9911796707
TMI Blog2024 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... the remedy and does not extinguish the debt. 3. The appellants herein had relied upon the judgment of a three-Judge Bench of this Court in State of Kerala and Others vs. V.R. Kalliyanikutty & Anr. (1999) 3 SCC 657 to contend that a time-barred debt under the Limitation Act cannot be recovered under the Recovery of Dues Act. While dealing with this contention, the High Court relied upon the judgment of a Constitution Bench of this Court in Bombay Dyeing and Manufacturing Company Limited vs. The State of Bombay and Ors., 1958 SCR 1122 to reiterate the principle that the Limitation Act merely bars the remedy and does not extinguish the debt. The High Court also distinguished the judgment in V.R. Kalliyanikutty (supra) by holding that the judgments of this Court in Bombay Dyeing and Manufacturing Company Limited (supra) and Tilokchand and Motichand and Others vs. H.B. Munshi and Another, (1969) 1 SCC 110 were not brought to the notice of the Bench deciding V.R. Kalliyanikutty (supra). 4. Facts in Civil Appeal arising out of SLP (C) No. 14213 of 2015 are as follows: i. Respondent No.3 - M/s Khemka Ispat Limited was a Company engaged in the business of manufacture, production, impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2009, Respondent No.1 issued a show cause notice under Section 3(1)(b) of the Recovery of Dues Act to the Appellants and the same was returned with the remarks "left/closed". x. Thereafter, on 10.01.2012, recovery notice sent to the appellants by Respondent No.2, the Additional General Manager of HSIDC Ltd., under Section 3(1)(b) of the Recovery of Dues Act was returned with the remarks "left/closed". The order determining the amount due as Rs. 213.19 lakhs w.e.f 10.01.2012 was passed by the HSIDC Ltd. xi. On 02.02.2012, the HSIDC Ltd. sent a notice under the provisions of the Recovery of Dues Act to the Appellants and the Respondent No. 3 indicating the sum determined to be due from them, which was to the tune of Rs.213.19 lakhs. On 01.03.2012, the appellants filed their reply. This was rejected by the Respondent No. 2, Additional General Manager of HSIDC Ltd., on 15.11.2012. Thereafter, the Respondent No. 2, Additional General Manager of HSIDC Ltd., issued a Final Notice under the provisions of the Recovery of Dues Act dated 15.11.2012 calling upon the appellants to pay Rs. 213.19 lakhs which was determined to be due from the Appellants and Respondent No. 3. xii. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... events where multiple recovery notices under the Recovery of Dues Act were issued, leading up to the determination of the sum due from the Appellants herein, in the following terms: "4. ...On continous non-repayment of dues, the possession of the mortgaged properties was taken over under section 29 of the State Financial Corporations Act, 1951. The primary security was disposed of by the Corporation for Rs. 61.00 lakh on 16.12.1999. The Recovery Certificate was issued on 22.09.2000 to the Collectors Gurgaon, Delhi & Srinagar and were returned in the year 2001 on the ground that no immovable/movable properties were available in the names of directors/guarantors and they were not residing at the given addresses. The fresh Recovery Certificate was issued on 10.08.2005 u/s 3 of Haryana Public Moneys (Recovery of Dues) Act, 1979 in the name of Collectors, Sri Nagar, Delhi & Gurgaon through Collector, Gurgaon. The Recovery Certificate pertaining to Collectors, Sri Nagar & Delhi were returned by Collector, Gurgaon to send the same directly to the concerned Collectors as there was no provisions to send the same by one Collector to another Collector. After obtaining legal opinion as per w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . viii. In the Special Leave Petition filed before this Court, the case of the Appellant as regards the debt being time-barred is as follows: "A. Because the order/proceedings dated 06.08.2014 passed by Respondent No. 3 under Section 32 (G) of the State Financial Corporation Act for recovery of Rs. 14,55,11,275/- along with pendente lite and future interest could not have been issued as the recovery had already become time barred against the petitioner. Since the recovery on the basis of mortgaged property had already been effected by way of sale dated 16.12.1999 the remaining amount could not be recovered beyond the limited time of three years" Contentions of the Parties 6. Before us, learned counsel for the appellants contend that the judgment in V.R. Kalliyanikutty (supra) directly covers the issue as according to them, in substance, there is no difference between the provisions of the Kerala Revenue Recovery Act, with which V.R. Kalliyanikutty (supra) was concerned, and the Recovery of Dues Act of the State of Haryana. According to the learned counsel, V.R. Kalliyanikutty (supra) has clearly held that Acts, like the Recovery of Dues Act, are intended for speedy recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very of amounts which are not legally recoverable. The Bench thereafter distinguished the judgment in Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir, Sarasiya Ghat, Kanpur, (1978) 1 SCC 44 as having no applicability to the interpretation of the Kerala Revenue Recovery Act. It further relied on the judgment of this Court in Director of Industries, U.P. vs. Deep Chand Agarwal (1980) 2 SCC 332 to reinforce its holding on the interpretation of the word 'due' under the Kerala Revenue Recovery Act. The plea that the statute of limitation merely bars the remedy and does not touch upon the right was not accepted by the Court by holding that the rights of the parties are not enlarged by the Kerala Revenue Recovery Act and that unless the Act expressly provided for enlargement of claims extending to the recovery of barred debts, that principle will not apply. Ultimately, the Court held that under the provisions of the Kerala Revenue Recovery Act a debt which is barred by the law of limitation cannot be recovered. 11. The Division Bench, in the impugned order, has relied on Bombay Dyeing (supra) to reinforce the point that the statute of limitation only bars the remedy and does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were time barred? To answer this question, we need to examine the relevant statutory provisions. 15. The objects and reasons of the State Financial Corporations Act are relevant for the purposes of the present case. They read as under: "The intention is that the State Corporations will confine their activities to financing medium and small scale industrial and will, as far as possible, consider only such cases as are outside the scope of the Industrial Finance Corporation. The State Governments also consider that the State Corporations should be established under a special Statute in order to make it possible to incorporate in the Constitution necessary provisions in regard to majority control by Government, guaranteed by the State Government in regard to the repayment of principal, and payment of a minimum rate of dividend on the shares, restriction on distribution of profits and special powers for the enforcement of its claims and recovery of dues. The main features of the Bill are as follows:- (vii) The Corporation will be authorised to make long-term loans to industrial concerns and to guarantee loans raised by industrial concerns which are repayable within a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) Where any sum is recoverable from a defaulter - (a) by the State Governemnt, such officer as it may, by notificaitaon, appoint in this behalf; (b) by a Corporation or a Government company, the Managing Director thereof, shall determine the sum due from the defaulter. (2) The Officer or the Managing Director, as the case may be, referred to in sub-section (1), shall send a certificate to the Collector mentioning the sum due from the defaulter and requesting that such sum together with the cost of proceedings be recovered as if it were an arrear of land revenue. (3) A certificate sent under sub-section (2) shall be conclusive proof of the matters stated therein and the Collector, on receipt of such certificate, shall proceed to recover the amount stated therein as an arrear of land revenue. (4) No civil court shall have jurisdiction - (a) to entertain or adjudicate upon any case; or (b) to adjudicate upon or proceed with any pending case; relating to the recovery of any sum due as aforesaid from the defaulter. The proceedings relating to the recoery of the sums due from the defaulters, pending at the commencement of this Act in any civil court, shall abate." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whether the particular action or prosecution will be successful, and is therefore independent of (say) the duty to pay damages for a civil wrong" (emphasis supplied) As would be clear from the passage above, a debt is not the same thing as the right of action for its recovery. While the debt is the right in the creditor with the corelative duty on the debtor the right of action for recovery is in the nature of a legal power. While the process of filing a civil suit may be barred because of the statute of limitation, the power to recover vested through Section 32-G of the State Financial Corporations Act read with Section 2(c) and Section 3 of the Recovery of Dues Act is a distinct power which continues notwithstanding that another mode of recovery through a civil suit is barred. Understood in that sense, it does appear that there is an additional right to enforce the claims of the financial corporations notwithstanding the bar of limitation. The same is the case with the provisions of the Kerala Revenue Recovery Act which fell for consideration of this Court in V.R. Kalliyanikutty (supra). 19. No doubt, even where the statute of limitation does not apply, the power has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1965, this Court in Director of Industries, U.P. v. Deep Chand Agarwal [(1980) 2 SCC 332 : AIR 1980 SC 801] held that the said Act is passed with the object of providing a speedier remedy to the State Government to realise the loans advanced by it or by the Uttar Pradesh Financial Corporation. Explaining the need for speedy recovery, it says that the State Government while advancing loans does not act as an ordinary banker with a view to earning interest. Ordinarily it advances loans in order to assist the people financially in establishing an industry in the State or for the development of agriculture, animal husbandry or for such other purposes which would advance the economic well-being of the people. Moneys so advanced have to be recovered expeditiously so that fresh advances may be made for the same purpose. It is with the object of avoiding the usual delay involved in the disposal of suits in civil courts and providing for an expeditious remedy that the U.P. Act had been enacted. It was on this ground that this Court upheld the classification of loans which are covered by the said U.P. Act in a separate category. It held that this is a valid classification and the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinabove. 22. This Court in V.R. Kallliyanikutty (supra) held that the words 'amounts due' occuring in the Kerala Revenue Recovery Act would only include legally recoverable debts i.e. debts which are not time-barred. For this purpose, it may be apposite to refer to the relevant portions from the decision in V.R. Kalliyanikutty (supra): "9. In the case of Hansraj Gupta v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd. [AIR 1933 PC 63 : 60 IA 13] the Privy Council was required to interpret the words "money due" under Section 186 of the Companies Act, 1913. Section 186 dealt with the recovery of any money due to the company from a contributory. Interpreting the words "money due", the Privy Council said that the phrase would only refer to those claims which were not time-barred. 10. The same reasoning would apply in the present case also. The Kerala Revenue Recovery Act does not create any new right. It merely provides a process for speedy recovery of moneys due. Therefore, instead of filing a suit, (or an application or petition under any special Act), obtaining a decree and executing it, the bank or the financial institution can now recover the claim under the Kerala Revenue R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyond the period of limitation to recover such delayed claims. 12. In the case of New Delhi Municipal Committee v. Kalu Ram [(1976) 3 SCC 407] relying on the Privy Council decision in Hansraj Gupta v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd. [AIR 1933 PC 63 : 60 IA 13] this Court interpreted Section 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958 in a similar way. Under that section where any person is in arrears of rent payable in respect of any public premises, the Estate Officer may, by order, require that person to pay the same within such time and in such instalments as may be specified in the order. While considering the meaning of the words "arrears of rent payable" this Court examined whether Section 7 creates a right to realise arrears of rent without any limitation of time. The Court observed that the word "payable" is somewhat indefinite in import and its meaning must be gathered from the context in which it occurs. In the context of recovery of arrears of rent under Section 7, this Court said that if the recovery is barred by the law of limitation, it is difficult to hold that the Estate Officer could still insist that the said amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company. This Application was made under Section 186(1) of the Indian Companies Act, which provides as follows: "Court may, at any time after making a winding-up Order, make an order on any contributory for the time being settled on the list of contributories to pay, in manner directed by the order, any money due from him or from the estate of the person whom he represents to the company exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act." The decision in Hansraj Gupta (supra) involved interpretation of the words 'any money due' occurring in Section 186(1) of the Indian Companies Act. The Privy Council, while following and affirming the judgment of the Lahore High Court in Sri Narain v. Liquidator, Union Bank of India, ILR 4 Lah. 109, held that a time-barred debt could not be enforced by a summary order under Section 186 since the section did not create new liability or confer new rights and since it merely created a summary procedure for enforcing existing liabilities. 25. Additionally, in Hansraj (supra) the Limitation Act applied to the company court, since it was a 'court'. Section 46- B of the State Financial Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring by those means'. [Paragraph 4, 5 of KGU Trust (supra)] 28. Deep Chand (supra) was a case where there was a challenge to the constitutionality of Section 3 of the U.P Public Moneys (Recovery of Dues) Act, 1965. The argument was that Section 3 provided two remedies to the Government - one being a suit and another being a remedy under the Act - and that the latter remedy was more onerous and without any guidelines in law. [Paragraph 2 of Deep Chand (supra)] In upholding the Constitutionality of the U.P Act, the Court noted that the object of the U.P Act was to enable speedy recovery of money and that therefore, the classification was valid. [Para 6 of Deep Chand (supra)] 29. While it is true that the U.P Act, similar to the Haryana Revenue Recovery Act [in the present case] or the Kerala Revenue Recovery Act, was enacted with the object to have speedy recovery of dues, this does not take away from the fact that the right was vested in the Financial Corporations to recover the loans through the said Acts, notwithstanding any other right, including the right to file a suit. 30. As far as the finding in V.R. Kalliyanikutty (supra) regarding Section 70(3) of the Kerala Revenue Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
