State bank dues as public demand upheld where written loan terms and State ownership supported Government recovery rights.

State-owned banking dues were treated as Government recoverable debts because the Jhalawar State Bank was found to be an asset of the former State and its dues vested in Rajasthan. Notifications transferring State banks to Bank of Rajasthan Ltd. were construed as authorising recovery on behalf of the Government, not as divesting Rajasthan of its right to recover the dues. Loan applications and receipts together satisfied the requirement of a written agreement, so the claims constituted public demand. The certificate was not invalid for omitting the period, and the special recovery mechanism was upheld as a valid classification under Article 14.

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Issues: (i) whether the Jhalawar State Bank was an asset of the former Jhalawar State and whether its dues vested in the State of Rajasthan; (ii) whether the notifications transferring the State banks to the Bank of Rajasthan Ltd. divested the Government of Rajasthan of the right to recover the dues; (iii) whether the loan amounts were payable under a written instrument or agreement so as to constitute a public demand; (iv) whether omission to specify the period in the certificate under the Act rendered the proceedings invalid; and (v) whether the Act offended Article 14 of the Constitution of India.

Issue (i): whether the Jhalawar State Bank was an asset of the former Jhalawar State and whether its dues vested in the State of Rajasthan.

Analysis: The Bank was established and funded from State resources, its management remained under the Ruler's control, and the surrounding circumstances showed that it was treated as a State undertaking rather than an independent entity. On the merger of the covenanting States, the assets of the former State vested in the United State of Rajasthan and later in the State of Rajasthan.

Conclusion: The Bank was an asset of the former Jhalawar State and its dues vested in the State of Rajasthan.

Issue (ii): whether the notifications transferring the State banks to the Bank of Rajasthan Ltd. divested the Government of Rajasthan of the right to recover the dues.

Analysis: The first notification authorised the Bank of Rajasthan Ltd. to recover the dues on behalf of the State and expressly preserved the Government's right to recover State debts. The later notification only reiterated the merger of the banks and did not effect any specific transfer of the debts or extinguish the Government's right of recovery.

Conclusion: The notifications did not transfer the dues to the Bank of Rajasthan Ltd. in its own right, and the amounts remained recoverable by the Government of Rajasthan.

Issue (iii): whether the loan amounts were payable under a written instrument or agreement so as to constitute a public demand.

Analysis: The borrowers' applications and the corresponding receipts contained the terms of borrowing, the promise to repay with interest, and the security for repayment. Read together, they constituted the written agreement governing the liability, and the Act did not require a single document.

Conclusion: The amounts were payable under written instruments or agreements and fell within the definition of public demand.

Issue (iv): whether omission to specify the period in the certificate under the Act rendered the proceedings invalid.

Analysis: The prescribed requirement as to the period is relevant to recurring demands such as revenue or rent, not to loans which do not arise for a specified period. The absence of that entry therefore did not constitute a defect affecting the certificate.

Conclusion: The certificate was not invalid on that ground.

Issue (v): whether the Act offended Article 14 of the Constitution of India.

Analysis: State dues form a distinct class, and a special procedure for their recovery is a permissible legislative classification. No hostile discrimination was established in the treatment of Government dues as compared with other banking debts.

Conclusion: The Act did not violate Article 14.

Final Conclusion: The demand was held to be legally recoverable as a public demand under the Act, and the challenge to the recovery proceedings failed on all grounds.

Ratio Decidendi: Debts of a State-owned banking undertaking remain recoverable as Government dues where the State retains ownership or beneficial control, and a statutory recovery mechanism for such dues is a valid classification when the liability is founded on a written agreement.

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