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A. Laxmipathi S/o Late Sri A. Venkateswara Rao and S. Satyanarayana S/o Late Sri S.S. Naidu Versus Andhra Pradesh State Financial Corporation Ltd

2008 (9) TMI 993 - ANDHRA PRADESH HIGH COURT

Writ Petition No. 25315 of 2005 - Dated:- 16-9-2008 - V.V.S. Rao, J. For Appellant: V. Hari Haran, Adv. For Respondents: J. Parthasarthy, Adv. ORDER V.V.S. Rao, 1. These two writ petitions can be disposed of by a common order as they came to be filed with a similar factual background and raise similar questions for consideration. In 1988 Andhra Pradesh State Financial Corporation Limited (SFC) sanctioned term loan and soft loan in a sum of ₹ 11,60,000/- to M/s. Nagarjuna Cable Industries P .....

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r in W.P. No. 26014 of 2005 informing that an amount of ₹ 87.20 lakhs is due from the borrower. The petitioners were asked to pay the said amount failing which action under the Andhra Pradesh Revenue Recovery Act, 1864 (RR Act, for brevity) would be initiated against them. Aggrieved by the said notice/letter these writ petitions are filed. The petitioners seek a direction to respondents to forbear from enforcing the debt of the borrower against them. 2. The Branch Manager of SFC, Ranga Red .....

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n 29 of the Act, the Unit was sold in auction to M/s. S.S. Industries. Unit was duly handed over on 11.01.1995. Even after realizing the sale proceeds the debt could not be discharged. Therefore, SFC made efforts to locate petitioners for recovering balance dues payable by petitioners. They failed to respond to the notices issued by the Corporation, and therefore, SFC initiated action by resorting to the provisions of the RR Act. 3. The main contention of the petitioners' Counsel is that in .....

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ing to the learned Counsel on 05.10.1999 SFC issued notices to the petitioners calling upon them to pay a sum of ₹ 7,20,000/- failing which action was proposed under Section 52-A of RR Act. Secondly, he submits that when action is initiated subsequent to the enforcement of debt under Section 29 of the Act for recovery of balance dues, the ratio in Kalliyanikutty (supra) has no application. He placed reliance on a recent judgment of this Court in Kumar Chemicals and Fertilizers (P) Limited .....

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enables SFC to take over the management or possession of industrial units of the borrower and lease/sell the property for realizing loan. This provision has been interpreted by the Courts in a number of judgments as conferring power on the SFC to sell the assets of the borrower Industry by adopting a fair and unarbitrary procedure keeping in view the objects of the Act (See U.P. Financial Corporation v. Naini Oxygen & Acetylene Gas Limited (1995)2SCC754 , Chairman and Managing Director, SIPC .....

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roperty for enforcing liability of surety for transferring management to financial corporation and/or for ad interim injunction restraining Industrial Concern from transferring or moving machinery from the premises. The procedure to be adopted by the District Judge in respect of such applications is contained in Section 32 of the Act. Sub-section (9) thereof provides for an appeal to the High Court against order of District Judge passed under Section 32(7) of the Act. In 1985 the Act was amended .....

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ent for the recovery of the amount due to it, and if the State Government or such authority, as that government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue. (emphasis supplied) 5. A plain reading of Section 32G of the Act would show that without prejudice to .....

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ans as arrears of land revenue under RR Act, subject to a notification by the State Government. In exercise of the powers conferred on them under Section 52A(1) of RR Act, the State Government issued notification vide G.O. Ms. No. 287, dated 03.02.1978. As per this notification rupee loans and foreign exchange loans (term loans) granted to Industries for land, buildings, plant and machinery, sanctioned by SFC are recoverable in the same manner as arrears of land revenue under provisions of Secti .....

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with interest to them under RR Act. When the period of limitation expires, can it be said that the loans and advances sanctioned by SFC are "due" to them. 7. The question directly fell for consideration in Kalliyanikutty (supra) with reference to Section 71 of the Kerala Revenue Recovery Act, 1968. The purport of Section 71 of the said Act is same as that of Section 52A of RR Act. It enabled - as in the case of proviso to Section 52A(1) of A.P. Act, the public authorities to recover & .....

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preme Court observed as under. There is no question, however, in the present case of any payment voluntarily made by a debtor being adjusted by his creditor against a time-barred debt. The provisions in the present case are statutory provisions for coercive recovery of "amounts due". Although the necessity of filing a suit by a creditor is avoided, the extent of the claim which is legally recoverable is not thereby enlarged. Under Section 70(2) of the Kerala Revenue Recovery Act the ri .....

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amounts which have ceased to be legally recoverable on the date when recovery proceedings are undertaken. Under the Kerala Revenue Recovery Act such process of recovery would start with a written requisition issued in the prescribed form by the creditor to the collector of the District as prescribed under Section 69(2) of the said Act. Therefore, all claims which are legally recoverable and are not time-barred on that date can be recovered under the Kerala Revenue Recovery Act. 8. In N.A. Radha .....

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utty [1999]2SCR372 , proceedings under the Act cannot lie for recovery of amounts that are barred by limitation. The question that arises is whether the claim of the respondent - Corporation is barred by limitation and whether this question would be adjudicated in these proceedings. 9. In Kumar Chemicals (supra) on which strong reliance is placed by the learned Standing Counsel for SFC also does not deviate from the ratio of Supreme Court's decision. It is observed therein that when Section .....

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