Central recovery law overrides State recovery mode for higher-value bank debts, and guarantors remain liable under the later statute.

Central law prevails over a State law where inconsistency persists between enactments under the Seventh Schedule, subject to harmonious construction. The UP Public Moneys (Recovery of Dues) Act, 1972 was not rendered void by insertion of section 32G in the State Financial Corporation Act, 1951 because both recovery modes could operate independently. Guarantors fall within the broad definition of debt under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, so recovery can proceed against them. Where the debt exceeds the statutory threshold, recovery under the 1972 Act is barred and proceedings must be taken under the 1993 Act.

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Issues: (i) Whether a Central Act prevails over a State Act in case of inconsistency between laws made under List I and List II of the Seventh Schedule; (ii) whether the UP Public Moneys (Recovery of Dues) Act, 1972 became void or inoperative after insertion of section 32G in the State Financial Corporation Act, 1951; (iii) whether guarantors are covered by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993; and (iv) whether recovery under the UP Public Moneys (Recovery of Dues) Act, 1972 is barred where the debt exceeds Rs. 10 lakhs.

Issue (i): Whether a Central Act prevails over a State Act in case of inconsistency between laws made under List I and List II of the Seventh Schedule.

Analysis: Articles 246(1), 246(2) and 246(3) place the legislative field under the Seventh Schedule in a hierarchical structure, with Parliament having exclusive power over List I and State legislatures acting subject to that power. The scheme of Article 246 shows that when there is conflict between a law made by Parliament under List I and a law made by the State under List II, the Central law occupies the superior field. The principle of harmonious construction remains applicable, but where repugnancy or inconsistency persists, the Central law prevails.

Conclusion: The Central Act prevails over the State Act in case of inconsistency.

Issue (ii): Whether the UP Public Moneys (Recovery of Dues) Act, 1972 became void or inoperative after insertion of section 32G in the State Financial Corporation Act, 1951.

Analysis: Section 32G of the State Financial Corporation Act, 1951 was inserted later and expressly states that the recovery procedure is without prejudice to any other mode of recovery. The UP Public Moneys (Recovery of Dues) Act, 1972 also provides an independent mode of recovery. Since section 32G does not exclude or contradict that statutory mode, there is no repugnancy or inconsistency between the two enactments.

Conclusion: The UP Public Moneys (Recovery of Dues) Act, 1972 is not void or inoperative on account of section 32G of the State Financial Corporation Act, 1951.

Issue (iii): Whether guarantors are covered by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis: The definition of "debt" under section 2(g) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is broad enough to include a liability due from any person to a bank or financial institution, whether secured or unsecured and whether payable under a mortgage or otherwise. A guarantor's liability arises in the course of the lending transaction and is a legally recoverable liability. Excluding guarantors would fragment recovery proceedings and defeat the object of the statute.

Conclusion: Guarantors are covered by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and recovery can be initiated against them under that Act.

Issue (iv): Whether recovery under the UP Public Moneys (Recovery of Dues) Act, 1972 is barred where the debt exceeds Rs. 10 lakhs.

Analysis: The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 applies to debts exceeding the statutory threshold and has an overriding effect under section 34. Its saving clause does not preserve the UP Public Moneys (Recovery of Dues) Act, 1972. In view of the statutory override and the Supreme Court authority relied upon, recovery proceedings against both the principal borrower and the guarantor cannot proceed under the 1972 Act for debts above the threshold; the proper remedy lies under the 1993 Act.

Conclusion: Recovery proceedings under the UP Public Moneys (Recovery of Dues) Act, 1972 are barred where the debt exceeds Rs. 10 lakhs.

Final Conclusion: The writ petition succeeds, and the impugned recovery proceedings under the 1972 Act are quashed, leaving the respondents at liberty to proceed under the appropriate law.

Ratio Decidendi: Where a later special recovery statute with overriding effect governs debts above the prescribed threshold, the earlier State recovery mechanism cannot be used for such recovery, and guarantor liability can also be enforced under the later statute.

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