(1) In this petition under Articles 226 and 227 of the Constitution of India there is no dispute as to facts. The petitioner is displaced person. He had left property in West Punjab and in lieu thereof was entitled to compensation under the Displaced Persons (Compensation and Rehabilitation) Act. On the 7th of May, 1957, he incurred a loan of Rs. 25,000/- from the Industries Department Punjab. On the 20th of August, 1960, the Department issued a notice to the petitioner (copy Annexure 'B') demanding payment of the installments due. In case of default the department would proceed to recover the entire amount of the loan. The petitioner approached the Department with a request that a sum of RS. 25,419.70 was due to him as compensation from the Central Government under the Act and this amount be adjusted and whatever balance still remained due the petitioner would pay. The Punjab Government took the position that it was not concerned with this matter of adjustment and the petitioner was advised to approach the Central Government the Central Government which refused the petitioner's request. Hence the present petition.
(2) The contention of the learned counsel for the petitioner is that under the Act and the Rules framed thereunder the compensation has to be adjusted towards the loan due from the petitioners the loan being a 'public dues.' In section 2(d) of the Act 'public dues' has been defined as under:--
' 'public dues in relation to a displaced person includes--
(i)arrears of rent in respect of any properly allotted or leased to the displaced person by the Central Government or a State Government or the Custodian;
(ii)any amount recoverable whether in one lump sum or in installments from the displaced person account of loans granted to him by the Central Government or a State Government or the Rehabilitation Finance Administration constituted under the Rehabilitation Finance administration Act, 1948, (XII of 1948) and any interest on such loans;
(iii) the amount of purchase money or any part thereof and any interest on such amount or part remaining unpaid and recoverable from the displaced person on account of transfer to him of any property or interest therein by--
(a) the Central Government or
(b) any State Government; or
(c) any body corporate or other authority or person financed by the Central Government or a State Government and such dues have been declared by the Central Government by have been declared by the Central Government by notification in the Official Gazette to be public dues recoverable from the displaced person.'
The Rules under which the petitioner claims the adjustments are Rules 14 and 15 and these Rules are in these terms--
'14. Deduction of certain dues from the amount of compensation--The following dues shall be deducted from the amount of compensation in the order of priority mentioned below:
(ii) the amount if any referred to in clause (a) of Rule 13.
(iii) the amount if any referred to in clause (b) of Rule 13.
15. Determination of net compensation--After deducting the amount referred to in Rule 14 m the Regional Settlement Commissioner or a Settlement Officer. or an Assistant Settlement Officer having jurisdiction and duly authorised by the Regional Settlement Commissioner shall pass an order determination the net amount of compensation payable to the applicant in respect of his verified claim and shall prepare a summary in the form specified in Appendix VII (abstract of particulars).'
(3) It appears from the combined reading of these provisions that the contention of the petition that he is entitled tot he adjustment of his claim amounting to Rs. 25, 419. 70 towards the loan is correct. Rule 14 makes it incumbent on the Government before determining the net amount of compensation to deduct 'public dues' due form the claimant, The deduct 'public dues' due from the claimant. The short question that arises for determination therefore is whether the loan of Rs. 25,000/- was a 'public dues' and should have been adjusted when the final certificate as to compensation was given to the petitioner on the 28th of February, 1959. This is a date on which both the parties were agreed. The loan was incurred before this date. The learned Advocate General's contention is that as the amount could not be demanded by the Punjab State inasmuch case the installment had not fallen due the amount cannot be said to be recoverable within the meaning of the definition in section 2(d)(ii).
I am, however, unable to agree with this contention. The moment a loan is incurred the relationship between the lender and the borrower is that of creditor and debtor. From the date of the loan so far as the creditor is concerned that the amount is due and is recoverable. The mere fact that its recovery is postponed does not in any manner detract from the fact that it is recoverable. In a contract of loan recoverability is inherent/ Otherwise it is not a contract of loan. Moreover the scheme of Chapter IV of the Displaced Persons (Compensation and Rehabilitation) Rules 1955 puts the recovery of 'public dues' on a priority basis. The object is that all 'public dues' or in other words loans advanced by persons should be adjusted before compensation is very purpose of the Rules. I am therefore clearly of the view that the Central Government was in error in not acceding to the request of the petitioner for adjustment of the loan due from him to the industries Department Punjab towards the amount of compensation payable to him.
(4) For the reasons given above I allow this petition and direct the Central Government to adjust this loan towards the petitioner's claim. If the petitioners has paid anything towards this loan he will be afforded credit to that extend. There will be no order as to costs in this petition.
(5) Petition allowed.