2024 (5) TMI 458 - SC - Indian Laws

Recovery of time-barred debt - extinguishment of debt or not - Use of the Haryana Public Moneys (Recovery of Dues) Act, 1979, and the State Financial Corporation Act, 1951, for recovering time-barred debts. - HELD THAT - While the Court focused on the implication of a notification under Section 71 of the Kerala Revenue Recovery Act whereunder the Government could declare the Act applicable to any institution, the attention of the Court in STATE OF KERALA ORS. VERSUS V.R. KALLIYANIKUTTY ANR. 1999 (4) TMI 609 - SUPREME COURT was not drawn to the powers envisaged under the State Financial Corporations Act which were also applicable to the recovery of debts in Kerala. As noticed above, the statement of objects and reasons of the State Financial Corporations Act refers to providing State Financial Corporations with special privileges in the matter of enforcement of claims against borrowers . This Court in V.R. Kallliyanikutty 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. The Court in K.C. Ninan 2023 (5) TMI 1251 - SUPREME COURT , after a comprehensive analysis of the scheme of the Electricity Act, held that the power to initiate proceedings to recover the electricity dues was independent of the power to disconnect electrical supply. Thereafter, the Court noticed the decision in V.R. Kalliyanikutty and concluded that statute of limitation only barred a remedy, while the right to recover the loan through any other suitable manner provided remains untouched. Having so held, the Court rejected the argument of the auction purchasers and concluded that the bar of limitation under Section 56(2) of the Electricity Act would only restrict the remedy of disconnection under Section 56 of the Electricity Act and that the Electric Utilities were entitled to reocver electricity arrears through civil remedies or in exercise of its statutory power. Thus, for a comprehensive consideration and an authoritative pronouncement after taking into account all aspects, including those dealt with hereinabove, the matter needs to be placed before the Hon ble Chief Justice of India to constitute an appropriate three-judge bench. Let the papers along with this order be placed before Hon ble the Chief Justice of India for seeking appropriate directions from His Lordship, in this regard.

Summary

Issues Involved:

1. Whether a time-barred debt under the Limitation Act, 1963 can be recovered under the Haryana Public Moneys (Recovery of Dues) Act, 1979 and the State Financial Corporation Act, 1951.
2. Whether the decision in V.R. Kalliyanikutty vs. State of Kerala & Anr. is contrary to the principles laid down in Bombay Dyeing and Manufacturing Company Limited vs. The State of Bombay and Ors.

Summary:

Issue 1: Recovery of Time-Barred Debt

The appellants contended that a time-barred debt under the Limitation Act, 1963 cannot be recovered under the Haryana Public Moneys (Recovery of Dues) Act, 1979 (Recovery of Dues Act) read with the State Financial Corporation Act, 1951. They relied on the judgment in V.R. Kalliyanikutty vs. State of Kerala & Anr. (1999) 3 SCC 657, which held that a time-barred debt cannot be recovered under the Kerala Revenue Recovery Act, 1968. The High Court, however, dismissed the writ petitions, holding that the Limitation Act merely bars the remedy and does not extinguish the debt, relying on the Constitution Bench decision in Bombay Dyeing and Manufacturing Company Limited vs. The State of Bombay and Ors., 1958 SCR 1122.

Issue 2: Conflict with Precedents

The High Court distinguished V.R. Kalliyanikutty (supra) by noting that the judgments 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). The High Court reiterated that the Limitation Act only bars the remedy and does not extinguish the debt.

Reasoning and Discussion:

The Supreme Court noted that the Division Bench in the impugned order did not directly address the holding in V.R. Kalliyanikutty (supra) that the Kerala Revenue Recovery Act did not create any additional right to recover and enforce the outstanding amounts due. The Court examined the relevant statutory provisions, including Section 32-G of the State Financial Corporations Act and Sections 2(c) and 3 of the Recovery of Dues Act, which confer a right of recovery on the financial corporation, without prejudice to any other mode of recovery, including filing a suit.

The Court referred to Salmond on Jurisprudence to explain that a debt is not the same as the right of action for its recovery. The power to recover vested through Section 32-G of the State Financial Corporations Act read with the Recovery of Dues Act is distinct and continues notwithstanding that another mode of recovery through a civil suit is barred.

Conclusion:

The Supreme Court concluded that the findings of the Division Bench in the impugned order do not directly address the holding in V.R. Kalliyanikutty (supra) and that the matter needs comprehensive consideration. The Court directed that the papers along with the order be placed before the Chief Justice of India to constitute an appropriate three-judge bench for an authoritative pronouncement on the issues involved.