/soRanaoSugarsoLimitedoandoPunjabo EnergyoDevelopmentoAgencyo(hereinafterotoobeoreferredoaso'PEDA').oTheo saidoTripartiteoFinancialoCollaborationoAgreemento(hereinafteroreferredotooaso 'CollaborationoAgreement')owasolateroonoamendedovideoaoSupplementaryo TripartiteoFinancialoCollaborationoAgreementoexecutedobetweenotheopartieso ono20.11.2000oforosettingoupoofoaobagasseobasedoco-generationoProject.oTheo petitioners-PromoteesoasowelloasorespondentoNo.1-PEDAohadoinvestedoinotheo equityo shareo capitalo ofo M/so Ranao Sugarso Limited.o Theo Collaborationo Agreementocontainedoaoclauseowherebyotheopetitionersowereoboundotoobuyo backo theo shareso ofo M/so Ranao Sugarso Limitedo heldo byo respondento No.1-PEDAoafterotheoexpiryoofo10oyearsofromotheodateoofocommercialoproductiono ofo theo co-generationo project.o Theo dateo ofo commercialo productiono ofo theo Projectowaso13.01.2001.oTheocauseoofoactionotooenforceobuyobackoofotheo sharesothusoaccruedoinofavouroofotheorespondentoNo.1-PEDAoono13.01.2011.o TheorespondentsodidonototakeoanyostepsoforoenforcementoofoClauseo8o(g)oofo theo Collaborationo Agreemento withino theo periodo ofo limitationo i.e.o tillo

12.01.2014o ando theo onlyo stepso thato wereo takeno wereo sendingo ofo letters/reminders.o Ono 21.09.2015,o theo Governmento ofo Punjabo issuedo ao Notificationo declaringo respondento No.2o aso theo "Authorizedo Officer"o foro recoveryoofotheoGovernmentodues,oinvestedoasoequityobyorespondentoNo.1-PEDA,oonobehalfoofotheoStateoGovernmentoinotheomatteroofoM/soRanaoSugarso Limited."o Ito iso pleadedo thato noo Notificationo foro theo appointmento ofo ano "Authorizedo Officer"o couldo beo issuedo aso theo claimo ofo respondento No.1-PEDAo doeso noto fallo withino theo purviewo ofo theo Punjabo Publico Moneyso (Recoveryo ofo Dues)o Act,o 1983.o Accordingly,o theo petitionerso submittedo ao representationotootheorespondentsoinvokingotheoArbitrationoClauseoinotermso CWP-25954-2015o(O&M).o o -3-o o 2023:PHHC:080187o ofo theo 'Collaborationo Agreement.'o However,o insteado ofo accedingo too theo demandoraisedobyotheopetitioners,orespondentoNo.1-PEDAoclaimedothatoano amountoofoRs.9,44,93,441.46oisotoobeorecoveredofromotheopetitionersoandothato theoliabilityoofotheopetitionersodoesonotoneedoanyodetermination.oAorecoveryo certificateowasothereafteroissuedobyotheoAuthorisedoOfficeroforotheorecoveryo ofo theo aboveo amounto calculatedo uptoo 30.09.2015o video Memoo datedo

19.11.2015.oItowasofurtheroaverredothatoneitheroanyonoticeowasoissuedotootheo petitionerso noro anyo opportunityo waso providedo too themo too puto fortho theiro defenceobeforeotheoissuanceoofotheoRecoveryoCertificate.oTheoprocessowaso thusochallengedoonogroundsonotedoduringoarguments.oooo RESPONSEoOFoTHEoRESPONDENTSo o o AoshortoreplyoonobehalfooforespondentsoNo.lotoo3ohadobeenofiledo whereinoitowasoaverredothatoaobaggaseobasedodemonstration,oco-generationo projectoofo10.2oMWocapacityowasosanctionedobyotheoMinistryoofoNewoando Renewableo Energy,o Governmento ofo India,o video itso communicationo datedo

28.09.1999oforosettingoupoinoSugaroMilloofoM/soRanaoSugarsoLimitedoato villageo Buttaro Seviyan,o Districto Amritsar.o Theo Governmento ofo Punjabo througho Departmento ofo Science,o Technology,o Environmento ando Non-Conventionalo Energyo Sourceso decidedo foro equityo participationo ofo Rs.255o Lakhsoinotheoprojectovideoletterodatedo13.03.2001otootheoNodaloAgencyoi.e.o respondento No.1-PEDA.o Aftero seekingo theo requisiteo approvals/sanctionso fromo allo theo concernedo quarters,o ao Tripartiteo Financialo Collaborationo Agreemento waso executedo betweeno theo partieso ono 28.03.2000o whicho waso supplementedoono20.11.2000.oTheoagreementospecificallyocontainedoaorecitalo thato respondento No.1-PEDAo haso beeno grantedo sanctiono byo theo Stateo GovernmentotooinvestofundsotootheotuneoofoRs.255olakhsoinotheoequityoofoM/so CWP-25954-2015o(O&M).o o -4-o o 2023:PHHC:080187o RanaoSugarsoLimitedowhereuponotheosanctionoforoinvestmentoofotheoamounto waso accordedo ono 28.03.2003o ando fundso wereo disbursed.o Aso pero theo GovernmentoofoPunjabodirections,otheoGovernmentsofundsowereoinvestedoaso equityofundsoandotheorequisiteosharesowereoallottedotootheorespondentoNo.1-PEDA.oTheobaggaseobasedoprojectowasocommissionedobyoM/soRanaoSugarso Limitedoono13.01.2001oasotheosupplyoofopowerotootheogridoofodistributiono licenseeocommencedofromosaidodateoi.e.o13.01.2001.oThereowasoaolock-ino periodoofo10oyearsofromotheodateoofoproductionoforotheoinvestmentomadeobyo theoStateoGovernment.oTheopromotersohadotheooption,owithopriorosanctionoofo theo Stateo Government/PEDAo too retire/buyo theo equityo ino yearlyo installments/lumposumoafteroperiodoofo05oyears.oIfotheoPromotersodidonoto exerciseosuchooptionoafteroexpiryoofotheoperiodoofo05oyears,otheyowereoboundo toobuyobackotheosharesoheldobyoPEDAoonoexpiryoofoaotermoofo10oyearsofromo theodateoofoCommercialoProduction.oTheorepaymentoofotheoamountoofotheo sharesosubscribedobyoPEDA,oalongowithointerest,owasotoobeocollectedoatotheo ratesomentionedounderoClauseo8o(b)o(i).oTheoPromotersofailedotoofulfillotheiro boundenoobligationoasoperotheoCollaborationoAgreement.oAocommunicationo datedo15.05.2013owasosentotootheopetitionersotoobuyobackotheo25.50oLakho equityoshares.oHowever,oasotheopromotersodidonotoexerciseotheoaboveosaido option,oPEDAowasoentitledotoorecoverotheoamountopayableoasoGovernmento dueso withouto prejudiceo too itso othero rightso undero theo agreement.o Theo respondentso remindedo theo petitionerso abouto theiro obligationso ando soughto paymentoofoRs.o5,86,72,992.69owithinoaoperiodoofooneomonthoofailingowhicho theoactionowasotoobeotakenoinotermsoofotheoclauseo8o(g)oofotheoagreementovideo letterodatedo15.05.2013.oHowever,otheopetitionersodidonotopayoanyoheedotoo theosaidorequests/remindersothatowereosentoagainoono06.09.2013,o06.02.2014o CWP-25954-2015o(O&M).o o -5-o o 2023:PHHC:080187o aso wello aso ono 06.06.2014.o Consequently,o video Notificationo datedo

21.09.2015,orespondentoNo.2owasoappointedoasoAuthorizedoOfficerounderotheo provisionsoofotheoPunjaboPublicoMoneyso(RecoveryoofoDues)oAct,o1983.oAo recoveryo certificateo waso eventuallyo issuedo byo theo Authorizedo Officero ono

19.11.2015o foro theo Stateo Governmento dueso recoverableo fromo M/so Ranao SugarsoLimited.oItoisoaverredothatotheopetitionersoareoobligatedotoobuyotheo equityosharesosubscribedobyorespondentoNo.1-PEDAoandotheoliabilityobeingo strict,o theo sameo hado too beo dischargedo byo theo petitioners.o Theo communicationso hado beeno repeatedlyo sento too theo petitionerso too payo theo outstandingodues,ohowever,otheyochoseotoobeonon-responsiveoandonon-committaloinoresponseocompelingotheoAuthorisedoOfficeroforoissuanceoofo recoveryocertificates.ooooo oo Theo petitionerso hado alsoo enjoyedo othero additionalo financialo benefitsosuchoasograntofromoGovernmentoofoIndiaoandoavailedoloanoalongo witho fiscalo incentives.o Despiteo havingo availedo multifariouso benefits,o theo petitionerso failedo too fulfillo theiro boundeno obligation.o Ino theo evento ofo theo petitionerso noto repayingo theo amount,o hugeo losso wouldo beo causedo too theo PublicoExchequer.oTheoproceedingsowereothusodefendedoasorightlyoinvokedo asoperotheoCollaborationoAgreement.ooo o Noorejoinder/replicationowasofiledotootheowrittenostatement.oo ARGUMENTSoOFoPETITIONERSo o Learnedocounseloforotheopetitionersoreferredotootheoprovisionsoofo theo Punjabo Publico Moneyso (Recoveryo ofo Dues)o Act,o 1983o (hereinaftero referredotooaso'Actoofo1983')oandohasoarguedothatorespondentoNo.1-PEDAoiso neithero ao Corporationo noro ao Stateo Governmento ando iso onlyo ao Societyo registeredo undero theo Societieso Registrationo Act,o 1860.o Acto ofo 1983o waso CWP-25954-2015o(O&M).o o -6-o o 2023:PHHC:080187o enactedotooprovideoforospeedyorecoveryoofocertifiedoduesopayableotootheoStateo GovernmentoorotheoPunjaboFinancialoCorporationooroanyootheroCorporationo notifiedobyotheoStateoGovernmentooroaoGovernmentoCompanyooroaoBankingo Company.oItoisocontendedothatorespondentoNo.1-PEDAodoesonotofalloinoanyo ofotheosaidocategoriesodescribedounderotheoActoofo1983.oTheoobjectoofotheoActo ofo1983obeingorecoveryoofoloan,oadvanceoorograntoasoisoreferredotooinoSectiono 3oreadowithoSectiono2o(h)o(i),otheoStatuteowouldonotoapplyoasotheoarrangemento inotheoinstantocaseowasoforopurchaseoofotheoequityosharesowhichoareoalwayso openotoobeoredeemedobyosaleoinostockomarket.oAodisputeocouldonotothusobeo resolvedounderotheoActoofo1983obutocouldoonlyobeoresolvedobyoanyoothero lawfulomeansoincludingoandonotorestrictedotooarbitrationoorocivilosuit.oItoiso furtheroarguedothatotheoinvestmentonotoohaveobeenodoneobyotheoGovernment;oo GovernmentoCompany;oGovernmentoCorporationooroaoBankingoCompany,o asorequiredounderotheoActoofo1983,orecoveryoofoanyootheroamountocannotobeo effectedo througho theo aboveo Act.o Ino soo faro aso recoveryo pursuanto too ano agreementobetweenotheopartiesotooeffectorecoveryoisoconcerned,otheosameocano beoinvolvedoonlyoinoanoeventualityowhereotheomoneyoisopayableotootheoStateo Government.oSince,otheomoneyoinotheopresentocaseowasopayable,oifoatoall,otoo PEDAoandonototootheoGovernment,ohence,oevenotheoaboveoclauseoofoSectiono 3ocanoalsoonotobeoresortedoto.oItoisofurtheroarguedothatotheobasicoorderoofo issuanceoofoaorecoveryocertificateoisothusonotoonlyounlawfulobutohasoalsoobeeno passedo withouto adheringo too theo principleso ofo theo naturalo justiceo ando ino violationo ofo theo ruleo ofo Audio Alteramo Partemo o renderingo theo recoveryo certificateoliableotoobeoquashed.oItoisofurtherocontendedothatotheoActoofo1983o oustso theo jurisdictiono ofo Civilo Courto ando therefore,o ito iso necessaryo too determineotheo"sumodue"oandonoomaterialowasoplacedobeforeotheoauthorizedo CWP-25954-2015o(O&M).o o -7-o o 2023:PHHC:080187o officerowhichocouldojustifyotheodeterminationoofotheo"sumodue"oandoissuanceo ofo theo recoveryo certificate.o Ito waso alsoo contendedo thato thereo waso noo considerationothatohadoflownofromorespondentoNo.1-PEDAotootheopetitionerso andoasosuch,otheoTripartiteoFinancialoCollaborationoAgreementoisovoidoando unenforceableoagainstotheopetitionersoforowantoofoconsideration.oAofurthero argumento waso raisedo thato theo claimo haso alsoo noto beeno raisedo withino theo periodo ofo limitationo whicho endedo ono 12.01.2014o ando Sovereigno Powero cannotobeoinvokedoforoeffectingorecoveryoofoaotimeobarredodebtobyotakingo recourseo too ao coerciveo modeo ofo recovery.o Ao referenceo waso madeo too theo judgmentoofotheoHon'bleoSupremeoCourtoinotheomatteroofoS.oK.oBhargavao Vs.o Collector,o Chandigarho ando others,o reportedo aso (1998)o 5o Supremeo CourtoCaseso170.oTheorelevantoextractoofotheosaidojudgmentoreadsothus:-o "8.oItoisoclearofromotheoperusaloofotheoaboveoquotedoSectionothato beforeoaocertificateocanobeoissuedobyotheoManagingoDirectoro underosub-sectiono(2)oofoSectiono3,oheomustodetermineotheo`sumo due'ofromotheodefaulteroasoenjoinedouponohimobyoSectiono3o(1)o

(b).oItoisodifficultotooappreciateotheocontentionoofotheolearnedo counselo foro theo respondento Financialo Corporationo thato anyo sucho determinationo cano takeo placeo withouto noticeo too theo defaulter.o Theo jurisdictiono ofo theo civilo courtso too goo intoo theo questionsoasotoowhatoisotheoamountodueoisoexpresslyooustedobyo sub-sectiono(4)oofoSectiono3.oInoitsoplace,otheopowerohasobeeno giveno too theo Managingo Directoro undero Sectiono 3o (1)o (b)o too determineoaso too whato iso theoamountodueo fromo theodefaulter.o Thereo cano beo noo doubto thato anyo sucho determinationo byo theo ManagingoDirectorowilloresultoinociviloconsequencesoensuing.o Theodeterminationobeingofinaloandoconclusive,owouldohaveotheo resulto ofo theo passingo ofo ao finalo decree,o inasmucho aso theo defaultersofromowhomoanyoamountoisofoundotoobeodue,owouldo becomeo liableo too payo theo amounto soo determinedo ando theo CWP-25954-2015o(O&M).o o -8-o o 2023:PHHC:080187o Collectorowillohaveotheorightotoorecoverotheosameoasoarrearsoofo landorevenue.o

9.oInoouroopinion,oevenothoughoSectiono3odoesonotoexpresslyo provideoforoanoopportunityobeingogivenotootheoallegedodefaultero tooexplainoasotoowhetheroanyoamountoisodueooronotobutoinoviewo ofotheonatureoofotheosaidoprovision,otheoprinciplesoofonaturalo justiceomustobeoreadointooit.oTheorequirementoofodeterminationo ofotheosumodueobyotheoManagingoDirectoromustobeoregardedoaso providingo foro theo Managingo Directoro hearingo theo allegedo defaulterobeforeocomingotootheoconclusionoasotoowhatoisotheosumo due.o Theo veryo useo ofo theo wordso `determine'o ando `sumo due'o impliesothatothereomayobeoaolisobetweenotheopartiesoandotheyo haveotoobeoheardobeforeoaofinaloconclusionoisoarrivedoatobyotheo ManagingoDirector.oItoisonotoaomereoclaimoofotheoCorporationo whichoisoforwardedotootheoCollectorofororealisation,obutoitoisotheo `sumo due'o aso determinedo byo theo Managingo Directoro whicho aloneoisorecoverable.oAsoalreadyoobserved,othisodeterminationo cannotobeodoneowithoutonoticeotootheoallegedodefaulter."o o o Ao referenceo waso alsoo madeo too theo judgmento ofo theo Hon'bleo SupremeoCourtoinotheomatteroofoIqbaloNaseeroUsmanioVs.oCentraloBankoofo Indiaoandoothers,oreportedoaso2006o(2)oSCCo241,owhereinochallengeohado beenoraisedotootheoissuanceooforecoveryocertificateounderoSectiono3oofotheo UttaroPradeshoPublicoMoneyso(RecoveryoofoDues)oAct,o1972.oTheorelevanto extractoofotheosaidojudgmentoreadsothus:-oo "6.oThereoisonoodoubtothatotheofirstorespondentoisoaobankingo companyowithinotheomeaningoofoSectiono2(f)oofotheoAct.oSectiono 3(b)oofotheoActoprovidesothatowhereoanyopersonoisopartyo"tooanyo agreementorelatingotooaoloan,oadvanceoorograntogivenotoohimooro relatingotoocreditoinorespectoofoororelatingotoohire-purchaseoofo goodsosoldotoohim,obyoaobankingocompanyooroaoGovernmento CWP-25954-2015o(O&M).o o -9-o o 2023:PHHC:080187o company,o aso theo caseo mayo be,o undero ao State-sponsoredo scheme"oandosuchopersonomakesoanyodefaultoinotheorepaymento ofo theo loano oro advanceo oro anyo instalmento thereof,o ono ao certificateo aso too defaulto alongo witho ao requesto fromo theo concernedo companyo too theo Collector,o theo Collectoro shallo proceedotoorecoverotheoamountostatedothereinoasoarrearsoofolando revenue.o Whileo thereo iso noo doubto thato theo appellanto hado obtainedo ao loano fromo theo firsto respondent-bankingo companyo ando defaultedo ino repaymento thereofo thereo iso noo evidenceo too suggestothatotheoloanowasorelatingotoohire-purchaseoofogoodso soldotoohimounderoao"State-Sponsoredoscheme."oTheolearnedo Counseloforotheorespondentofranklyoconcededothatotheoloanowaso notounderoanyosucho"State-sponsoredoscheme."oInoouroview,otheo provisionso ofo theo Acto areo noto intendedo too supplanto theo machineryoforoexecutionoofoallodecreesounderotheoprovisionsoofo theo Codeo ofo Civilo Procedure.o Theyo cano onlyo beo utilisedo foro recoveryo ofo sumso dueo ino theo specialo caseso enumeratedo ino Sectiono3(1)oofotheoAct.o

7.o Uponoao perusaloofo theorecord,oando afterohearingo learnedo Counsel,oweoareonotosatisfiedothatotheocaseoofotheoappellantofallso withinotheoparametersoofoSectiono3oofotheoAct.oConsequently,o theo revenueo officerso haveo neithero theo authorityo too issueo anyo certificateofororecovery,onorotheopowerotootakeoanyostepsoforo recoveryoofotheodecretaloamount.oTheoHighoCourtoseemsotoohaveo beenoimpressedobyotheofactothatotheomoneyowasopublicomoney,o andothatoinoorderotooencourageodevelopmentoinotheocountry,o banksoareoprovidingoloanofacilitiesotoopersonsowhooareowillingo toopurchaseovehiclesoandofurtherothatoifosuchoaoloanoisotreatedo aso ao commercialo loan,o ito wouldobeo difficulto foro theo Banko too recoverotheosameobyofilingoaocivilosuit,owhichotakesoyearsoando yearsotoodecide.oAccordingotootheoHighoCourto"theomoneyoofotheo Bankoandofinancialoinstitutionsoisopublicomoney,owhichoshouldo beo ino circulation,o otherwiseo theo Banko ando depositorso willo suffer."o Weo areo afraido thato whileo thiso mayo beo veryo goodo CWP-25954-2015o(O&M).o o -10-o o 2023:PHHC:080187o sentiment,oitocannotoapplyoinotheofaceoofoSectiono3oofotheoActoforo theoreasonothatoSectiono3odoesonotoenvisageotheoprovisionsoofo theoActobeingoutilisedofororecoveryoofoeveryoloanotaken.oSectiono 3(1)(b)opermitsothisotoobeodoneoonlyoinorespectoofoloansotakeno underoao"State-sponsoredoscheme",owhichoexpressionohasobeeno definedoinoSectiono2(g)oofotheoAct.oSinceoitoisoadmittedothatotheo loanotakenobyotheoappellantowasonotounderooroinorelationotooao "State-sponsoredoScheme"owithinotheomeaningoofoSectiono2(g),o whatevero elseo ito mayo be,o ito wouldo noto beo recoverableo byo recourseotootheomachineryounderoSectiono3oofotheoAct."o o o AofurtheroreferenceowasomadeotootheojudgmentoofotheoAllahabado Higho Courtoinotheomatteroofo Shardao Devio ,o Smt.o Vs.o Stateo ofo U.P.o ando others,oreportedoaso2002oAIRo(Allahabad)o1.oTheorelevantoextractoofotheo saidojudgmentoreadsothus:-oo "19.o Ao readingo ofo sub-sectiono (1)o ofo S.o 3o wouldo showo thato clauseso (a),o (b)o ando (c)o relateo too differento typeso ofo loans,o advancesoorocredits.oClauseo(a)orelatesotooloans,oadvancesooro creditso giveno byo wayo ofo financialo assistance.o Financialo assistanceohasoaospecialomeaningoandohasobeenodefinedoinosub-sectiono (b)o ofo S.o 2.o Clauseo (c)o relateso too loanso raisedo byo industrialo concern.o Hereo againo 'industrialo concerno haso ao specialomeaningounderotheoActoandoitohasobeenodefinedoinosub-sectiono(d)oofoS.o2.oClauseo(b)orelatesotooloansooroadvancesooro creditso giveno byo ao bankingo companyo oro ao Governmento Company,o aso theo caseo mayo be,o undero ao Stateo Sponsoredo Scheme,owhichohasobeenodefinedoinosub-sectiono(g)oofoS.o2.oTheo wordsounderoaostateosponsoredoscheme"oareoconspicuousobyo theiro absenceo ino clauseso (a)o ando (c).o Theseo threeo clauseso namely,o(a),o(b)oando(c)oidentifyotheotypeoofoloans,oadvancesooro creditsoand,otherefore,otheyohaveobeenoseparatelyoprovided.oIfo theointentionoofotheoLegislatureowasothatoanyoloan,oadvanceooro credito giveno byo ao bankingo companyo whicho waso noto undero aoRAJ KUMAR ARORA CWP-25954-2015o(O&M).o o -11-o o 2023:PHHC:080187o Stateo sponsoredo schemeo couldo alsoo beo recoveredo undero theo provisionsoofotheoActoifoanoagreementohadobeenoexecutedobyotheo borrowerowithotheobank,oaoseparateoprovisionosimilarotooclauseo

(d)owouldohaveobeenoenacted.oItoisonoteworthyothatoanyomoney,o advanceo oro credito giveno byo theo Stateo Governmento oro ao corporationowhichoisonotoofotheotypeocoveredobyoclauseso(a),o(b)o ando(c)oviz.oitoisonotobyowayoofofinancialoassistanceoorounderoao StateoSponsoredoSchemeooroisoinorespectoofoaoloanoraisedobyoano industrialoconcern,ocannotobeorecoveredounderotheoprovisionso ofo theo Acto unlesso thereo iso ao specifico agreemento betweeno theo borroweroandotheoStateoGovernmentoorotheoCorporationotootheo effectothatoitoshallobeorecoverableoasoarrearsoofolandorevenue.o Clauseo (d)o whicho dealso witho sucho ao situationo clearlyo contemplatesoexistenceoofoanoagreementospecificallyoprovidingo fororecoveryoofotheoloanoasoarrearsoofolandorevenue.oThereforeo theocontentionothatoinoclauseo(b)oofosub-sectiono(1)oofoS.o3,otheo expressionounderoaoStateoSponsoredoScheme"odoonotoqualifyoao loan,oadvanceoorocreditogivenobyoaobankingocompanyocannotobeo accepted.oWithoprofoundorespectsoweoareounableotooacceptotheo viewotakenoinoKrishnaoRiceoMillso(supra),otootheoeffectothatotheo wordsotooanyoagreementorelatingotooaoloan,oadvanceoorogranto givenotoohim"oisoaoclauseosufficientotooincludeotheopetitionero and,otherefore,otheopropositiono'oroappearingothereafterocreateso anotherocontingencyowhichoiso'relatingotootheocreditoinorespecto of,o oro relatingo too hire-purchaseo ofo goodso soldo too himo byo ao bankingocompany.o.o.o.o.o.o.ounderoaoStateoSponsoredoScheme,o andotheosecondoclauseoisoindependentoofotheofirstoclause.oWhato isorelevantotoobeoseenohereoisowhetherotheoexpressionounderoao StateoSponsoredoScheme"owouldoalsooqualifyotheowordso'byoao bankingo companyo oro theyo qualifyo theo wordso 'governmento companyoalone.oTheoagreementomayorelateotooeiteitheroaoloano oroadvanceoorocreditoinorespectoofoororelatingotoohire-purchaseo ofo goodso sold.o Theo purposeo foro whicho theo moneyo iso giveno namely,oitoisoaoloanosimpliciterooroisorelatingotoohire-purchaseo ofogoodsosoldo toohimo iso noto ato allo relevantoforo decidingotheo CWP-25954-2015o(O&M).o o -12-o o 2023:PHHC:080187o controversy.oWhatoisodecisiveoisowhetherotheoloanooroadvanceo orocreditowasogivenounderoaoStateoSponsoredoScheme.oInoouro opinion,oclauseo(b)oappliesotooonlyosuchocategoriesoofoloansooro advanceso oro creditso whicho haveo beeno giveno undero ao Stateo SponsoredoSchemeobyoaobankingocompanyooroaoGovernmento companyo ando noto too allo kindso ofo loanso oro advances.o o

20.oInoaomatterorelatingotoorepaymentoofoloanobyoinstallmentso thereo canobeo ao seriouso andobonao fideodisputeoregardingo theo exactoamountowhichohasoaccruedoasointerestoandoalsooaboutotheo totalo amounto outstandingo againsto ao borrower.o Undero theo schemeoofotheoAct,opowerohasobeenoconferredouponotheobankotoo sendoaocertificateotootheoCollectoromentioningotheoamountodueo fromo ao borroweroando thereafterotheo amountoiso recoveredoaso arrearso ofo lando revenue.o Theo banko iso empoweredo too takeo ao unilateralodecisionoregardingotheoquantumoofotheoamountowhicho iso dueo fromo theo borrowero aso neithero ao noticeo noro ano opportunityoofohearingotootheoborroweroatotheotimeoofotakingoofo suchoaodecisionoisoprovidedounderotheoAct.oUnderosub-sectiono

(5)oofoS.o3,otheocertificateosentotootheoCollectoroisofinaloando cannoto beo questionedo ino anyo suito oro ino anyo referenceo too arbitrationoproceedings.oNoociviloCourtooroanyootheroauthorityo cano granto ano injunctiono ino respecto ofo anyo actiono takeno oro intendedotoobeotakenoinopursuanceoofoanyopoweroconferredobyo orounderotheoAct.oTheoonlyoremedyoavailableotootheopersonofromo whomo recoveryo iso soughto too beo madeo iso too payo theo amounto undero protest,o whereupono theo recoveryo proceedingo shallo beo stayedo ando thereaftero makeo ao referenceo undero oro otherwiseo enforceoanoarbitrationoagreementoinorespectoofoamountosoopaido orofileoaosuitoagainstotheoStateoGovernmentoinotheoCiviloCourto foro theo amounto soo paido whereo heo willo haveo ao righto too giveo evidenceoofotheoamount,oifoany,owhichoheoallegesotoobeodueofromo himo ino accordanceo S.o 287-A,o U.o P.o Zamindario ando Lando ReformsoAct.oFilingoofoaosuitofororecoveryoofotheoamountoaftero theomoneyohasoalreadyobeenopaidoisoratheroaoharshoremedyoforo CWP-25954-2015o(O&M).o o -13-o o 2023:PHHC:080187o ao borrowero whoo disputeso theo correctnesso ofo theo amounto mentionedo ino theo recoveryo certificate.o Thiso showso thato theo provisionso ofo theo Acto areo veryo stringent.o Theo Acto mayo beo constitutionallyovalidoasounderotheoStateoSponsoredoSchemeso credito iso convenientlyo availableotooweakero sectionoofo societyo withoutofurnishingocollateralosecurityoandoatoaorateoofointeresto whichoisolowerothanotheomarketorate,oandotheorepaymentohasotoo beomadeoinoeasyoinstallmentsooveroaolongoperiod.oTheomoneyso advancedobyotheoStateoGovernmentohaveogototoobeorecoveredo expeditiouslyosoothatofreshoadvancesomayobeomadeotoootherso whoohaveonotoyetoreceivedofinancialoassistanceoasopointedoouto inoDirectoroofoIndustriesov.oDeepoChand,oAIRo1980oSCo801.oButo theo Acto mayo ino ao giveno caseo causeo untoldo hardshipo ono theo borrowero aso theo banko iso empoweredo too takeo ao unilateralo decisionobyoitselforegardingotheoquantumoofotheoamountowhicho isodueofromoaoborrower.oInoviewoofotheseosalientofeaturesoofotheo Act,oitoisonecessaryotoogiveoitoaostrictomeaningoandoshouldobeo heldoapplicableoonlyotoothoseocasesowhichoclearlyoandosquarelyo fallowithinoitsoambit."o o oo o Ao referenceo waso alsoo madeo too theo judgmento ofo Hon'bleo Supremeo Courto ino theo mattero ofo B.O.I.o Financeo Ltd.o Etc.o Vs.o Theo Custodianoandoothers,oetc.oreportedoaso1997o(10)oSCCo488.oTheorelevanto extractoofotheosaidojudgmentoreadsoasounder:-oo o "40.oSectiono57oappliesotoocasesowhereotwoosetsoofopromisesoareo distinct.oWhenotheovoidopartoofoanoagreementocanobeoproperlyo separatedofromotheorest,otheolatterodoesonotobecomeoinvalid.oTheo ready-forwardotransactionoconsistsoofotwooparts.oInotheoreadyo legothereoisoaopurchaseoorosaleoofosecuritiesoatoaostatedopriceo whichoino executedoonopaymento ofo considerationoforotheo spoto deliveryo ofo theo securityo certificateso togethero witho transfero forms.oTheofulloandoabsoluteoownershipoofotheotitleoinosecuritieso vestso ino theo purchaser,o theo entireo propertyo ino theo securityo CWP-25954-2015o(O&M).o o -14-o o 2023:PHHC:080187o passingo immediatelyo upono sucho deliveryo ando payment.o Theo selleroisodivestedoofoallotheorights,otitleoandointerestsoinotheosaido securities.oTheoforwardolegoisotoobeoperformedoatoaolaterodateo ono theo statedo priceo beingo paid.o Theo securitieso areo too beo deliveredobackowhenotheotitleoinointerestothereinowouldopassotoo theo originalo seller.o Ito iso clearo thato sucho ao ready-o forwardo transactionoconsistsoofoaosetooforeciprocalopromises.oTheofirsto seto ofo promiseso wereo fullyo executed,o buto theo secondo seto remainedoexecutory.oSectiono57oofotheoContractoActowouldothuso beoattractedotootheopresentocase,otheoeffectoofowhichowouldobeo thato theo firsto seto ofo promiseso wouldo constituteo ao bindingo contractobutotheosecondoorotheoforwardolegowouldobeovoidoando unforceable.o Neithero theo objecto norotheoconsiderationoofotheo readyolegoisoillegal,ounlawfulooroprohibitedounderoSectiono23oofo theoContractoact.otheoforwardolegoisoneitherotheoconsiderationo norotheoobjectoforoenteringointootheoreadyoleg.oAtobestoitomayobeo thatotheoforwardolegoprovidedotheopartiesowithotheomotiveoforo enteringo intoo theo contracto buto thato wouldo noto affecto theo severabilityoofotheoforwardolegowhichoaloneoisodeclaredoillegalo underotheoSecuritiesoControloRegulationoAct."oo o o o LearnedoSeniorocounselofurtherorefersotootheojudgmentoinotheo matteroofoForeshoreoCo-operativeoHousingoSocietyoLimitedoVs.oPraveenoD.o Desaio(Dead)othroughoLRsoandoothers,oreportedoaso2015o(6)oSCCo412,otoo contendothatowhereoaoCourtohasonoojurisdiction,oitocannotobeoconferredoupono ito byo consento oro waivero ofo theo parties.o Relianceo waso alsoo placedo ono theo judgmento ino theo mattero ofo Nithinbhaio Saevatilalo Shaho ando anothero Vs.o ManubhaioManjibhaioPanchaloandoanother,oreportedoaso2011o(9)oSCCo638o toocorroborateotheoaforesaidoargumentoandotooemphasisothatonooamountoofo consentobyotheopartiesocanoconferojurisdictionowhereothereoexistsonone,oonoao CWP-25954-2015o(O&M).o o -15-o o 2023:PHHC:080187o Courtoofolawonorocanotheyodivestoaocourtoofojurisdictionowhichoitopossesseso underotheolaw.oo ARGUMENTSoBYoRESPONDENTo o Onotheootherohand,olearnedocounseloforotheorespondentoNo.1-PEDAo haso vehementlyo arguedo thato Tripartiteo Financialo Collaborationo Agreemento executedo betweeno theo partieso specificallyo provideo thato ino theo eventoofodefaultobyotheopromotersoinobuyingobackotheosharesoofoPEDA,oito shallo beo entitledo too recovero theo amounto payableo aso Governmento dues,o withouto prejudiceo too itso othero rightso undero theo agreement.o Heo furthero contendso thato theo respondent-Societyo waso onlyo ao Nodalo Agencyo foro investingo fundso ofo theo Stateo Governmento ando thato theo promoterso beingo boundotoobuyobackotheosaidoequity,ocommittedoaodefaultoinodoingoso.oTheo amounto ino questiono iso actuallyo ano advance/loano byo theo Governmento ando beingopublicomoneyoitocanorightlyorecoverotheosameobyotakingorecourseotootheo Actoofo1983.oo o Ito iso furthero contendedo thato similaro issueo hado earliero beeno examinedobyoaoCoordinateoBenchoofothisoCourtoinotheomatteroofoM/soRamao Petrochemicalo Limitedo ando otherso Vs.o Punjabo Stateo Industrialo Developmento Corporationo Limitedoando others,o CWPo No.12861o ofo2006o decidedo ono 27.11.2009,o whereino theo judgmentso reliedo upono byo theo petitionerso wereo consideredo byo thiso Courto undero ao similaro agreemento executedo betweeno theo petitionero thereino witho theo Punjabo Stateo Industrialo DevelopmentoCorporationoLimitedo(PSIDC).oTheorelevantoextractoofotheosaido judgmentoreadsothus:-o o "15.oMr.oRahuloSharma,olearnedocounseloforotheopetitionersohaso madeo theo followingo submissionso too attacko theo ordero datedo CWP-25954-2015o(O&M).o o -16-o o 2023:PHHC:080187o

31.5.2006o(P-9)oandotheoconsequentialorecoveryocertificateo(P-14)osentobyotheoPSIDCotootheoCollector,oSASoNagar,oMohali,otoo makeorecoveryoasoperotheoprovisionsoofoSectiono3oofotheo1983o Act.oo o

16.oMr.oSharmaohasofirstlyosubmittedothatotheoclaimomadeobyo PSIDCodoesonotofallowithinotheopurviewoofo1983oActoasonooloano orograntohasobeenosanctionedobyoitoinofavouroofotheopetitionero undero Stateo sponsoredo Scheme.o Accordingo too theo learnedo counselo ito iso onlyo theo loano advancedo fromo State-sponsoredo Schemeowhichoareocoveredobyotheo1983oActoandorecoveryoofo onlyosucholoanoamountocouldobeoeffectedobyoadoptingotheomodeo providedobyo1983oAct.oInosupportoofohisosubmissionolearnedo counselo haso placedo relianceo ono ao judgmento ofo Hon'bleo theo SupremeoCourtorenderedoinotheocaseoofoIqbaloNaseeroUsmaniov.o CentraloBankoofoIndia,o(2006)o2oSCCo241oandoarguedothatoino absenceo ofo evidenceo too suggesto thato theo loano waso advancedo underoaoState-sponsoredoSchemeoasorequiredobyoSectiono3,otheo 1983oActowouldonotoapplyoandotheoproceedingsoinitiatedothereino areowhollyowithoutojurisdiction.oMr.oSharmaohasoalsooplacedo relianceoonoaoFulloBenchojudgmentoofoAllahabadoHighoCourtoino theocaseoofoSmt.oShardaoDeviov.oStateoofoU.P.,oAIRo2002oAllo1o (F.B.),oandoarguedothatotheoU.P.oPublicoMoneyso(Recoveryoofo Dues)oAct,o1972o(forobrevity,o'theoU.P.oAct')oisopariomateriaotoo thatoofo1983oAct.oTheoquestionobyotheoFulloBenchoofoAllahabado Higho Courto waso decidedo whicho supporto theo claimo ofo theo petitioneroandoitowasoheldothatotheoloanoadvancedobyoaobankingo companyotooaoborrowerounderoState-sponsoredoSchemeoaloneo couldobeorecoveredobyotakingorecourseotooSectiono3oandonoto otherwise.oo o

17.oTheosecondosubmissionoofoMr.oSharmaoisothatoclauseo22oofo theo Financialo Collaborationo Agreemento (P-1),o whicho iso theo basiso ofo theo claimo madeo byo PSIDCo iso illegal,o voido and,o therefore,otheosameocannotobeoenforcedoinolaw.oAccordingotoo CWP-25954-2015o(O&M).o o -17-o o 2023:PHHC:080187o theolearnedocounsel,oclauseo22oofotheoFinancialoCollaborationo Agreemento iso noto ao spoto deliveryo contracto ando ito violateso Sectiono16oofotheoSecuritiesoContractso(Regulation)oAct,o1956.o Accordingotootheolearnedocounseloclauseo22oofotheoFinancialo Collaborationo Agreemento contemplateso theo purchaseo ofo securityo ato ao futureo dateo and,o therefore,o ito iso speculativeo ino nature.o Ino supporto ofo hiso submission,o learnedo counselo haso placedorelianceoonoaojudgmentoofoHon'bleotheoSupremeoCourto renderedoinotheocaseoofoB.O.I.oFinanceoLtd.ov.oTheoCustodian,o AIRo1997oSCo1952,oandoarguedothatoaocircularoissuedobyotheo Reserveo Banko ofo Indiao undero Sectiono 36(1)o prohibitso theo bankingo companyo fromo enteringo intoo buybacko transactionso whichoareonotomadeopublic.oTheyowereorequiredonototooentero intoo buybacko contractso whicho wereo noto accordingo too theo circular.o Heo haso theno placedo relianceo ono ao judgmento ofo CalcuttaoHighoCourtoinotheocaseoofoB.K.oHoldingso(P)oLtd.ov.o PremoChandoJuteoMills,o[1983]o53oCompanyoCaseso367,oando arguedothatotheoun-quotedosharesoofopublicolimitedocompanyo areoalsoomarketableosecuritiesoasothereoisoexpressoprohibitiono byo theo 1956o Act.o Anothero groundo ofo attacko raisedo byo Mr.o SharmaoisothatonooconsiderationohadoflownofromoPSIDCotootheo petitioners.oTheoFinancialoCollaborationoAgreemento(P1)oitselfo isovoidoasoperoprovisionsoofoSectiono25oofotheoContractoAct,o 1872o(forobrevity,o'theoContractoAct').oInothatoregardoheohaso placedorelianceoonotheojudgmentoofoHon'bleotheoSupremeoCourto inotheocaseoofoB.O.I.oFinanceoLtd.o(supra).o o o xxxo xxxo xxxo o o

23.oInotheobackgroundoofotheoaforesaidofactualoposition,oMr.o N.S.oBoparaiohasosubmittedothatotheoconstitutionalovalidityoofo theoU.P.oActohasobeenoupheldobyoHon'bleotheoSupremeoCourtoino theo caseo ofo Directoro ofo Industries,o U.P.o v.o Deepo Chando Aggarwal,o(1980)o2oSCCo332.oHeohasofurtheroclaimedothatotheo provisionsoofotheo1983oActoareopariomateriaotootheoU.P.oActo becauseobothotheoActsoaimedoatooneoobject,owhichoenableotheo CWP-25954-2015o(O&M).o o -18-o o 2023:PHHC:080187o Stateo Governmento ando theo Corporationo too recovero theo sumso advancedo aso arrearso ofo lando revenue.o Heo haso alsoo placedo relianceo ono twoo Divisiono Bencho judgmentso ofo thiso Courto renderedoinotheocasesoofoVivekoSarin'socaseo(supra)oandoVipino K.o Singlao v.o Haryanao Financialo Corporation,o2000o (1)o PLRo 303,owhereinotheoconstitutionalovalidityoofotheoHaryanaoActohaso beenoupheld.oLearnedocounselohasoalsooreliedouponoaoSingleo BenchojudgmentoofothisoCourtorenderedoinotheocaseoofoSwarajo Engineso Limitedo v.o Punjabo Stateo Industrialo Developmento Corporation,o 2008(1)o Bankers'o Journalo 390,o upholdingo theo constitutionalovalidityoofotheo1983oAct,owhichoinoturnoisobasedo onotheojudgmentoofoHon'bleotheoSupremeoCourtorenderedoino S.K.oBhargava'socaseo(supra).oTherefore,othereoisonoodoubtothato theoStateolegislatureoenjoysocompetenceotooenactosuchoActsoforo recoveryoofoitsodues.o xxxo xxxo xxxo o

26.oMr.oBoparaiothenoarguedothatotheoFinancialoCollaborationo Agreemento cannoto beo attackedo ono theo groundo ofo lacko ofo valuableoconsideration.oInothatoregardoheohasoplacedorelianceo onoSectiono2(d)oofotheoContractoAct,o1872,owhichoclearlyospellso outothatoanyopromiseomadeoorodoneooroabstainedofromodoingo wouldoalsoobeocalledo'consideration'oforosuchopromise.oo o

27.oReferringotootheoprinciplesoofomutuality,oMr.oBoparaiohaso arguedothatoitodoesonotolieoinotheomouthoofotheopetitionerotoo challengeoaopartoofotheoFinancialoCollaborationoAgreementoando acceptotheootheropartoasovalid.oAopartyotooaocontractocannoto accepto oro rejecto theo sameo transactiono byo keepingo theo advantageousounderoun-challengedopart.oInosuchoaosituationoao partyohasotooacceptotheootheropartoalso,onoomatterohowsoevero dis-advantageouso ito mayo be.o Ino theo sameo breath,o learnedo counselohasoexplainedoanotheroaspectobyoarguingothatonoopartyo couldorescindoaocontractoorotermoitoillegaloatoaomatureostageoato hiso convenience.o Ino supporto ofo theo aforesaido submission,o learnedo counselo haso placedo relianceo ono twoo judgmentso ofo CWP-25954-2015o(O&M).o o -19-o o 2023:PHHC:080187o Hon'bleotheoSupremeoCourtorenderedoinotheocasesoofoGangao RetreatoandoTowersoLtd.ov.oStateoofoRajasthan,o(2003)o12oSCCo 91o(paraso28otoo32)oandoNagubhaioAmmalov.oB.oShamaoRao,o AIRo1956oSCo593o(parao21).oAccordingotootheolearnedocounselo onceoaocontractostandoconcludedobetweenotheopartiesothenoito cannoto beo alteredo aftero enjoyingo advantageso fromo sucho ao contractoandochallengeotheosameotoobeoillegaloorovoid.o xxxo xxxo xxxo o

31.oKeepingoinoviewotheoaforesaidofacts,opleadingsoandorivalo contentionsoofotheoparties,oIofindothatotheofollowingosubstantiveo questionsoofolawowouldoariseoforodeterminationoinothisomatter:-oo "(A)oWhetherotheoadmittedooutstandingoduesoofoaofinancialo corporationocouldobeorecoveredobyoitounderoSectiono3oofotheo PunjaboPublicoMoneyso`o(RecoveryoofoDues)oAct,o1983?o xxxo xxxo xxxo o RE:oQUESTIONo(A):oo

33.oTheoPSIDCoisocoveredobyotheo1983oActoandoaonotificationo datedo18.9.1986otoothatoeffectowasoissuedounderoSectiono2(c)oofo theo1983oAct,owhichoisoMarko'A'.oTheoaforesaidonotificationo readsothus:-oo "No.o S.O.o 42/PA1/85/S.2/86.-o Ino pursuanceo ofo theo provisionsoofoclauseo(c)oofosectiono2oofotheoPunjaboPublico Moneyso(RecoveryoofoDues)oAct,o1983o(PunjaboActoNo.o1oofo 1985),otheoGovernoroofoPunjaboisopleasedotoospecifyotheo followingoCorporationsoforotheopurposesoofotheoabove-saido Act,onamely:-oo

1.o Theo Punjabo Stateo Industrialo Developmento CorporationoLimited.oo

2.otoo6.oxxxoxxxoxxx"oo o

34.oItoisopertinentotoonoticeothatotheoexpressiono'corporation'o usedo ino Sectiono 2(c)o ofo theo 1983o Acto meanso theo Punjabo FinancialoCorporationoestablishedounderotheoStateoFinancialo Corporationo Act,o 1951.o Ito includeso anyo othero corporationo ownedoorocontrolledobyotheoCentraloofoStateoGovernmentowhicho CWP-25954-2015o(O&M).o o -20-o o 2023:PHHC:080187o theoStateoGovernmentobyonotificationomayospecify.oAccordingly,o notificationo datedo 18.9.1986o (Marko 'A')o haso beeno issuedo stipulatingothatotheo1983oActowasoapplicableotooPSIDC.o xxxo xxxo xxxo o

36.oAocloseoanalysisoofoSectiono3owouldoshowothatoifoaopersonoiso aopartyotooanyoagreementoresultingotooaoloan,oadvanceoorogranto givenoororelatingotoocreditoororelatingotoohigheropurchaseoofo goodsosoldobyotheoStateoGovernment,oaobankingocompany,oao corporationo oro ao Governmento companyo undero ao State-sponsoredoSchemeothenotheorecoveryocouldobeoeffectedoundero theoprovisionsoofotheo1983oAct.oItoisoevidentothatoaopersonoiso requiredotoobeoaopartyotooanyoagreementorelatingotooaoloan,o advanceoorograntogivenobyotheoStateoGovernment,oaobankingo company,oaocorporationooroaoGovernmentocompany,owouldonoto necessarilyomeanothatoitohasotoobeoonlyounderoaoState-sponsoredo Scheme.o Theo expressiono 'State-sponsoredo Scheme'o haso beeno definedo byo clauseo (h)o ofo Sectiono 2o ofo theo 1983o too meano ao schemeosponsoredobyowayoofofinancialoassistanceobyotheoStateo Governmentounderowhichoitoadvancesomoneyotooaocorporationo oro ao Governmento companyo foro theo purposeso ofo disbursingo loans,oadvancesoorograntsooroforotheopurposeoofosaleoofogoodso onocreditoorohire-purchase.oSectiono2(h)oofotheo1983oActoreadso thus:-oo "2(h)o "State-sponsoredo scheme"o meanso ao schemeo sponsoredo byo wayo ofo financialo assistanceo byo theo Stateo Governmento undero whicho it-o (i)o advanceso moneyo too ao CorporationooroaoGovernmentoCompanyoforotheopurposeo ofodisbursingoloans,oadvancesoorograntsooroforotheopurposeo ofo saleo ofo goodso ono credito oro hireo purchase;o oro (ii)o guaranteeso oro agreeso too guaranteeo theo repaymento ofo ao loano advancedo orograntoorotheopaymentoofotheopriceoofo goodsosoldoonocreditoorohire-purchase."oo o

37.o Theo presento caseo involveso theo dueso ofo ao Governmento companyowhichohasoreceivedoalloitsofinancesofromotheoStateoando CWP-25954-2015o(O&M).o o -21-o o 2023:PHHC:080187o provisionsoofoSectiono3oofotheo1983oActocannotobeostretchedobyo interpretationotooconfineotheorecoveryobyowayoofoarrearsoofolando revenueoonlyoinorespectoofoState-sponsoredoSchemes.oSuchoano interpretationowouldodefeatotheoveryoobjectoofotheo1983oAct,o whichowasoenactedoforospeedyorecoveryoofotheoduesoofotheoStateo GovernmentoorotheoPunjaboFinancialoCorporationooroanyoothero CorporationolikeoPSIDC.o o

38.oTheomatteroisonotoresointegra.oHon'bleotheoSupremeoCourto inotheocaseoofoDeepoChandoAggarwalo(supra)ohasoconsideredo similaroprovisionsoofoU.P.oPublicoMoneyso(RecoveryoofoDues)o Act,o1965.oAnotherosimilaroprovisionoofotheoHaryanaoActocameo upoforoconsiderationoofoHon'bleotheoSupremeoCourtoinotheocaseo ofoS.K.oBhargvao(supra).oInobothotheoaforesaidocasesoitohasobeeno heldo thato theo dueso ofo ao corporationo couldo beo recoveredo aso arrearsoofolandorevenue.oAoDivisionoBenchoofothisoCourtohasotheo occasionotooconsiderotheoaforesaidoissueoinotheocaseoofoViveko Sarino(supra).oOneoofotheoquestionoraisedoinotheosaidocaseowaso whetherotheoprovisionsoofotheoHaryanaoActowereoultraovires.o TheoDivisionoBenchoheldothatobyovirtueoofoEntryo43oofoList-II,o theo Stateo legislatureo iso competento too legislateo ino respecto ofo publicodebtsoofotheoState.oTheoStateolawoisocalculatedotooensureo aoquickorecoveryoofopublicodues.oForotheoaforesaidopropositiono theoDivisionoBenchoplacedorelianceoonotheojudgmentoofoHon'bleo theoSupremeoCourtoinoDeepoChandoAggarwal'socaseo(supra).o SimilaroviewohasobeenotakenobyoaoDivisionoBenchoofothisoCourto inotheocaseoofoVipinoK.oSinglao(supra)oandobyoaolearnedoSingleo Judgeo ofo thiso Courto ino theo caseo ofo Swarajo Engineso Limitedo (supra).oo o

39.o Moreover,o theo petitionerso haveo agreedo byo executiono ofo FinancialoCollaborationoAgreemento(P-1)oandoSupplementaryo Agreemento (P-2)o thato theo 1983o Acto shallo beo applicable.o Ito cannoto nowo beoarguedobyo themothatosuchoano Acto wouldo noto apply.oItoisooneothingotoosayothatothereoisonooestoppeloagainstoao CWP-25954-2015o(O&M).o o -22-o o 2023:PHHC:080187o statuteobutoitoisoquiteoanotherothingothatotheopartiesobyomutualo agreemento mayo resolveo ao particularo modeo ofo paymento ando recoveryo whicho mighto haveo reflectionso ino ao statute.o Theo petitionersohavingoagreedotootheoaforesaidomodeocannotonowo wriggleooutoofotheocovenantsodulyosignedoandoaccepted.oTheo arrangemento madeo byo theo partieso byo signingo theo solemno covenantsocannotonowobeodefeatedobyoraisingoargumentsobasedo onotechnicalityoofoaostatute.oo o

40.o Theoargumento ofo theolearnedo counselo foro theopetitionerso basedoonotheojudgmentoofoHon'bleotheoSupremeoCourtoinoIqbalo Nassir'so caseo (supra)o iso whollyo misplaced.o Ino thato caseo theo CentraloBankoofoIndiaoafteroobtainingoaodecreeofromoaocivilo courto hado soughto itso executiono foro recoveryo ofo decreetalo amountoasoarrearsoofolandorevenue.oHon'bleotheoSupremeoCourto heldothatotheoprovisionsoofotheoU.P.oActowereonotointendedotoo supplantotheomachineryoforoexecutionoofoallodecreesounderotheo provisionsoofotheoCodeoofoCiviloProcedureoandowereoconfinedotoo specialocasesoenumeratedoinotheoAct.oTheoamountoofoloanowaso advancedobyotheoCentraloBankoofoIndiaoforotheopurchaseoofoao motherovehicleoandodecreeowasoobtainedoonoaccountoofodefaulto ino paymento ofo instalments.o Theo aforesaido judgmento haso noo applicationotootheofactsoofotheopresentocase.oTheoloansowhicho haveobeenoadvancedobyotheoPSIDCotootheopetitionersopartakeso theo charactero ofo Governmento dueso aso ito iso ao Governmento companyowhollyofinancedobyotheoState.oAlloitsofinancesohaveo beenocontributedobyotheoStateoGovernmentoasoisoevidentofromo theodataoprovidedobyoitoinoAnnexureoR-1.oTheobasicoreasonoforo excludingotheobankingocompanyolikeotheoCentraloBankoofoIndiao fromotheooperationoofoanyoStateolawolikeotheoU.P.oActowasothato theo lawo ino respecto ofo bankingo couldo beo framedo byo theo ParliamentoasoperoEntryo45oofoList-IoofotheoConstitution.oInotheo instantocaseoweoareonotodealingowithoaobankingocompany.oItoiso alsooworthwhileotoonoticeothatotheoCentraloBankoofoIndiaowaso noto engagedo ino theo implementationo ofo theo State-sponsoredo CWP-25954-2015o(O&M).o o -23-o o 2023:PHHC:080187o Scheme.oThereoareoschemesolikeoMarginaloMoneyoSchemeobyo theo Khadio Villageo ando Industrieso Commission,o whicho areo implementedo througho Cooperativeo Bankso oro theo Punjabo Nationalo Banko ofo othero bankingo companies.o Therefore,o theo argumentohasonoosubstanceoandoIohaveonoohesitationotoorejecto theosame.o xxxo xxxo xxxo o

43.oTheojudgmentoofoHon'bleotheoSupremeoCourtoinotheocaseoofo B.O.I.oFinanceoLtd.o(supra)oonowhichorelianceohasobeenoplacedo byoMr.oSharma,olearnedocounseloforotheopetitioner,owouldonoto beoattractedotootheofactsoofotheopresentocaseobecauseothatowasoao caseounderoSectiono16(1)oofotheo1956oActoandotheocontractoino thatocaseowasoheldotoobeounlawfuloasoitowasoinocontraventionoofo theoprovisionsoofoSectiono53oofotheoContractoAct.oLikewise,otheo FinancialoCollaborationoAgreementocannotobeoregardedoasoao contracto withouto 'consideration'o aso haso beeno soughto too beo urgedo byo theo learnedo counselo foro theo petitioner.o Heo citedo Sectiono25oofotheoContractoActotooargueothatoifoaocontractolackso 'valuableoconsideration'othenoasoperoSectiono25oitoisovoid.oSucho anoargumentolacksocompleteounderstandingoofotheoexpressiono 'consideration'oasodefinedoinoSectiono2(d)oofotheoContractoAct.o Theoaforesaidoprovisionoreadsothus:-oo o "2.oInterpretation-clause.oInothisoActotheofollowingowordso andoexpressionsoareousedoinotheofollowingosenses,ounlessoao contraryointentionoappearsofromotheocontext:-oo

(a)otoo(c)oxxxoxxxoxxxoo o

(d)oWhen,oatotheodesireoofotheopromisor,otheopromiseooroanyo othero persono haso doneo oro abstainedo fromo doing,o oro doesooroabstainsofromodoing,ooropromisesotoodooorotoo abstainofromodoing,osomething,osuchoactooroabstinenceo oropromiseoisocalledoaoconsiderationoforotheopromise;"oo o CWP-25954-2015o(O&M).o o -24-o o 2023:PHHC:080187o

44.oInotheopresentocase,otheoPSIDCohasoinvestedohugeosumoofo moneyowithotheoobjectoofopromotingoandoimprovingoindustrialo developmentoinotheoStateoofoPunjab,owhichoisooneoofotheoobjecto enumeratedoinotheoMemorandumoandoArticlesoofoAssociation.o Aparto fromo theo above,o Clauseo 22(a)o ofo theo Financialo CollaborationoAgreemento(P-1)ohasoincorporatedopromisesobyo theo petitionero too repayo theo amounto too theo PSIDC.o Theo arrangementooforepaymentoisothatotheofirstoinstalmentowouldobeo repaidowhenoperiodoofothreeoyearsowouldoexpireoafterotheodateo ofoproduction.oTheosecondoinstalmentowouldobecomeopayableo withinooneoyearoofotheoexpiryoofothreeoyears.oPetitioneroNo.o1o Ramao Petrochemicalo Companyo hado alsoo undertakeno too purchaseotheoequityoshareoholdingsotootheoextentoofotheoshareoofo theoPSIDCoinotwooequaloinstalmentsoonotheodateoofoexpiryoofo thirdoandofourthoyear.oTheoFinancialoCollaborationoAgreemento hasobeenofurtherosupplementedobyoSupplementaryoAgreemento executedo ono12.10.2000o (P-2).o Accordingo too clauseo8o ofo theo SupplementaryoAgreementoitohasobeenocategoricallyoprovidedo thatoinotheoeventoofofailureoofoRamaoPetrochemicaloCompanyotoo buyobackotheoequityoshareoholdingsoofotheoPSIDCothenoBLIPo andoTHIPoareotoobeojointlyoandoseverallyoresponsibleotoobuyo backo theo equityo shareholdingo ofo theo PSIDCo alongo witho theo Collaboratoroi.e.oRamaoCompanyoatotheosameopriceoandotermso &o conditionso aso mentionedo ino theo Financialo Collaborationo Agreemento datedo 18.3.1999o (P-1).o Therefore,o thereo iso noo questionoofolackingoofo'consideration'oasosoughtotoobeourgedobyo theolearnedocounseloforotheopetitioners.oItois,othus,oclearothatobyo virtueoofoclauseo22oofotheoFinancialoCollaborationoAgreement,o Ramao Companyo ando byo virtueo ofo Supplementaryo Agreemento BLIPoandoTHIPoalongowithoRamaoCompanyoareoliableotoobuyo backotheoequityoofoPSIDCoinvestedoinotheonewoventureoRamao Industry.oTheoaforesaidoamountobecameopayableoasoperotermso ofo clauseo 22(a)o ofo theo Financialo Collaborationo Agreemento supplementedo byo theo Supplementaryo Agreemento wheno theo periodo ofo threeo yearso expiredo fromo theo dateo ofo commercialo CWP-25954-2015o(O&M).o o -25-o o 2023:PHHC:080187o productiono byo theo company.o Theo undisputedo dateo ofo commercialoproductionoiso1.7.2001oandoaccordinglyotheoperiodo ofothreeoyearsoexpiredoono31.6.2004oandotheoamountoofofirsto installmento becameo payable.o Theo secondo installmento alsoo becameo payableo ono 30.6.2005o ando theo sameo iso recoverableo fromotheopetitioner.oInoparao10oofotheowrittenostatementofiledobyo theo PSIDCo ito haso beeno pointedo outo thato theo petitionero haso admittedotheoexistenceoofooutstandingoduesovideolettersodatedo

5.11.2004o ando 7.1.2005.o Thereo iso noo mentiono ofo anyo proceedingso undero SICAo Act.o Accordingly,o noo faulto cano beo foundoinotheoorderodatedo15.2.2006o(P-11)oando31.5.2006o(P-9)o ando consequentialo recoveryo certificateo datedo 14.6.2006o foro recoveryoofoRs.o441.96olacso(asoono31.3.2005).o xxxo xxxo xxxo o

46.o Theo aforesaido discussiono showso thato petitionero No.o 1o havingo agreedo too variouso termso ofo contracto iso makingo ano attemptotoowriggleooutoofoitobyoputtingoforwardooneoexcuseooro theo other.o Itoisowello settledo thato whenotwoopartiesoagreesotoo termsoofoaocontractothenoitoisonotoforotheocourtsotoointerpreto thoseocontractsounlessothereoisosomeoambiguity.oTheogeneralo principleo appearso too beo thato ino agreementso ando contractso concerningomercantileodealingsoanyooneowhoowantsotoomakeoao stipulationoinoderogationofromotheoordinaryolaworegulatingotheo rightso ofo theo partieso musto doo soo ino clearo ando unambiguouso terms.oTheseoprinciplesohaveobeenoechoedobyotheoConstitutiono BenchoofoHon'bleotheoSupremeoCourtoinotheocasesoofoCentralo BankoofoIndia,oLtd.,oAmritsarov.oTheoHartfordoFireoInsuranceo Co.oLtd.,oAIRo1965oSCo1288oandoGeneraloAssuranceoSocietyo Ltd.ov.oChandmulloJain,oAIRo1966oSCo1644.oTherefore,oitohasotoo beoheldothatoonceotheopartiesohaveoagreedotootermsoofocontracto howsoevero harsho theyo mayo be,o eveno ifo incorporatingo theo provisionsoofoaostatute,oitowouldonotobeoopenotoothemotooargueo thatotheoActowouldonotoapplyobecauseotheopartiesohadofreedomo toocontractoandoareosupposedotoobeoguidedobyoaosoundolegalo adviseoinothatoregard.oTheoFinancialoCollaborationoAgreemento CWP-25954-2015o(O&M).o o -26-o o 2023:PHHC:080187o (P-1oandoSupplementaryoAgreemento(P-2)oareonotothoseotypeoofo contractso whicho areo hito byo theo principleo ofo 'unconscionableo contracts'ooro'leaveoitoorosignoit'otypeoofocontracts.oTherefore,o theo partieso musto performo theo contracto ando cannoto avoido theo performanceo ofo theo sameo byo engagingo theo corporationo likeo PSIDCoinotheolitigation."o o o oo Relyingo ono theo above,o learnedo counselo foro theo respondentso contendsothatotheoissueoinoquestionohasoalreadyobeenoexaminedoandoaftero consideringotheojudgmentsoreliedobyotheopetitioner,othisoCourtohadocomeotoo theoconclusionothatotheoproceedingsofororecoveryoofotheoduesounderotheoActo ofo1983oinoagreementsorelatingotooequityobuyobackocouldobeodulyoinvoked.o HeofurtherocontendsothatotheoPEDAoisowhollyocontrolledoStateoentityoandotheo moneyoinoquestionoalsoobelongsotootheoStateoGovernment.oTheonecessaryo sanctionsoandoapprovalsoforoadvancingotheosaidomoneyowasoalsooaccordedobyo theoStateoGovernmentoandothatomerelyobecauseotheorespondentoNo.1-PEDAo actedo aso ano intermediary,o theo sameo wouldo noto altero theo natureo ofo theo investment.o Theo moneyo beingo ao publico dueo haso too beo recoveredo expeditiouslyoandothatoanyosuchoconcessionooughtonototoobeogivenotootheo petitionerso aso wouldo haveo ano impacto ofo givingo premiumo too theo violatoro himself.oo CONSIDERATIONSo o Iohaveoheardotheolearnedocounseloappearingoforotheorespectiveo partiesoandohaveoalsoogoneothroughotheodocumentsoappendedoalongowithotheo presentopetitionoasowelloasotheojudgmentsoreliedobyotheorespectiveopartieso extractedoabove.oo CWP-25954-2015o(O&M).o o -27-o o 2023:PHHC:080187o oo Theo Governmento ofo Punjabo hado notifiedo theo Punjabo Publico Moneyso(RecoveryoofoDues)oAct,o1983otooprovideoforospeedyorecoveryoofo certainoduesoofotheoStateoGovernmentoorotheoPunjaboFinancialoCorporationooro anyootheroCorporationonoticedobyotheoStateoGovernmentoinothisobehalfooroao GovernmentoCompanyooroaobankingoCompany.oTheorelevantoclausesoofotheo aforesaidoActoofo1983oreadsothus:-oo

2.o (c)o "Corporation"o meanso theo Punjabo Financialo Corporationo establishedounderotheo Stateo Financialo CorporationsoAct,o1951oando includesoanyootherocorporationoownedoorocontrolledobyotheoCentralo GovernmentoorotheoStateoGovernmentowhichotheoStateoGovernmento may,obyonotificationospecify;o xxxo xxxo xxxo

(e)o "Governmento Company"o meanso ao Governmento companyo aso definedoinoSectiono617oofotheoCompanies,oAct,o1956;o o o o xxxo xxxo xxxo

(h)o"StateoSponsoredoscheme"omeansoaoschemeosponsoredobyowayoofo financialoassistanceobyotheoStateoGovernmentounderowhichoit—oo xxxo xxxo xxxo

(i)oadvancesomoneyotooaoCorporationooroaoGovernmentoCompanyo forotheopurposeoofodisbursingoloans,oadvancesoorograntsooroforo theopurposeoofosaleoofogoodsoonocreditoorohire-purchase,ooroo o

(ii)oguaranteesooroagreesotooguaranteeotheorepaymentoofoaoloano advanceoorograntoorotheopaymentoofotheopriceoofogoodsosoldoono creditoorohire-purchase.oo o o xxxo xxxo xxxo o

3.o Recoveryo ofo certaino aso arrearso ofo lando revenueo (1)o whereo anyo personsoisoaoparty-oo o

(a)otooanyoagreement,orelatingotooaoloan,oadvanceoorograntogiven,ooro relatingotoocreditoinorespectoofoororelatingotoohire-purchaseoofogoodso byo theo Government,o ao bankingo company,o ao Corporationo oro ao CWP-25954-2015o(O&M).o o -28-o o 2023:PHHC:080187o GovernmentoCompany,oasotheocaseomayobe,ounderoaoStateosponsoredo scheme;ooroo o

(b)o too anyo agreemento relatingo too ao guaranteeo giveno byo theo Stateo Government,oaoBankingoCompany,oaoCorporation,ooroaoGovernmento CompanyoinorespectoofoaoloanoraisedobyoanoIndustrialoConcern;ooroo o

(c)otooanyoagreementoprovidingothatoanyomoneyopayableothereunderotoo theo Stateo Governmento shallo beo recoverableo aso ano arrearo ofo lando revenue;oandosuchoperson-oo o

(i)omakesoanyodefaultoinorepaymentoofotheoloanooroadvanceooroanyo installmentothereof;ooroo o

(ii)o havingo becomeo liableo undero theo conditionso ofo theo granto too refundotheograntooroanyoportionothereof,omakesoanyodefaultoinotheo refundoofosuchograntooroanyoportionothereof;ooroo o

(iii)ootherwiseofailsotoocomplyowithotheotermsoofotheoagreement;o thenoinotheocaseoofotheoStateoGovernmentosuchoofficeroasomayobeo authorizedoinothatobehalfobyotheoStateoGovernmentobyonotification,o ando ino theo caseo ofo ao bankingo company,o ao Corporationo oro ao Governmento Company,o theo Managingo Directoro thereof,o byo whatevero nameo calledo mayo sendo ao certificateo too theo Collectoro mentioningotheosumodueofromosuchopersonoandorequistingothatosucho sumotogetherowithocostsoofotheoproceedingsobeorecoveredoasoifoit,o whereoanoarrearoofolandorevenue.oo o

(2).oAocertificateosentounderosub-sectiono(1)oshallobeoconclusiveoproofo ofo theo mattero statedo thereino ando theo Collectoro ono receivingo sucho certificateo shallo proceedo too recovero theo amounto statedo thereino aso arrearoofolandorevenue.oo o

3.oWhereotheopropertyoofoaopersonoreferredotooinosub-sectiono(1)oiso subjecto too anyo mortgage,o charge/pledgeo oro othero encumbranceo ino CWP-25954-2015o(O&M).o o -29-o o 2023:PHHC:080187o favouroofotheoStateoGovernment,oaoBankingoCompanyoaoCorporationo oroaoGovernmentoCompany,oasotheocaseomayobe,othen-oo o

(a)oinoeveryocaseoofoaopledgeoofogoods,oproceedingsoshallofirstobeo takenoforotheosaleoofogoodsosoopledgedoandoifotheoproceedsoofosucho saleoareolessothanotheosumodue,othenoproceedingsoshallobeotakenoforo recoveroofotheobalance:oProvidedothatowhereotheoStateoGovernmento isoofoopinionothatoitoisonecessaryosootoodooforosafeguardingotheo recoveryoofotheosumodueotooit,oaoBankingocompany,oaoCorporationo oroaoGovernmentoCompany,oasotheocaseomayobe,oitomayofororeasono too beo recordedo ino writingo directo proceedingso too beo takeno foro recoveryo ofo theo sumo dueo beforeo oro ato theo sameo timeo aso theo proceedingsoareotakenoforosaleoofotheogoodsopledged;oo

(b)oInoeveryocaseoofoaomortgage,ochargeoorootheroencumbranceoono immovableoproperty,o sucho propertyoor,oaso theocaseo mayobeotheo interestothereinoofotheopersonoreferredotooinosub-sectiono(1)oshallo firstobeosoldoinoproceedingsofororecoveryoofotheosumodueofromothato persono ando anyo othero proceedingso mayo beo takeno onlyo ifo theo Collectorocertifiesothatothereoisonooprospectooforealisationoofotheo sumodueothroughotheofirstomentionedoprocessowithinoaoreasonableo time."ooo o CLAUSESoOFoTHEoAGREEMENToBETWEENoTHEoPARTIESo oo Additionally,o ito wouldo alsoo beo necessaryo too refero too certaino clauseso ofo theo Tripartiteo Financialo Collaborationo Agreemento datedo

28.03.2000oexecutedobetweenotheoparties.oTheorelevantoclausesoareoextractedo asounder:-o o th"ThisoAgreementoisomadeoatoChandigarhothiso28 odayoofoMarcho ino theo yearo Twoo Thousando BETWEENo theo Punjabo Energyo DevelopmentoAgency,oaosocietyoregisteredounderotheoprovisionso ofo Societieso Registrationo Act,o 1860,o havingo itso Registeredo OfficeoatoSCOo54-o56,oSectoro17-A,oChandigarhoactingothrougho CWP-25954-2015o(O&M).o o -30-o o 2023:PHHC:080187o Sh.o P.S.o Aujla,o IAS,o itso Chiefo Executiveo (hereinaftero calledo "PEDA",o whicho expressiono shall,o unlesso repugnanto too theo contexto oro meaningo thereof,o includeo theo saido PEDA,o itso successorsoandoagreedoassigns)oofotheoFIRSToPARTo o ANDo o RanaoSugarsoLimitedoaoCompanyopromotedobyoPunjaboAgroo IndustriesoCorporationo(PAIC)oandoM/s.oRanaoGurjeetoSingho andoAssociateso(hereinoafterocalledo"Theopromoters"oandotheo termo shallo includeo theiro successors,o legalo heirs,o executors,o representativesoandoagreedoassigns)oandoregisteredounderotheo CompaniesoAct,o1956ohavingoitsoregisteredoofficeoatoSCOoNo.o 49-50,oSectoro8-C,oMadhyaoMarg,oChandigarhoactingothrougho Sh.o Ranao Gurjeeto Singho itso Managingo Directoro (hereinaftero calledo"RSL",owhichoexpressionoshall,ounlessorepugnantotootheo contexto oro meaningo thereof,o includeo theo saido RSL,o itso heirs,o executors,orepresentativesoandoagreedoofotheoSECONDoPART.o o ANDo o Sh.oRanaoGurjeetoSinghosonoofoSh.oRanaoDaljitoSinghoResidento ofo53,oSectoro4,oChandigarhoandoSh.oRanaoRanjitoSinghosonoofo Sh.oRanaoDaljitoSinghoResidentoofo53,oSectoro4,oChandigarho andoSh.oRanaoMohinderjitoSinghosonoofosh.oRanaoDaljitoSingho Residentoofo50,oSectoro4,oChandigarhoandoSh.oRanaoHardeepo SinghosonoofoSh.oRanaoMohinderjitoSinghoResidentoofo50.oSectoro 4,o Chandigarh,o ando Mrso Rajbanso Kauro wifeo ofo Sh.o Ranao GurjeetoSinghoResidentoofo53,oSectoro4,oChandigarhoandoMrso B.K.o Nagrao wifeo ofo Sho H.S.Nagrao Residento ofo 53,o Sectoro 4o ChandigarhotheocoreopromotersoofoRanaoSugaroLimitedoactingo throughoSh.oRanaoGurjeetoSinghoandohereinoafterocalledotheo "PROMOTERS",owhichoexpressionoshall,o30nlessorepugnantotoo theocontextooromeaningothereof,oincludeotheiroheirs,oexecutors,o representative:oandoagreedoassigns)oofotheoTHIRDoPART.o CWP-25954-2015o(O&M).o o -31-o o 2023:PHHC:080187o o o o WHEREASoRSLohasoitsoexistingounitoatoVillageoButtaroSeviyan,o BabaoBakalaoTaluk,oDistrictoAmritsaro(Punjab)oandocurrentlyo producingoSugaroandobesidesogeneratingoenergyoforoitsoownouseo andoalsoosupplyingosurpluso4oMWotooPSEB.o o WHEREASo PEDAo iso theo nodalo agencyo ofo theo Punjabo Govt.o mainlyo establishedo foro promotiono ando developmento ofo non-conventionaloenergyoprojectsoandoprogrammesoinotheostateoofo Punjab.o ANDoo WHEREASoPEDAohasobeenograntedosanctionobyotheoStateogovt.o tooinvestofundsotootheotuneoofoRs.o255olacsoinotheoequityoofoRSLo forotheopurposeoofopromotingotheosettingoupoofoaobagasseobasedo co-generationo (demonstration)o Projecto ato Villageo Buttaro Seviyan,o Babao Bakalao Taluk,o Districto Amritsaro (Punjab)o too generateo10.2oMWoSurplusopowerotoobeofedointootheoGridoofo PSEBoatoSathialaoDistrictoAmritsaro(hereinafteroreferredotooaso "theoPROJECT").o o AndoWHEREASounderotheoSchemeoofotheoGovernmentoofoIndia,o MNESoofowhichosanctionoisogivenotheretoovideotheiroletterono.o 1/137/98-CPGodatedo28.9.99.o o o Nowothisodeedowitnessethoandoitoisoherebyoagreedoandodeclaredo byoandobetweenotheopartiesoheretooasounder:o-o o

1.k Theo"PEDA"oshalloparticipateoinotheoequ'tyoshareocapitaloofo theoRSLotootheoextentoofoRs.o2.55ocroreso@Rs.o25.00olacsopero MWoofosurplusopowerotoobeofedointootheoGridoEquityo investmentobyoPEDAoinotheoprojectoshallobeomadeoinodirecto CWP-25954-2015o(O&M).o o -32-o o 2023:PHHC:080187o proportionotootheoequityocontributionomadeobyotheopromoterso ofoRSUo o

2.k Theoequityocontributionoonotheoaccountoofopromoter'soshareotoo theoextentoofoRs.o711.50olacsoshallobeomadeobyotheoPROMTERSo ofoRSL.o o

3.k oTheopartiesoheretooagreeoandoundertakeotooacceptoandoabideobyo theoconditions,oifoany,othatohaveobeen/mayobeoimposedobyotheo CentraloGovernmentoasopartoofotheosanctionoletteroandobyotheo Centralo Financialo Institutionso and/oro Bank(s)o whileo providing/agreeingo too provideo Mediumo and/oro longo termo financeotootheoRSLoforotheoimplementationoofotheoPROJECToando suchoconditionsoshallobeodeemedotooformoarointegralopartoofothiso Agreemento ando shallo bindo theo partieso aso thougho hereino specificallyoembodied.o xxxo xxxo xxxo

8.o(a)oTheofreshoequityoofoStateoGovernmentotootheotuneoofoRs.o

2.55oCroresothroughoPEDAoshallobeoforoaoperiodoofo10o(Ten)o yearsofromotheodateoofoCommercialoproductionoandoshallonotobeo withdrawno beforeo theo stipulatedo periodo However,o theo promotersoshallohaveotheooptionowithotheoprioroconsentoofotheo Stateo Govt./PEDAo too retire/buyo theo saido equityo byo equalo installments/lumpo sumo aftero 5o yearso fromo theo dateo ofo commercialoproductionoandoforothisopurposeonooaccrualsofromo theoprojectoshallobeoutilized.oFurtherotheoPROMOTERSoofoRSLo contributingoRs.o711.50olacsoinotheoprojectothroughoequity,oshallo notosell/transferotheosameotillotheoexpiryoofo10oyearsofromotheo dateoofocommercialoproductionoand/orountilotheoequityoofoStateo governmentoPEDAoisofullyoretiredowhicheveroisolater.o o b)o Theo saleo priceo ofo sucho shareso shallo beo determinedo byo adoptingotheofollowingomethodsoandohigheropriceoarrivedoatobyo CWP-25954-2015o(O&M).o o -33-o o 2023:PHHC:080187o anyooneoofotheseomethod:oshallobeotakenoasotheofinalosaleopriceo ofotheoshares:o o

(i)k AnoamountoequivalentotootheoamountopaidobyotheoPEDAoforotheo acquisitionoofotheosaidosharesoplusotheosimpleorateoofointeresto equalotootheotermolendingorateoofotheoIDBIoasoapplicableoforoao givenoarea,ofromotheodateoofosubscriptionoofosharesobyoPEDAo forotheosharesoinoquestionotootheodateoofopaymentoofotheosaleo priceobyotheopromotersoofoRSLolessodividendoifoany,oreceivedobyo PEDAoinorespectoofotheosaidoshareoinotheointerveningoperiod.o o

(ii)k AsotheosharesoofoRSLoareolistedotheostockoexchangesoinoIndiao andotheomarketopriceothereofoisobeingoquoted,otheohighestopriceo ato whicho theo shareso wereo tradedo ato anyo oneo ofo thoseo stocko exchangesoduringoaoperiodoofothreeomonthsopriorotootheodateoofo exercisingo theo optiono ofo threeo monthso prioro too theo dateo ono whicho theo Promoterso ofo RSLo oughto toopurchase,o theoshares,o whicheveroisohigher.o o

(iii)k TheoPromotersoofoRSLowhileoexercisingotheooptionoshallodeposito 10opercentoofotheoofferoamountoalongowithotheoletteroexercisingo theooptionoandoshallocompleteotheobuyobackowithinooneomonthoofo theodateoofoexercisingotheooption.o c)oo InocaseotheopromotersoofoRSLoexerciseotheooptionoando deposito10opercentoofotheoofferoamount,othenoPEDAoshallobeo boundotoosellotheoequityotootheoPromotersoofoRSLoonly.o o d)ooo Theo saleo ando purchaseo ofo theo shares,o aso aforesaid,o paymento ofo priceo thereforo ando deliveryo ofo share-scriptso ando transferodeedorelativeothereto,oshallobeocompletedowithinooneo monthoofotheoexerciseobyotheoPEDAoofoitsorightotooselloitsoshareso inotheoRSLoand/orobyotheoRSLoofoitsorightotoobuyotheosaidoshareso CWP-25954-2015o(O&M).o o -34-o o 2023:PHHC:080187o

(e)o Withoutoprejudiceotootheoprovisionsoofoclauseo6(c)oabove,o theo PEDAo shallo also,o ino theo evento ofo theo RSLo failingo too purchaseotheoequityosharesoofotheoPEDA/StateoGovt.oinotheoRSLo asoprovidedoinoclauseoabove,obeoentitledotooselloitsosharesoinotheo RSLoatotheoriskoandocostoofotheoRSLoeitherobyopublicoauctionooro througho recognisedo shareo brokerso ofo theo Stocko Exchangeso whereotheosharesoareolistedobyoprivateonegotiations.o o

(f)o Ino theo evento theo saleo ando purchaseo ofo shareso iso noto completedoinotimeoasoprovidedoinoClauseo6(d)oabove,otheototalo priceo too beo paido byo theo RSLo foro theo purchaseo ofo shareso aso determinedoinotermsothereofoshallocarryofurtherosimpleointeresto @o 20%o pero annumo witho halfo yearlyo restso fromo theo dateo ono whichotheopriceowasopayableobyotheoRSLountilotheoactualodateoofo paymento o

(g)o TheoPROMOTERSoOFoRSLoshallobeoboundotoobuyotheo shareso ofo PEDAo aso pero theo termso ando conditionso ofo thiso agreementoafterotheoexpiryoofo10o(Ten)oyearsofromotheodateoofo commercialoproductionoandoRSLoguaranteesotheorepaymentoofo theo amounto ofo shareso subscribedo byo PEDAo alongwitho theo interestothereonocalculatedoatotheoratesomentionedounderoclauseo

(8)(b)(i)otooPEDAoandoinocaseotheosharesoareonotoboughtobacko byotheoPromotersowithinotheostipulatedoperiodothenoPEDAoshallo withoutoprejudiceotootheootherorightsounderothisoagreement,obeo entitledotoorecoverotheoamountopayableoasoGovernmentodues."o xxxo xxxo xxxo

17.oProjectocostoandomeansoofofinanceoasoapprovedobyoMNES,o GOIoisoasounder"-o o o o o o o o (Rs.oInoLakhs)o S.No.o SourceoofoFinanceoo Amountoo 1o Promoter'so(i.e.oM/soRSL'so)oEquityoo 711.50o 2o Capitalo subsidyo too beo providedo byo 430.04o theoMinistryo430.04o@Rs.o70.00opero CWP-25954-2015o(O&M).o o -35-o o 2023:PHHC:080187o MWoofosurplusopowerolimitedotooRs.o

600.00o lakhso minuso theo USAIDo grantoofoRs.o169.96olacs.o 3o Granto fromo theo Ministryo too theo 755.71o IREDAo@Rs.o130.00olacsoperoMWo ofosurplusopowerotoobeoprovidedoino turnobyotheoIREDAotooM/s.oRSLoasoao softoloan,otheorateoofointerestobeingo 9%operoannum,o 4o Granto fromo theo USAIDo undero theo 169.96o ABCocomponentoofotheoGEPoprojecto o 5o Fresho Equityo contributiono byo theo 255.00o Stateo governmento througho PEDAo @Rs.o25.00olacsoperoMWoofosurpluso powero 6o RevisedotermoloanofromotheoIREDAo 49.29o o TotaloProjectoCostoo 2371.50o o xxxo xxxo xxxo PERIODoOFoAGREEMENT:o

23.oSubjectotootheoprovisionsohereinocontained,othisoagreemento shallocontinueotooremainoinoforceoandooperationosoolongoasotheo PEDAoincludingoitsonomineesocontinuesotooholdoanyosharesoino RSLooroanyootheroamountoremainsotoobeopaidobyotheoPromoterso ofoRSL.o o ARBITRATION:o

24.oAllodifferencesoandodisputesobetweenotheopartiesoheretooono anyo clauseo oro mattero hereino containedo oro theiro respectiveo rights,oclaimsooroliabilitiesohereunderoorootherwise,ohowsoever,o inorelationotoooroarisingooutoofothisoagreement,oshallobeoreferredo tooarbitrationobyotwooarbitratorso(oneotoobeobyoeachoparty)owhoo shall,o beforeo proceedingso witho theo reference,o appointo ano UmpireoandosuchoarbitrationoshallobeogovernedobyotheoIndiano CWP-25954-2015o(O&M).o o -36-o o 2023:PHHC:080187o Arbitrationo&oConciliationoAct,o1996ooroanyomodificationooro re-enactmentothereofoforotheotimeobeingoinoforce.o o o o xxxo xxxo xxxo

27.oThisoAgreementoshalloonlyobeocancelled/rescindedobyoeithero ofotheopartiesotooitowhenotheosharesoofoPEDA/Stateogovt.oareo retired/PurchasedobyoRSLoasoperoprovisionsocontainedoinothiso agreement.o (Emphasisosupplied)o o oo Byo virtueo ofo theo Supplementaryo Agreement,o theo followingo amendmentso wereo incorporatedo ino theo Tripartiteo Financialo Collaborationo Agreement:-oo Clauseo Amendmentso No.o nd8(e)o (i)k Theowordo"RSL"oinotheo2 olineoshouldobeo replacedobyotheowordso"PROMOTERS"o th(ii)k Theo4 olineoshouldobeoamendedoasofollowso "itsosharesoinotheoRSLoatotheoriskoandocostoofo theoPROMOTERSoeitherobyopublicoauctiono or"ooo nd th8(f)o Theowordo"RSL"oinotheo2 olineoando5 olineoshouldobeo replacedobyotheowordso"PROMOTERS"o o 8(g)o (i)k InotheoFirstolineotheowordso"PROMOTERSo OFoRSL"oshouldobeoreplacedobyotheowordso 'PROMOTERS"ooo rd(ii)k Theowordso"RSL"oinotheo3 olineoshouldobeo replacedobyotheowordso"PROMOTERS"o th th th28o Theowordso"RSLoinotheo6 ,o8 olineoando11 olineoshouldo beoreplacedobyotheowordso"PROMOTERS"o st th30o Theowordso"RSL"oinotheo1 oolineoando5 olineoshouldobeo replacedobyotheowordso"PROMOTERS"oo o CWP-25954-2015o(O&M).o o -37-o o 2023:PHHC:080187o oo Theo primeo questiono whicho ariseso foro considerationo iso aso too whetherotheoamountoinvestedobyorespondentoNo.1-PEDAowhichoisoaoSociety,o couldoao"Governmentodue"oandorecoveryothereofocouldobeoeffectedounderotheo PunjaboPublicoMoneyso(RecoveryoofoDues)oAct,o1983.oo oo Theocontentionoofotheopetitionersoisothatotheoamountoinvestedotoo theo tuneo ofo Rs.255o Lakhso waso ano equityo contributiono byo theo Stateo Governmentoandothatotheosameocannotobeoconstruedoeitheroasoano'advance'ooro 'grants'o oro 'loan'o foro saleo ofo goodso ono credito oro hireo purchaseo oro ano agreementorelatingotooloan,oadvancesoofograntobyotheoStateoGovernment,oao Bankingo Company,o ao Corporationo oro ao Governmento Company.o Ito waso contendedothatorespondentoNo.1-PEDAodoesonotofallounderoeitheroofotheosaido categories.o Ito waso furthero contendedo thato Clauseo 3o (i)o (c)o referso too ano agreemento whereo theo moneyo iso dueo too theo Stateo Government.o Sinceo theo moneyorecoverableounderotheoagreementoinoquestionoisonotodueotootheoStateo GovernmentoandowasotoobeoreleasedotooPEDAoi.e.otheoSociety,otheoprovisionso ofotheoActoofo1983ocannotobeoinvokedoforoeffectingorecovery.oRespondentso may,o ifo soo advised,o takeo recourseo too theo ordinaryo remedies/procedureo availableo too ito undero theo commono lawo foro effectingo recoveryo ofo theo outstandingoamount.oo o Counselo foro theo petitionerso haso emphaticallyo arguedo thato Sectiono3o(1)o(a)oando(b)owouldonotobeoapplicableosinceotheoagreementodoeso noto relateo too loan,o advanceo oro granto byo theo Governmento oro itso Companies/Corporationo undero Stateo Sponsoredo Schemeo aso definedo undero Sectiono2o(h)oreadowithoSectiono2o(d)oofotheoActoofo1983.oArgumentoagainsto Sectiono3o(1)o(c)ohasobeenonoticedoabove.oo CWP-25954-2015o(O&M).o o -38-o o 2023:PHHC:080187o o ItoisoundisputedothatoPEDAoisoregisteredoasoaoSocietyoandoisonoto aoGovernmentoCompanyooroCorporationowithinotheomeaningoofotheoAct.ooooooo oo Itowouldothusoalsoobeonecessaryotooexamineotheostatusoofotheo Punjabo Energyo Developmento Agencyo ando too considero asotoo whethero anyo transactionoinitiatedobyotheoStateoGovernmentothroughotheoPunjaboEnergyo DevelopmentoAgencyohasotoobeoconstruedoasoanoindependentotransactionooro suchoaotransactionoisoprimarilyoaotransactionowithotheoGovernmentothrougho anoagent.oo oo Theo respondent-Punjabo Energyo Developmento Agencyo waso formedo ino Septembero 1991o aso ao Stateo Nodalo Agencyo foro promotiono ando developmento ofo Renewableo Energyo Programmes/Projectso ando Energyo ConservationoProjectsoinotheoStateoofoPunjaboasoperotheoinformationoavailableo onotheoofficialowebsiteoofotheosaidoAgency.oItoisoalsoostatedothereinothatoitoisoao registeredoSocietyounderotheoSocietiesoRegistrationoAct,o1860.oTheoprojectso areo providedo financialo ando fiscalo assistanceo byo respondento No.1-PEDAo underotheoNRSEoPolicyo2012oofotheoGovernmentoofoPunjab.oFurtherotheo PunjaboStateoElectricityoRegulatoryoCommissionohasoalsoodesignatedoPEDAo aso theo Nodalo Agencyo foro theo purposeso ofo theo RECo Regulationso ando monitoringo ofo Renewableo Purchaseo Obligationso (RPO)o ino theo Stateo ofo Punjab.oItoisoalsootheoStateoDesignatedoAgencyoforoEnergyoEfficiencyoando ConservationsounderotheoEnergyoConservationoAct,o2001obyotheoBureauoofo EnergyoEfficiency,oMinistryoofoPower.oTheolistoofoMembersoofoBoardoofo GovernorsoofotheoPEDAoisoasounder:-o 1o AdditionaloChiefoSecretary,o DepartmentoofoNewo&oRenewableoEnergyoSources,o PunjaboCiviloSecretariat-1,o o o Chandigarhoo o o CWP-25954-2015o(O&M).o o -39-o o 2023:PHHC:080187o 2o AdditionaloChiefoSecretary,o DepartmentoofoAgriculture,oo MinioSecretariat,oSectoro9,o Chandigarho o 3o FinancialoCommissioner,o DepartmentoofoRuraloDevelopmentoandoPanchayato VikasoBhawan,oSectoro62,oSASoNagaro(Mohali)o o 4o PrincipaloSecretary,o DepartmentoofoPlanning,oo SCOoNo.o70-72,oSectoro17,o Chandigarh.o o 5o PrincipaloSecretary,oDepartmentoofoPower,o MinioSecretariat,oSector-9,oo Chandigarh.o o 6o PrincipaloSecretary,oDepartmentoofoIndustries,o UdyogoBhawan,oSectoro17,o Chandigarh.o o 7o PrincipaloSecretary,oDepartmentoofoIrrigation,o IrrigationoBhawan,oSectoro18,oChandigarhoo o 8o ManagingoDirector,o PunjaboInfrastructureoDevelopmentoBoard,o SCO-89-90,oSector-34oA,oChandigarh.oo o 9o ChiefoExecutive,oo PunjaboEnergyoDevelopmentoAgency.o o 10o Chairman-cum-ManagingoDirector,oo PunjaboStateoPoweroCorporationoLimited,o TheoMall,oPatiala.o o oo Aoperusaloofotheoaforesaidoclearlyoshowsothatotheorespondent-PEDAo iso whollyo ownedo ando controlledo byo theo Stateo ofo Punjab.o Aso ano AgencyounderotheoDepartmentoofoNewoandoRenewableoEnergyoProjects,oito provideso financialo ando fiscalo assistanceo undero theo NRSEo Policyo ofo theo GovernmentoofoPunjab.oThusoevenotheofinancialodealingsoundertakenobyotheo AgencyoareoconductedobyorespondentoNo.1-PEDAoforoandoonobehalfoofotheo Governmento ofo Punjab,o througho theo concernedo Department.o Extendingo financialo oro fiscalo assistanceo foro implementingo theo projectso undero NRSEo CWP-25954-2015o(O&M).o o -40-o o 2023:PHHC:080187o Policyo ofotheo Governmento ofo Punjab,o theo actsoundertakenobyo respondento No.1-PEDAocannotobeoconstruedoasoitsoindependentoandoexclusiveoacts.oTheo actionsoareoprimarilyoundertakenobyotheorespondentoNo.1-PEDAoinoitsostatuso aso ano agento ofo theo Governmento ofo Punjab.o Ito createso ao bindingo ando enforceableo obligationo foro ando againsto theo Governmento ofo Punjab.o Consequently,otheoactivitiesoundertakenobyorespondentoNo.1-PEDAohaveotoo beoconstruedoasoactsoofotheoagentoforoandoonobehalfoofotheoPrincipaloandotheo RightsoofotheoPrincipalocannotobeooustedobyoallegingothatothereoisonooprivityo ofocontractobetweenotheoprincipaloandotheootherosignatory.oo oo Further,o ao perusalo ofo theo Tripartiteo Financialo Collaborationo AgreementoexecutedobetweenorespondentoNo.1-PEDAoandotheopetitionerso hereino specificallyo reciteso thato theo respondento No.1-PEDAo iso theo Nodalo AgencyoofotheoStateoofoPunjaboandothatoitohasobeenograntedosanctionobyotheo GovernmentoofoPunjabotooinvestofundsotootheotuneoofoRs.255olakhsoinotheo equityo foro theo purposeso ofo promotingo ando settingo upo ofo co-generationo projects.oItoisofurtheropointedooutothatotheoaboveosaidoprojectohasobeenogiveno sanctiono undero theo Schemeo ofo Governmento ofo Indiao video lettero datedo

28.09.1999oandowasobeingoexecutedoforotheoprofitableoimplementationoando operationoofotheoproject.oFurther,oevenoinoClauseo8o(a)oofotheoAgreement,oito wasostatedothatotheoequityotootheotuneoofoRs.255olakhsothroughoPEDAoisothato ofotheoStateoGovernmentoandothatotheosaleopriceoofotheoequityowasotoobeo determinedoafteroaoperiodoofo10oyearsobyoadoptingotheohigheropriceoarrivedoato byotheomethodogivenounderoClauseo8o(b).oFurther,oaoprohibitionowasoalsoo imposedoonotheopromotesoagainstosellingotheiroequityotillotheoequityoofoStateo Govt.oisofullyoretiredooroforoaoperiodoofo10oyears,owhicheveroisolater.oHence,oito wasospecificallyoknownotootheocontractingopartiesoandoespeciallyotheopartieso CWP-25954-2015o(O&M).o o -41-o o 2023:PHHC:080187o hereinothatotheoequityoinvestmentoisothatoofotheoStateoGovt.oandonotoofotheo Society.oItowasoalsoospecifiedothatotheosaleopriceoshallobeoassessedobyoeithero takingotheoamountsopaidoforotheoacquisitionoofosharesoplusotheosimpleorateoofo interestoequalotootheotermolendingorateoofoIDBIofromotheodateoofosubscriptiono ofotheosharesolessotheodividend,oifoany,oreceivedoinorespectoofotheosaidoshareso inotheointerveningoperiodoorotheoshareopriceoduringotheoperiodoofo03omonthso priorotooexercisingotheooption,owhicheveroisohigher.oItowasofurtheroprovidedo thatoinotheoeventoofotheopetitionersofailingotoopurchaseotheoequityoshares,otheo PEDA/StateoGovernmentowasoentitledotoosellotheosharesoatotheoriskoandocosto ofotheopetitionersoapartofromocreatingoaobindingoobligationoonotheopetitionerso toopurchaseosaidosharesoasoperotheotermsoandoconditionsoofotheoagreement.o Thereowasothusoaoguaranteeooforepaymentoofotheoamountoofotheosharesoalongo witho interesto ato pre-approvedo rateso witho ao specifico understandingo thato respondentoNo.1-PEDAoshallobeoentitledotoorecoverotheoamountopayableoaso Governmentodues.oo oo Theoaboveoclausesoclearlyoshowothatotheoinvestmentohadonoto onlyooriginatedofromotheoGovernmentobutowasoalsootoobeoreturnedotootheo Government.oTheoinvestmentostipulatedointerestoasoprescribedoorotheoshareo valueowhicheverowasohigher.oItowasoalsoostipulatedothatowhileocalculatingotheo valueo ono theo basiso ofo theo interest,o theo valueo ofo dividendo releasedo too theo Governmento shallo beo deducted.o Accordingly,o ito cannoto beo saido thato theo releaseoofofinancialoassistanceowasoinotheonatureoofoanoequityoinvestmento entailingotheorisk.oRather,otheoinvestmentostipulatedoaominimumoguaranteedo returnoequivalentotootheolandingointerestorateoofoIDBI.oTheodeductionoofotheo dividendofromotheopayableoamountotootheoStateoGovernment,oonomaturityoofo theolock-inoperiod,ofurtheroestablishesothatotheotransactionoinoquestionoisonoto CWP-25954-2015o(O&M).o o -42-o o 2023:PHHC:080187o justoanoinvestmentooptionoandoisoratheroinotheonatureoofoaoloanotransactionobyo theoGovernmentothroughoitsoAgency.oTheopetitionersocannot,oatothisostage,obeo permittedotoodisputeotheonatureoofotheotransaction.oo oo Theo Hon'bleo Supremeo Courto haso heldo ino theo mattero ofo Bangaloreo Electricityo o Supplyo Companyo Limitedo (BESCOM)o Vs.o E.S.o SolaroPoweroPrivateoLimitedoandoothers,oreportedoaso2021o(6)oSCCo718o thatowhileointerpretingoaocontract,otheoCourtomustoconsiderotheounderlyingo purposeo ando intento ofo contract.o Theo broado principleso ofointerpretationoofo contracto aso laido downo byo theo Hon'bleo Supremeo Courto ino theo aboveo saido judgmentoareoextractedoasounder:-o "16.oBeforeoembarkingoonotheoexerciseoofointerpretationoofotheo agreemento ito iso necessaryo too takeo stocko ofo theo well-o settledo canonso ofo constructiono ofo contracts.o Lordo Hoffmanno ino Investorso Compensationo Schemeo Limitedo vs.o Westo Bromwicho Buildingo Societyo summarizedo theo broado principleso ofo interpretationoofocontractoasofollows:o

(1)oInterpretationoisotheoascertainmentoofotheomeaningowhicho theodocumentowouldoconveyotooaoreasonableopersonohavingo allo theo backgroundo knowledgeo whicho wouldo reasonablyo haveobeenoavailableotootheopartiesoinotheosituationoinowhicho theyowereoatotheotimeoofotheocontract.o

(2)o Theo backgroundo waso famouslyo referredo too byo Lordo Wilberforceoasotheo"matrixoofofact,"obutothisophraseois,oifo anything,o ano understatedo descriptiono ofo whato theo backgroundomayoinclude.oSubjectotootheorequirementothatoito shouldohaveobeenoreasonablyoavailableotootheopartiesoandotoo theoexceptionotoobeomentionedonext,oitoincludesoabsolutelyo anythingowhichowouldohaveoaffectedotheowayoinowhichotheo languageoofotheodocumentowouldohaveobeenounderstoodobyoao CWP-25954-2015o(O&M).o o -43-o o 2023:PHHC:080187o

(3)oTheolawoexcludesofromotheoadmissibleobackgroundotheo previousonegotiationsoofotheopartiesoandotheirodeclarationso ofosubjectiveointent.oTheyoareoadmissibleoonlyoinoanoactiono fororectification.oTheolawomakesothisodistinctionofororeasonso ofo practicalo policyo and,o ino thiso respecto only,o legalo interpretationo differso fromo theo wayo weo wouldo interpreto utterancesoinoordinaryolife.oTheoboundariesoofothisoexceptiono areoinosomeorespectsounclear.oButothisoisonototheooccasionoono whichotooexploreothem.o

(4)oTheomeaningowhichoaodocumento(oroanyootheroutterance)o wouldoconveyotooaoreasonableomanoisonototheosameothingoaso theomeaningoofoitsowords.oTheomeaningoofowordsoisoaomattero ofodictionariesoandogrammars;otheomeaningoofotheodocumento isowhatotheopartiesousingothoseowordsoagainstotheorelevanto backgroundo wouldo reasonablyo haveo beeno understoodo too mean.o Theo backgroundo mayo noto merelyo enableo theo reasonableomanotoochooseobetweenotheopossibleomeaningsoofo wordso whicho areo ambiguouso buto eveno (aso occasionallyo happensoinoordinaryolife)otooconcludeothatotheopartiesomust,o forowhateveroreason,ohaveousedotheowrongowordsoorosyntax.o (See:o Mannaio Investmentso Coo Ltdo vo Eagleo Staro Lifeo AssuranceoCooLtdo[1997]o2oWLRo945.o

(5)oTheo"rule"othatowordsoshouldobeogivenotheiro"naturaloando ordinaryomeaning"oreflectsotheocommonosenseopropositionoo thato weo doo noto easilyo accepto thato peopleo haveo madeo linguistico mistakes,o particularlyo ino formalo documents.o Ono theootherohand,oifooneowouldoneverthelessoconcludeofromotheo backgroundothatosomethingomustohaveogoneowrongowithotheo language,otheolawodoesonotorequireojudgesotooattributeotootheo partiesoanointentionowhichotheyoplainlyocouldonotohaveohad.o LordoDiplockomadeothisopointomoreovigorouslyowhenoheosaido inoTheoAntaiosoCompaniaoNevieraoSAovoSalenoRederiernao ABo[1985]o1oACo191,o201:o CWP-25954-2015o(O&M).o o -44-o o 2023:PHHC:080187o "...oifodetailedosemanticoandosyntacticaloanalysisoofowordso ino ao commercialo contracto iso goingo too leado too ao conclusionothatofloutsobusinessocommonsense,oitomustobeo madeotooyieldotoobusinessocommonsense."o

17.o Theo dutyo ofo theo Courto iso noto too delveo deepo intoo theo intricaciesoofohumanomindotooexploreotheoundisclosedointention,o butoonlyotootakeotheomeaningoofowordsousedoi.e.otoosayoexpressedo intentionso(Smt.oKamlaoDevioVs.oSethoTakhatmaloandoanother).o InoseekingotooconstrueoaoclauseoinoaoContract,othereoisonooscopeo foroadoptingoeitheroaoliberalooroaonarrowoapproach,owhatevero thatomayomean.oTheoexerciseowhichohasotoobeoundertakenoisotoo determineowhatotheowordsousedomean.oItocanohappenothatoino doingo soo oneo iso driveno too theo conclusiono thato clauseo iso ambiguous,oandothato ito haso twoo possibleo meanings.o Inothoseo circumstances,otheoCourtohasotoopreferooneoaboveotheootheroino accordanceowithotheosettledoprinciples.oIfooneomeaningoisomoreo ino accordo witho whato theo Courto considerso too theo underlinedo purposeoandointentoofotheocontract,ooropartoofoit,othanotheoother,o theno theo courto willo chooseo formero oro rathero thano theo later.o AshvilleoInvestmentov.oElmeroContractors.oTheointentionoofotheo partiesomustobeounderstoodofromotheolanguageotheyohaveoused,o consideredoinotheolightoofotheosurroundingocircumstancesoando objectoofotheocontract.oBankoofoIndiaoandoanotheroVs.oK.oMohano Daso andoothers.o Everyo contracto iso too beo consideredo witho referenceo too itso objecto ando theo wholeo ofo itso termso ando accordinglyo theo wholeo contexto musto beo consideredo ino endeavoringotoocollectotheointentionoofotheoparties,oevenothougho theoimmediateoobjectoofoinquiryoisotheomeaningoofoanoisolatedo clause.oBiharoStateoElectricitiyoBoard,oPatnaoandoothersoVs.o M/soGreenoRubberoIndustriesoandoothersoreportedoaso(1990)o1o SCCo731."o o o o Ito iso thuso wello laido downo thato theo intento ofo theo partieso ando declarationocanobeodulyolookedointootooascertainotheounderstandingoofotheo CWP-25954-2015o(O&M).o o -45-o o 2023:PHHC:080187o partieso ato theo timeo ofo executiono ofo theo contract.o Theo purposeo behindo executionoofotheocontractoamongstotheopartiesoattainsoprimacy.oTheoCourtoiso noto requiredo too delveo deepo intoo theo intricacieso soo aso too variouso hypero technicalodimensionsowhichomayoneverohaveobeenomeantobyotheocontractingo parties.oo o Thereoisonoodefinitionoofo'loan';o'advance'ooro'grant',ounderotheo Actoofo1983.ooItowouldothusobeonecessaryotooassignomeaningotoothem.ooo Loano oo Theo meaningo ofo Loano haso beeno expressedo ino Chittyo ono Contracts,oVol.IIo30thoEdn.,op.909,oas:-ooo "Aocontractoofoloanoofomoneyoisoaocontactowherebyooneopersono lendso oro agreeso too lendo ao sumo ofo moneyo too another,o ino considerationoofoaopromiseoexpressooroimpliedotoorepayothato sumoonodemand,ooroatoaofixedoorodeterminableofutureotime,ooro conditionallyouponoanoeventowhichoisoboundotoohappen,owithooro withoutointerest."o oo oo TheoaboveosaidodefinitionohasoalsoobeenoreliedobyotheoHon'bleo SupremeoCourtoinotheomatteroofo"KeshavlaloKhemchandoandoSonsoPvt.o Ltd.oandoothersoVs.oUnionoofoIndiaoandoothers,"oWritoPetitiono(Civil)o No.901oofo2014,odecidedoono28.01.2015,owhereinounderoparagraphoNo.37,o theoHon'bleoSupremeoCourtohasoheldoasounder:-o "37.oTheoexpressiono'loan'ohasoaowell-osettledoconnotationoi.e.,o advancingo ofo moneyo byo oneo persono too anothero undero ano agreementobyowhichotheorecipientoofotheomoneyoagreesotoorepayo theoamountoonosuchoagreedotermsowithoregardotootheotimeoofo repaymentoandotheoliabilityotoopayointerest."o o Theootherowordsocommonlyomeanoasounder:-o CWP-25954-2015o(O&M).o o -46-o o 2023:PHHC:080187o Advanceo ndo Aso pero theo Lawo Lexiono Dictionary,o 2 o Edition,o 1977,o p-64o definesotheowordo'Advance'oasoo 1)k"aonounomeansothatoprecedes,osomethingopaidoinoadvance,o suchoasoaopaymentoofomoneyomadeobeforeoitoisodue;o 2)kTheowordoadvanceoconveysotheoideaoofofurnishing.otenderingo oroofferingoomethingowhichomayobeoreturnedoinotheosameo form.oAziroAhamedoKhanoAnharoHasan,oAIRo191oAllo469o 471o(UPoZamindarioDebtoReductionoActo(15oofo1953);o o 3)kTheoexpressionomeansosomethingodueotooaopersonobutowhicho isopaidotoohimoaheadoofotheotimeowhenoitoisodueotoobeopaid.o CommissioneroofoIncomeoTaxov.oEoSrinivasan,o(1963)o50o ITRo788.o797o(Mad).o(IncomeoTaxoAct,o1961,oS.o2(22);o o 4)kAdvancesoo-oMoneysopaidobeforeooroinoadvanceoofotheopropero timeoofopayment,omoneyoorocommoditiesofurnishedoonocredit,o moneyoadvancedotoobeorepaidoconditionallyo(Blacko42)."o o o Further,o ito waso heldo ino K.M.o Mohommedo Abdulo Kadiro Rowthero v.o S.o Muthicho Chettiar,o (1960)o 2o Mado LJo 13o ato 15o thato "advance"omeansoliterallyoaopaymentobeforehand;oinocertainocasesoitomayobeo aoloanobutoitocannotobeosaidothatoaosumopaidobyowayoofoadvanceoisonecessarilyo aoloan.o Granto ndoo AsoperotheoLawoLexionoDictionary,o2 oEdition,o1977,op-800otheo wordo"grants"ohasobeenodefinedoasounder:-o "Granto -o Ano operativeo wordo ofo conveyance,o particularlyo appropriateotoodeedsoofogrant,oproperlyosoocalled,obutousedoino otheroconveyancesoalso,osuchoasodeedsoofobargainoandosale,oando leases;oaogiftooroassignmentoofomoneyoetc.ooutoofoaofundo[S.o13,o CWP-25954-2015o(O&M).o o -47-o o 2023:PHHC:080187o IndustrialoDevelopmentoBankoofoIndiaoAct]oorotheothingograntedo orobestowedoorotoobestowobyoaoformaloact."oo o o o o ApartotherefromotheoUsuriousoLoansoAct,o1918oasoamendedoino theoyearo2018,odefinesoao"loanotoomeanoandoincludeoanyootherotransactiono whichois,oinotheoopinionoofotheoCourt,oinosubstanceoaoloan."oTherefore,oeacho ando everyo transactiono ando itso natureo iso openo too judicialo scrutinyo aso too whetherosuchoaotransactionoshouldobeoconstruedoasoaoloanooronot.oo o o Hence,o powero haso beeno vestedo ino theo Courto too undertakeo judicialoscrutinyoandoCourtomayodetermineowhetherotheotransactionoisoinotheo natureo ofo loano oro not.o Applyingo theo aboveo testo ando consideringo thato theo agreementostipulatedoreturnoalongowithominimumoagreedointeresto(beingotheo Benchmark)oandoreturnoonoequityotoobeoadjustedoinotheopayableoamount,otheo transactionoinoquestionocanosolelyobeoheldoasoao"loan"otransactionobetweeno theoGovernmentoandotheopetitionersothroughotheorespondentoNO.1-PEDA.o o o Admittedly,oitoisoalsooseenothatotheopartiesohadoagreedoundero Clauseo8o(g)othatoinotheoeventoofodefault,otheorespondentoshallobeoentitledotoo recovero theo amounto payableo aso Governmento dues.o Sucho ano agreemento amongstotheopartiesosealsotheoprocedureothatohadobeenoagreedoamongstothemo foro effectingo recoveryo ofo theo amount.o Ito haso beeno heldo byo theo Hon'bleo Supremeo Courto ino theo mattero ofo Shreejeeo Tracoo (I)o Pvt.o Limitedo Vs.o PaperlineoInternationaloInc.o,oArbitrationopetitionoNo.2oofo2002odecidedoono

17.12.2002,o thato theo partieso haveo theo freedomo too chooseo theo lawo whicho wouldogovernothem.oo oo oo Theoreadingoofotheoclauseo8o(g)oofotheoagreementoclearlyoshowso thatotheopartiesoagreedotoosubjectothemselvesotootheoprocedureoprescribedoino theo Acto ofo 1983o foro recoveryo ofo theo dueo amounto aso Governmento dues.o CWP-25954-2015o(O&M).o o -48-o o 2023:PHHC:080187o Havingo agreedo tootheo lawo toobeo enforcedo foro effectingo recoveryo ofo sucho amount,o ito wouldo noto beo openo too theo petitionerso too nowo contendo thato notwithstandingotheiroconsent,otheyoareonotosubjectedotootheoagreedomodeoofo recoveryoofotheomoneyoasoGovernmentoduesounderotheoprovisionsoofotheo PunjaboPublicoMoneyso(RecoveryoofoDues)oAct,o1983.oTheopetitionersothuso wouldobeoestoppedofromoraisingosuchoaopleaoatotheostageowhenotheoliabilityo becameodueoandotheyohadoalreadyoenjoyedotheomoneyoforoitsocompleteotenureo asoperotheoagreement.oTheopleaoofotheopetitionerothatoSectiono3oofotheoActoofo 1983ocannotobeoenforcedofororecoveryoofotheoamountoisothusorejected.oTheo transactionoisoessentiallyobetweenotheopetitionersoandotheoStateoGovernmento throughoitsoagentoPEDAoandotheoamountoinvestedoinoequityowasolargelyoao loano transactiono amongsto theo parties.o Theo caseo ino hando wouldo thuso beo coveredounderoSectiono3o(1)o(c)oofotheoActoofo1983oandotheorespondentso cannotobeoheldotoohaveoactedoillegallyoinoinvokingotheosaidoActoofo1983oforo recoveryoofotheoGovernmentodues.ooo o o Advertingo too theo contentiono ofo theo petitionerso thato claimo ino questionoisobarredobyolimitation,oaoperusaloofotheoagreementoshowsothatotheo sameowasoexecutedoono28.03.2000owithoaolock-inoperiodoofo10oyears.oTheo argumentoraisedobyotheopetitionersothatotheoprocessooforecoveryounderotheo Actoofo1983ohavingobeenoinitiatedothroughotheorecoveryocertificateoissuedoino theoyearo2015,oitowouldobeobarredobyolimitationowhichoiso03oyearsofromotheo dateowhenotheoamountofellodueoi.e.o27.03.2010.ooo o o oo TheosaidocontentionofailsotooimpressothisoCourtoforotheoreasonso thatotheoaforesaidoperiodoofo10oyearsowasoaolock-inoperiodowhereafterotheo petitionersowereoboundotoobuyobackotheosharesoatotheoratesoasomentionedo underoClauseo8o(b).oTheoPromoterowasohowever,ogivenoanooptionotoopurchaseo CWP-25954-2015o(O&M).o o -49-o o 2023:PHHC:080187o theosharesoafterotheoexpiryoofoaoperiodoofo05oyearsowithotheoprioroconsentoofo theoState/PEDA.oHence,otheosaidoclauseocannotobeointerpretedotoocontendo thatotheoobligationotoobuyobackowasoonlyoonoexpiryoofoaoperiodoofo10oyearso andonotoanytimeothereafter.oRather,oexpiryoofotheoperiodoofo10oyearsocreatesoao bindingo obligationo ono theo petitionerso too buyo backo theo saido shareso ato theo agreedoshareopriceoandoprocedureoprescribed.oo oo o IoamofurtherosupportedoinomyoaforesaidoviewobyoClauseo23oofo theo Saido agreementowhicho specifieso thato theo agreemento inoquestiono shallo remainoinoforceoandoinooperationosoolongoasotheorespondentocontinuesotooholdo anyosharesooroanyootheroamountoremainsotoobeopaidobyotheopromoters.oHence,o theoagreementoremainsooperativeotillopaymentoofotheosumodue.oConsequently,o theo limitationo haso too beo examinedo fromo theo dateo wheno theo demando ino questionowasoraisedoandonotoonotheoexpiryoofotheolock-inoperiodoofo10oyearso itself.oo o o TheodemandoinoquestionowasoraisedobyorespondentoNo.1-PEDAo videocommunicationoBearingoMemooNo.1224-30odatedo15.05.2013,oandoaso sucho theo proceedingso ino questiono cannoto beo saido too beo timeo barred.o Subsequento reminderso wereo alsoo sento byo theo respondentso ando ino itso communicationodatedo06.06.2014,orespondentoNo.1-PEDAohadospecificallyo statedothatotheoGovernmentowouldohaveonoooptionoleftobutotooreferotheocaseotoo theoGovernmentofororecoveryoofotheoamountoasoGovernmentoduesoasoperotheo provisionso ofo Clauseo 8o (g)o ofo theo Tripartiteo Financialo Collaborationo agreement.o Theo recoveryo officero waso thereaftero notifiedo byo theo State.o Ao certificateowasoissuedolateroonobyotheorecoveryoofficeroforotheoamountotoobeo realizedofromotheopetitioners.oTheoaboveosaidoorder,oevenothoughodoesonoto referotooanyoopportunityohavingobeenograntedotootheopetitionersotoorespondo CWP-25954-2015o(O&M).o o -50-o o 2023:PHHC:080187o quaotheoamountodue,ohowever,oitoisoevidentofromoaoperusaloofotheoavermentso containedoinotheopetitionothatotheyohaveonotodisputedotheosaidodetermination.o Petitionerso haveo failedo too refero too anyo materialo and/oro theo termso ofo theo TripartiteoFinancialoCollaborationoAgreementotooestablishothatotheorecoveryo certificateoissuedobyotheorecoveryoofficeroorotheoamountofoundodueowasonotoino consonanceowithotheotermsoandoconditionsoofotheoCollaborationoagreement.o ThereomayohaveobeenosomeoreasonsoforothisoCourtotooexamineotheoaboveosaido agreementoinocaseotheopetitionersowouldohaveobeenoableotoodemonstrateothato theoassessmentomadeobyotheorecoveryoofficerowasoimproperooroinoviolationoofo theocontractoexecutedobetweenotheoparties.oInotheoabsenceothereof,osettingo asideo ofo theo recoveryo certificateo merelyo foro ao technicalo complianceo ofo principleso ofo naturalo justiceo wouldo not,o ino myo opinion,o beo appropriateo consideringothatohugeosumsoofopublicoduesoareorecoverableoandofurtherothato theopresentopetitionohasoalsooremainedopendingoforonearlyo08oyears.oooo o oo ItoisowellosettledobyotheoHon'bleoSupremeoCourtoinotheomatteroofo "Natwaro Singho Vs.o DirectoroofoEnforcementoandoanother"oreportedoaso

(2010)o13oSCCo255.oTheorelevantoparagraphoNo.26oofotheosaidojudgmentoiso extractedohereinafterobelow:-oo o "26.oEvenoinotheoapplicationoofotheodoctrineoofofairoplayothereo musto beo realo flexibility.o Thereo musto alsoo haveo beeno causedo someorealoprejudiceotootheocomplainant;othereoisonoosuchothingo aso ao merelyo technicalo infringemento ofo naturalo justice.o Theo requirementso ofo naturalo justiceo musto dependo ono theo circumstancesoofotheocase,otheonatureoofotheoinquiry,otheoruleso undero whicho theo tribunalo iso acting,o theo subject-mattero too beo dealto witho ando soo forth.o Cano theo courtso supplemento theo statutoryoproceduresowithorequirementsooveroandoaboveothoseo specified?oInoorderotooensureoaofairohearing,ocourtsocanoinsisto CWP-25954-2015o(O&M).o o -51-o o 2023:PHHC:080187o andorequireoadditionalostepsoasolongoasosuchostepsowouldonoto frustrateotheoapparentopurposeoofotheolegislation."oo Emphasisosuppliedo o ooo Principlesoofonaturalojusticeoareonotojustoanoemptyoformality.o Thereohasotoobeoaorealoprejudiceooccasionedoasoaoresultoofonon-complianceotoo theoprinciplesoofonaturalojustice.oTheorecoveryoproceedingsoareonotorequiredo toobeosetotoonaughtoonlyoforoaomereotechnicalocomplianceoofoprinciplesoofo naturalojusticeoandoinotheoabsenceoofoanyomaterialobeforeotheoCourtotooeveno primaofacieosuspectothatotheocalculationomadeobyotheorecoveryoofficer.oTheo pleaoisoseeminglyointendedosolelyotoodelayorecoveryoofotheopublicomoneyoando henceocannotobeoaccepted.oo oo AowritoCourtoisoalsoorequiredotookeepoinomindoasotoowhetherotheo pleaoisobasedoonovalidoconsiderationsooroisoonlyoaomischievousowayotoodelayo theodischargeoofoaoliabilityoandotoocreateoanoimpedimentoinoanoexpeditiouso recoveryo ofo theo publico dues.o Theo objecto ofo theo partieso agreeingo too theo procedureoofoeffectingorecoveryoasoGovernmentoduesounderotheoActoofo1983o wasotooensureoanoexpeditiousorecoveryoofotheoGovernmentoduesoandopublico funds.oTheosaidoobjectocannotobeoallowedotoobeodefeatedoforoanoassumedoando unsubstantiatedoprejudice.o o o Forotheoforegoingoreasonsoandofindingonoomerits,otheopresento petitionoisodismissed.oo o o Nooorderoasotoocosts.oo o Juneo01,o2023o o o oooooooooo(VINODoS.oBHARDWAJ)o rajoarorao o o o oooooo o ooooooJUDGEo o o o Whetherospeaking/reasonedoo :oYes/Noo Whetheroreportableoo o :oYes/Noo