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TMI Blog2024 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export, sale and distribution of all types of Cold Rolled Strips, steel sockets, pipe and tube products, and other allied goods. ii. On 07.03.2003, Respondent No.3 had taken a Term Loan under an Equipment Finance Scheme from Respondent No.1 - Haryana State Industrial and Infrastructure Development Corporation Limited (hereinafter referred to as the HSIDC Ltd. ) for a sum of Rs.105.90 lakhs. In view of the said Term Loan, Respondent No.3 had entered into a Loan Agreement with HSIDC Ltd. along with the personal guarantees of the appellants herein. iii. On 31.03.2003, the sanctioned loan amount to the tune of Rs.105 lakhs was disbursed to Respondent No.3. On 15.07.2003, further amount of Rs. 2 lakhs was disbursed. The Loan was to be repaid in five years with a moratorium period of six months w.e.f. 01.10.2003. iv. On 19.08.2004, the First Default Notice was issued to Respondent No.3 by HSIDC Ltd. along with intimation of a right under Section 29 of the State Financial Corporations Act. v. In the meantime, Respondent No.3 became a Sick Company and reference was made to the Board for Industrial and Financial Reconstruction (for short the BIFR ). On 31.07.2006, the outstanding as on date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 3(1) of the Recovery of Dues Act for a sum of Rs. 243.11 lakhs, was issued. xiii. On 12.07.2013, appellants filed CWP No. 15983 of 2013 challenging the recovery notice. The relevant ground was raised in the following terms: G. BECAUSE the Impugned Orders deserve to be quashed as the recovery which has been initiated by first sending the notice on 10.01.2012 under the provisions of Haryana Public Moneys (Recovery of Dues) Act, 1979 is much beyond the limitation to recover any dues by the Corporation. The period of limitation if any was 3 years from 31.07.2004, when the amount stood and payable by Respondent No. 3 Company (in Liqn.). The period to recovery from either the Company or the Guarantors who stood surety for the said amount expired in the year 2007. The recovery as per the notices sent by the Respondent Corporation admittedly have been sent on 10.01.2012 and subsequent thereto and therefore any adjudication or determination of a sum due in view of the above said Act is unsustainable and is in any case time barred xiv. The Writ Petition was dismissed vide the impunged order. 5. The facts in Civil Appeal arising out of Special Leave Petition (C) No. 23041 of 2015 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the Collector may send a certificate to other Collector, Recovery Certificates were returned to Collector, Gurgaon. However, Recovery Certificate in the name of Collector Gurgaon was being pursued. As Recovery Certificate with Collector Delhi was not traceable in his office, photocopy of the Recovery Certificate was relodged with Collector Delhi on 16.04.2008. It was informed by Collector Delhi that the Recovery Certificate lodged with them was not in their jurisdiction and as such recovery cannot be effected. Further, the directors residing at Gurgaon Delhi had shifted to some unknown places. However, as the new addresses of one of the Directors Sh. Charanjeet Gaba were found out, fresh RCs were issued to Collectors Delhi (Central, East, South West), Gurgaon Sri Nagar (Kashmir) on 19.04.2010 u/s 32G of the State Financial Corporations Act. However, the Recovery Certificate dated 19.04.2010 was quashed by the High Court of Punjab and Haryana vide order dated 02.12.2011 passed in CWP No. 12226 of 2010 on the ground that the same was issued without affording the Petitioners an opportunity of personal hearing. The Corporation was given liberty to proceed after hearing the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the word due in the Recovery of Dues Act cannot be interpreted to include timebarred debts. 7. Learned counsel for the respondent-Corporations strongly refuted these contentions and contended that the impugned order was perfectly justified in holding that the decision of this Court in V.R. Kalliyanikutty (supra) has not considered the holding in Bombay Dyeing (supra) and Tilokchand Motichand (supra). Questions that arise for this Court s consideration 8. The questions that fall for consideration are, firstly, are the appellants right in contending that the recovery proceedings initiated against them under the Recovery of Dues Act are barred in view of the principle laid down in V.R.Kalliyanikutty (supra). Secondly, if they are right, then is the decision in V.R. Kalliyaikutty (supra) contrary to the holding in Bombay Dyeing and Manufacturing Company Limited (supra) and if so what is the course open for this two-Judge Bench. Reasoning in V.R. Kalliyanikutty (supra) 9. To appreciate these contentions, we need to first understand the law laid down in V.R. Kalliyanikutty (supra). The primary question of law involved in V.R. Kalliyanikutty (supra) was, whether a debt which is barre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt reiterarted the principle that statutes of limitation only bar the remedy and do not extinguish the right and so holding, it found that the definition of unpaid accumulations in that case did apply to wages of employees that were time-barred. The Court went on to hold that while time-barred wages did vest in the State, since the Act did not, in that case, provide for disbursement of the wages to the workers whose claims could be established and since there was no provision for the workers making the claim, the Act was held to be contrary to Article 31(2) of the Constitution, which then existed. 12. It is well settled that the laws of limitation only bar the remedy and do not extinguish the right, except in cases where title is acquired by prescription. We may note here that V.R. Kalliyanikutty (supra) did not dispute the principle that the statute of limitation only bars the remedy and does not extinguish the debt. After considering this principle it went onto hold that there was no enlargement of right in the Kerala Revenue Recovery Act. The impugned order, in the present case, further holds that Bombay Dyeing (supra) and Tilokchand and Motichand (supra) were not brought to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntures by industrial concerns, subject to the provision that the Corporation will be required to dispose of any shares, etc., acquired by it in fulfilment of its underwriting liability within a period of 7 years. (ix) The Corporation will have special privileges in the matter of enforcement of its claims against borrowers (emphasis supplied) Section 32-G of the State Financial Corporations Act reads as under:- 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 Collector shall proceed to recover that amount in the same manner as an arrear of land reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any other mode of recovery which includes the right to file a suit. The conferment of such a right to recover an amount due as arrears of land revenue, notwithstanding any other remedy, is for a public purpose and in public interest. 18. At this point, we deem it appropriate to refer to a passage from Salmond on Jurisprudence, 12th Edition, on the concepts of Right and Power [Page 224, 229 230]: 42. Legal rights in a wider sense of the term We must now consider the wider use of the term, according to which rights, do not necessarily correspond with duties. In this generic sense, a legal right may be defined as any advantage or benefit conferred upon a person by a rule of law. Of rights in this sense there are four distinct kinds. These are (1) Rights (in the strict sense), (2) Liberties, (3) Powers, and (4) Immunities. Each of these has its correlative, namely (1) Duties, (2) No-Rights, (3) Liabilities, and (4) Disabilities. A debt is not the same thing as a right of action for its recovery. A former is the right in the strict and proper sense, corresponding to the duty of the debtor to pay; the latter is a legal power, corresponding to the liability of the debtor to be sued. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and since the Division Bench in the Impugned Order was not engaged with that issue, we refrain from dealing with the same. 20. In the context of the Kerala Revenue Recovery Act, the decision in V.R. Kalliyanikutty (supra) needs to be discussed. The relevant portions of the judgment is extracted hereinbelow: 3. ...Under Section 71, however, there is a provision for extending the Act to recovery of certain other dues if the Government is satisfied that it is necessary to do so in public interest. Under Section 71 it is provided as follows: 71. Power of Government to declare the Act applicable to any institution. The Government may, by notification in the Gazette, declare, if they are satisfied that it is necessary to do so in public interest, that the provisions of this Act shall be applicable to the recovery of amounts due from any person or class of persons to any specified institution or any class or classes of institutions, and thereupon all the provisions of this Act shall be applicable to such recovery. 4. In exercise of its powers under Section 71, the State Government has issued a notification bearing SRO No. 797 of 1979 by which the provisions of the said Act have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation are also loans given in public interest for the purpose of economic advancement of the people of the State, to help them in agricultural operations or establishment of industries. For this reason the Kerala Revenue Recovery Act has been made applicable to such loans so that there can be a speedy recovery of such loans and the amounts can be utilised for similar objects again. 18. In the premises under Section 71 of the Kerala Revenue Recovery Act claims which are time-barred on the date when a requisition is issued under Section 69(2) of the said Act are not amounts due under Section 71 and cannot be recovered under the said Act. Our conclusion is based on the interpretation of Section 71 in the light of the provisions of the Kerala Revenue Recovery Act. Under the said provision, the Government in public interest could make the Revenue Recovery Act applicable to recovery of amounts due to any person or class of persons or to any specified institution or any class or classes of institutions and on such notification by the provisions of the Act was applicable to such recovery. Admittedly, in V.R. Kalliyanikutty (supra) a notification was issued making the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Kerala Revenue Recovery Act. In fact, under Section 70 of the Kerala Revenue Recovery Act, it is provided that when proceedings are taken under this Act against any person for the recovery of any sum of money due from him, such person may, at any time before the commencement of the sale of any property attached in such proceedings, pay the amount claimed and at the same time deliver a protest signed by himself to the officer issuing the demand or conducting the sale as the case may be. Sub-section (2) of Section 70 provides that when the amount is paid under protest, the officer issuing the demand or the officer at whose instance the proceedings have been initiated, shall enquire into the protest and pass appropriate orders. If the protest is accepted, the officer disposing of the protest shall immediately order the refund of the whole or part of the money paid under protest. Under sub-section (3) of Section 70, the person making a payment under protest shall have the right to institute a suit for the refund of the whole or part of the sum paid by him under protest. 11. Therefore, under Section 70(3) a person who has paid under protest can file a suit for refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor 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 right of a debtor to file a suit for refund is expressly preserved. Instead of the bank or the financial institution filing a suit which is defended by the debtor, the creditor first recovers and then defends his recovery in a suit filed by the debtor. The rights of the parties are not thereby enlarged. The process of recovery is different. An Act must expressly provide for such enlargement of claims which are legally recoverable, before it can be interpreted as extending to the recovery of those amounts which have ceased to be legally recoverable on the date when recovery proceedings are undertaken. Under the Kerala Revenue Recovery Act such a 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) is again based fully on the interpretation of the Privy Council in Hansraj (supra). That apart, the decision in Kalu Ram (supra) involved the interpretation of the words arrears of rent payable under Section 7 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958. The Court noted that the word payable generally means that which should be paid and thereafter concluded that the word can only be interpreted to mean dues which are legally recoverable. The provisions herein use the words amounts due and are provisions which create a right to recover through a separate mechanism, notwithstanding the right to file a civil suit. 27. At this juncture, we also deem it fit to note the decision of this Court in KGU Trust (supra).The decision in KGU Trust (supra) was rendered while interpreting the words entire amount of rent due occurring in Section 20(4) of the U.P Buildings (Regulation of Letting, Rent and Eviction) Act, 1972. While the landlord could file an eviction suit on the ground that the tenant is in arrears of rent, the Tenant was given an option to resist this eviction suit by depositing this entire amount of rent due . While the decision in V.R. Kalliyaniku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the right to the debtor under Section 70(3) of the Kerala Revenue Recovery Act cannot be said to be determinative of the issue. 31. It would also be apposite to point out that the applicability of V.R. Kalliyanikutty (supra) to Section 56(2) of the Electricity Act, 2003 recently fell for consideration before a three-judge Bench of this Court in K.C. Ninan v. Kerala State Electricity Board, 2023 INSC 560. One of the questions which the Court was faced with was whether the statutory bar on recovery of electricity dues after the limitation period of two years provided under Section 56(2) of the Electricity Act, 2003 would have an implication on the civil remedies of the Electric Utilities to recover such arrears. The auction purchasers, who had purchased premises where electricity had been disconnected due to defaults of the previous owners, argued that the period of limitation would apply to such dues and that Electric Utilities could not demand such time-barred dues from them. The Court in K.C. Ninan (supra), 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 po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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