IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 2078 of 2007()
1. SALINI RAVINDRAN, W/O. T.P.RAVINDRAN,
... Petitioner
Vs
1. THE DEPUTY TAHSILDAR (R.R.),
... Respondent
2. THE KERALA FINANCIAL CORPORATION,
For Petitioner :SRI.MILLU DANDAPANI
For Respondent :SRI.V.B.UNNIRAJ, SC, KFC
The Hon'ble MR. Justice K.BALAKRISHNAN NAIR
The Hon'ble MR. Justice P.N.RAVINDRAN
Dated :25/02/2010
O R D E R
C.R.
K. BALAKRISHNAN NAIR & P.N.RAVINDRAN, JJ.
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W.A.No.2078/2007
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Dated this, the 25th day of February, 2010
JUDGMENT
Balakrishnan Nair, J.
The writ petitioner is the appellant. The Writ Petition was
filed by her, challenging Ext.P9 order of the Deputy Tahsildar
(Revenue Recovery), Kerala Financial Corporation, Kozhikode
and Ext.P10 notice issued under Section 36 of the Kerala
Revenue Recovery Act.
2. The brief facts of the case are the following:
The appellant was a Director of M/s. Southern Poly Bags Private
Limited (hereinafter referred to as “the Company”). According to
her, she was in its Board only for a period of one year from
14.2.1987. The Company availed a term loan of Rs.26,20,000/-
and a bridge loan of Rs.3,52,000/- from the Kerala Financial
Corporation (for short “KFC”). According to the appellant, the
term loan was availed on 2.2.1987 and the bridge loan on
18.3.1988, when she was not a member of the Board of
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Directors of the Company. Since the Company defaulted to pay
the amounts due under the loan agreements, the 2nd respondent
KFC took over the factory run by the Company under Section
29 of the State Financial Corporations Act, 1951, in 1991. In
March, 1994, the properties of the Company were auctioned for
an amount of Rs.18,10,000/-. Since the amount so raised by
auction was not sufficient to wipe off the liability of the KFC,
revenue recovery proceedings were taken against the appellant,
on the ground that she was a guarantor for the said loans.
There is some dispute regarding the date of service of notice by
affixture. But, it is common ground that the same was served
by affixture in 1995, at the last known address of the appellant.
The appellant owned a landed property with a building thereon
in Kozhikode district. That property was sold by her to a third
party by sale deeds dated 3.9.1995, 2.10.1995 and 4.10.1995.
The revenue recovery officials took steps against the property
covered by those sale deeds, ignoring the sale made to the third
party. In that context, motion was made before this Court and
as per the direction of this Court, Ext.P9 order was passed by
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the Deputy Tahsildar (Revenue Recovery), KFC, Kozhikode. The
said officer decided to ignore the sale deeds, for the reason that
the transfer was made after the notice of default was served on
the appellant. Pursuant to Ext.P9, notice of attachment under
Section 36 of the Revenue Recovery Act was served as per
Ext.P10. In the above context, the Original Petition was filed,
challenging Exts.P9 and P10. The learned Single Judge
dismissed the Original Petition, taking the view that since the
property was sold by the appellant after the initiation of the
Revenue Recovery proceedings, by virtue of Section 44 of the
Revenue Recovery Act read with Section 53 of the Transfer of
Property Act, the transaction was invalid. Therefore, the
Original Petition was dismissed. Challenging the said judgment,
this Writ Appeal is preferred.
3. We heard the learned senior counsel Sri.K.P.Dandapani
for the appellant and learned standing counsel for the 2nd
respondent KFC. We also heard the learned Government
Pleader for the 1st respondent. The learned senior counsel
mainly raised two points before us. The first point was that in
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view of the interpretation given to Section 34(2) of the
Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (hereinafter referred to as”the Act”), the provisions of the
Kerala Revenue Recovery Act cannot be invoked. It is brought
to our notice that the Apex Court in Unique Butyle Tube
Industries (P) Ltd. v. U.P. Financial Corporation [(2003)2
SCC 455] held that for recovery of moneys due to the U.P.
Financial Corporation, the provisions of U.P. Public Moneys
(Recovery of Dues) Act, 1972 cannot be invoked, as the said Act
is not specifically mentioned in sub-section (2) of Section 34 of
the Act. Going by the said reasoning, the learned senior counsel
submitted that in the absence of specific saving of the Kerala
Revenue Recovery Act, the provisions of the same cannot be
pressed into service, to recover the amounts due to the 2nd
respondent. The second point urged by the learned senior
counsel was that the loan was barred by limitation and
therefore, a time barred debt cannot be recovered invoking the
provisions of the Revenue Recovery Act. In support of that
submission, reliance was placed on the decision in State of
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Kerala v. R.Kalliyanikutty [1999(2) KLT 146 (SC)].
Therefore, the learned senior counsel prayed for allowing the
appeal.
4. The learned standing counsel for the 2nd respondent, on
the other hand, submitted that the first point regarding
inapplicability of the Revenue Recovery Act for recovering the
moneys due to the KFC, is covered by the decision of this Court
in Amritha Cyber Park (P) Ltd. v. Kerala Financial
Corporation [2006(2) KLT 394] and the Division Bench
decision of this Court in Usman v. Kerala Financial
Corporation [2007(2) KLT 604]. The learned standing counsel
also submitted that since the loan sanctioned was to be repaid
in 94 monthly instalments commencing from 10.3.1990 and
ending on 10.2.1997, the recovery of the loan was not time-
barred in 1994-95, when steps were taken under the Revenue
Recovery Act.
5. The learned senior counsel for the appellant, in answer,
submitted that the decision of the Division Bench of this Court in
Usman (supra) cannot stand with the decision of the Apex
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Court in Unique Butyle Tube Industries (P) Ltd. (supra). So,
the said decision requires re-consideration.
6. We considered the rival submissions made at the Bar
and perused the materials on record. We will first deal with the
contention of the appellant regarding limitation. In para 3 of
the counter affidavit filed by the 2nd respondent, it is stated as
follows:
“Without prejudice to the aforesaid objection
the 2nd respondent respectfully submits as follows.
The petitioner was one of the directors of a private
limited company by its name M/s. Southern Poly
Bags Pvt. Ltd. The said company had availed of a
term loan of Rs.26,20,000/- and bridge loan of
Rs.3,52,000/- from the respondent Corporation for
the purpose of setting up an industrial unit. The
borrower company had executed agreements
undertaking to repay the loan in 94 monthly
instalments commencing from 10.3.1990 and ending
on 10.2.1997. The petitioner and other directors of
the company had executed a deed of guarantee
dated 2.3.1987 by which they had personally
guaranteed the repayment of all the amounts due
from the borrower company to the 2nd respondent
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Corporation. A true copy of the deed of guarantee
dated 2.3.1987 is produced herewith and marked as
Exhibit R2(a). The borrower company had mortgaged
and hypothecated immovable and movable properties
in favour of the Corporation towards security. The
borrower company and the guarantors including the
petitioner had committed default of payment of
instalments of principal and interest due under the
agreements executed by them. In these
circumstances the respondent Corporation took
possession of the properties mortgaged and
hypothecated by the borrower company. Therefore
the respondent Corporation took possession of the
assets in exercise of the powers under Sec.29 of the
State Financial Corporations Act. Thereafter the
aforesaid properties were sold for a sum of
Rs.18,10,000/- and sale proceeds were credited in
the account of the company on 21.3.1994. After
giving credit to the sale proceeds a sum of
Rs.42,69,225/- was outstanding in the loan account
of the company. The 2nd respondent issued a
requisition dated 3.11.1994 to the District Collector
for initiating revenue recovery proceedings under the
Kerala Revenue Recovery Act against the petitioner
and other guarantors for realisation of the balance
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amount due under the loan account. Accordingly the
1st respondent initiated proceedings under the
Revenue Recovery Act against the petitioner and
other Directors and their assets. It is submitted that
there is no illegality or irregularity in the action taken
by the respondents.”
Since the time for repayment of the loan granted was to end
only on 10.2.1997, it is manifest that the recovery of the
amounts due under the loan was not barred by limitation, as the
proceedings were initiated to recover the amounts under the
Revenue Recovery Act during 1994-95. So, the said plea fails.
7. The next point to be considered is whether the decision
of the Apex Court in Unique Butyle Tube Industries (P) Ltd.
(supra), relied on by the learned senior counsel, will apply to
the facts of this case. It was a case of recovery of amounts due
to the U.P. State Financial Corporation, which is admittedly, a
Corporation constituted under the State Financial Corporations
Act, like the 2nd respondent herein. The amounts were sought
to be recovered, invoking the provisions of the U.P. Public
Moneys (Recovery of Dues) Act,1972. The Apex Court, after
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referring to Section 32 of the Act, held that since the U.P. Public
Moneys (Recovery of Dues) Act, 1972 is not mentioned in sub-
section (2) of Section 34, the recovery was bad. According to
the learned senior counsel, the provisions of the Kerala Revenue
Recovery Act are similar to the provisions of the U.P. Public
Moneys (Recovery of Dues) Act, 1972. Therefore, the said
decision of the Apex Court will squarely apply to the facts of this
case.
8. Section 34 of the Act reads as follows:
“34. Act to have over-riding effect:–(1) Save
as provided under sub-section (2), the provisions of
this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for
the time being in force or in any instrument having
effect by virtue of any law other than this Act.
(2) The provisions of this Act or the rules made
thereunder shall be in addition to, and not in
derogation of, the Industrial Finance Corporation
Act,1948 (15 of 1948), the State Financial
Corporations Act, 1951 (63 of 1951), the Unit Trust
of India Act, 1963 (52 of 1963), the Industrial
Reconstruction Bank of India Act, 1984 (62 of
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1984), the Sick Industrial Companies (Special
Provisions) Act, 1985 (1 of 1986) and the Small
Industries Development Bank of India Act,1989 (39
of 1989).”
So, the provisions of the Act are not in derogation of the
provisions of the various enactments mentioned in sub-section
(2), quoted above. The same includes the State Financial
Corporations Act, 1951. Section 32G of the State Financial
Corporations Act, 1951 reads as follows:
“32G. Recovery of amounts due to the
Financial Corporation as an arrear of land revenue:–
Where any amount is due to the Financial
Corporation in respect of any accommodation
granted by it to any industrial concern, the Financial
Corporation or any person authorised by it in writing
in this behalf, may, without prejudice to any other
mode of recovery,make an application to the State
Government 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
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Collector shall proceed to recover that amount in the
same manner as an arrear of land revenue.”
Going by the above provision, any amount due to the KFC can
be recovered, in the same manner, as recovering arrears of
land revenue. Arrears of land revenue are recoverable under
the provisions of the Kerala Revenue Recovery Act. Since the
provisions of the State Financial Corporations Act, including
Section 32G, are not affected by the provisions of the Act, we
find nothing illegal in the 2nd respondent invoking the provisions
of the Kerala Revenue Recovery Act, to recover the amounts
due to it. A decision is an authority for what it decides and not
what logically flows from it. So, in the face of Section 32G, the
decision in Unique Butyle Tube Industries (P) Ltd. (supra)
cannot be pressed into service, to contend that the provisions of
the Kerala Revenue Recovery Act cannot be invoked, to recover
the amounts due to the KFC. This view taken by us finds
support from the decision in Usman v. Kerala Financial
Corporation [2007(2) KLT 604], wherein a Division Bench of
this Court upheld the decision of the learned Single Judge in
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Amritha Cyber Park (P) Ltd. v. Kerala Financial
Corporation [2006(2) KLT 394] that recovery proceedings
under the Revenue Recovery Act can be resorted to recover the
amounts due to the KFC. In view of the above position, the
second ground urged by the appellant also cannot be accepted.
In the result, the Writ Appeal fails and it is dismissed.
K. Balakrishnan Nair,
Judge.
P.N.Ravindran,
Judge.
nm.