Full Judgment Text
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PETITIONER:
STATE OF KERALA & ORS.
Vs.
RESPONDENT:
V.R.KALLIYANIKUTTY & ANR.
DATE OF JUDGMENT: 01/04/1999
BENCH:
Sujata V.Manohar, D.P.Mohapatra, R.C.Lahoti
JUDGMENT:
Mrs. Sujata V. Manohar, J.
Leave granted in S.L.P.(C) No.12051 of 1988.
All these appeals raise a common question of law
whether a debt which is barred by the law of limitation can
be recovered by resorting to recovery proceedings under the
Kerala Revenue Recovery Act of 1968. A Division Bench of
the Kerala High Court in the impugned common judgment dated
2.11.1987 in C.A.No.4211 of 1988, CA No.4393 of 1988 and
C.A.No.4175 of 1988 held that in the absence of any
provision in the Kerala Revenue Recovery Act creating a
substantive right to recover time-barred debts, the said Act
which provides for summary recovery cannot be availed of
once the period prescribed for recovery under the Limitation
Act has expired. This judgment of the Division Bench of the
Kerala High Court was followed by a subsequent Division
Bench in its judgment dated 29.1.1988 which is the subject
matter of appeal arising from S.L.P. (C) No.12051 of 1988.
The above decisions of the Division Bench, however, have
been overruled by a Full Bench of the Kerala High Court by
its judgment dated 10.4.1996 which is the judgment under
appeal in C.A.Nos.12393 and 12394 of 1996. All these
appeals, have, therefore, been heard together.
The Kerala Revenue Recovery Act, 1968 is an Act to
consolidate and amend the laws relating to recovery of
arrears of public revenue in the State of Kerala. Under
Section 5 of the Kerala Revenue Recovery Act of 1968,
"whenever public revenue due on land is in arrear," such
arrear, together with interest, if any, and cost of the
process may be recovered by one or more of the modes set out
in that section. One of the modes so prescribed is
attachment and sale of the defaulters’ movable or immovable
property. Under Section 68 of the said Act, "all sums due"
to the Government on account of quit rent or revenue other
than public revenue dues on land, as also all sums declared
by any other law for the time being in force to be
recoverable as arrear of public revenue "due" on land or
land revenue can be recovered under the provisions of the
said Act. Under Section 2(a) of the said Act "arrears of
public revenue due on land" is defined to mean the whole or
any portion of any kist or instalment of such revenue not
paid on the day on which it falls due according to the
kistbandy or any engagement or usage. Under Sub- section
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(j) of Section 2 "public revenue due land" means the land
revenue charged on the land and includes all other taxes,
fees and cesses on land, whether charged on land or not, and
all cesses or other dues payable to the Government on
account of water used for purposes of irrigation. The Act,
therefore, provides a method for speedy recovery of arrears
of public revenue. 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:-
"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."
In exercise of its powers under Section 71, the State
Government has issued a notification bearing S.R.O. No.797
of 79 by which the provisions of the said Act have been made
applicable to the recovery of the amounts due from any
person to any bank on account of any loan advanced to such
person by that bank for agriculture or agricultural
purposes. Under another notification S.R.O. No.851 of 79
issued under Section 71 by the State Government the
provisions of the said Act are also made applicable to the
recovery of amounts due from any person or class of persons
to the Kerala Financial Corporation. Thus in public
interest the State Government has made the said Act
applicable for speedy recovery of loans given by a bank for
agricultural purposes as well as for speedy recovery of
loans given by the Kerala Financial Corporation. The
overall scheme of the Act, therefore, is to provide for
speedy recovery, not merely of public revenue but also of
certain other kinds of loans which are required to be
recovered speedily in public interest.
Explaining analogous provisions of the U.P. Public
Moneys (Recovery of Dues) Act, 1965, this Court in The
Director of Industries, U.P. and Ors. v. Deep Chand
Agarwal (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
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the provisions of the Act are not violative of Article 14.
The same reasoning would apply to the loans which are
covered by the said notifications under Section 71 of the
Kerala Revenue Recovery Act. Agricultural loans and loans
by the State Financial Corporation 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.
Civil Appeal Nos. 4211 of 1988, 4393 of 1988 and 4175
of 1988 pertain to agricultural loans given by a bank while
Civil Appeal Nos. 12393 of 1996 and 12394 of 1996 pertain
to loans given by the Kerala Financial Corporation.
Looking to the object of Section 71 we have to examine
whether time-barred claims of the State Financial
Corporation and the banks can be recovered under it. Is the
object only speed of recovery or is it also enlargement of
the right to recover? The respondent-institutions rely on
the words "amount due" in Section 71 as encompassing
time-barred claims also. Now, what is meant by the words
"amounts due" used in Section 71 of the Kerala Revenue
Recovery Act as also in the notifications issued under
Section 71? Do these words refer to the amounts repayable
under the terms of the loan agreements executed between the
debtor and the creditor irrespective of whether the claim of
the creditor has become time-barred or not? Or do these
words refer only to those claims of the creditor which are
legally recoverable? An amount "due" normally refers to an
amount which the creditor has a right to recover. Wharton
in Law Lexicon defines "due" as anything owing; that which
one contracts to pay to another. In Black’s Law Dictionary,
6th Edn. at page 499 the following comment appears against
the word "due". "The word "due" always imports a fixed and
settled obligation or liability; but with reference to the
time for its payment there is considerable ambiguity in the
use of the term, the precise signification being determined
in each case from the context. It may mean that the debt or
claim in question is now (presently or immediately) matured
and enforceable, or that it matured at sometime in the past
and yet remains unsatisfied, or that it is fixed and certain
but the day appointed for its payment has not yet arrived.
But commonly and in the absence of any qualifying
expressions, the word "due" is restricted to the first of
these meanings, the second being expressed by the term
"overdue" and the third by the word "payable"." There is no
reference in these definitions to a time-barred debt. In
every case the exact meaning of the word "due" will depend
upon the context in which that word appears.
In the case of Hansraj Gupta & Ors. v. Dehra Dun-
Mussoorie Electric Tramway Co. Ltd. (AIR 1933 PC 63) 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. It noted that the
section is concerned only with moneys due from a
contributory. A debtor who is not a contributory is not
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affected by it. Moneys due from him can be recovered only
by a suit in the Company’s name. Secondly, the section
creates a special procedure for obtaining payment of moneys.
It is not a section which purports to create a foundation
upon which to base a claim for payment. It creates no new
rights. Thirdly, the power of the court to order payment
under that Section is discretionary. It may refuse to act
under that section, leaving the liquidator to sue in the
name of the Company. Therefore, the respondent under the
procedure of Section 186 cannot be deprived of some defence
or answer open to him in a suit for the same moneys.
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 Recovery Act. Since this Act does not create any
new right, the person claiming recovery cannot claim
recovery of amounts which are not legally recoverable nor
can a defence of limitation available to a debtor in a suit
or other legal proceeding be taken away under the 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 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.
Therefore, under Section 70(3) a person who has paid
under protest can file a suit for refund of the amount
wrongly recovered. In law he would be entitled to submit in
the suit that the claim against which the recovery has been
made is time-barred. Hence no amount should have been
recovered from him. When the right to file a suit under
Section 70(3) is expressly preserved, there is a necessary
implication that the shield of limitation available to a
debtor in a suit is also preserved. He cannot, therefore,
be deprived of this right simply by making a recovery under
the said Act unless there is anything in the Act which
expressly brings about such a result. Provisions of the
said Act, however, indicate to the contrary. Moreover, such
a wide interpretation of "amount due" which destroys an
important defence available to a debtor in a suit against
him by the creditor, may attract Article 14 against the Act.
It would be ironic if an Act for speedy recovery is held as
enabling a creditor who has delayed recovery beyond the
period of limitation to recover such delayed claims.
In the case of New Delhi Municipal Committee v. Kalu
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Ram and Anr. (1976 (3) SCC 407) relying on the Privy
Council decision in Hansraj Gupta v. Dehra Dun-Mussoorie
Electric Tramway Co. Ltd.(Supra) 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 payable. When a
duty is cast on an authority to determine the arrears of
rent the determination must be in accordance with law.
Section 7 only covers arrears not otherwise time-barred.
The respondent-institutions, however, placed reliance
on Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir,
Sarasiya Ghat, Kanpur (1978 (1) SCC 44). This case turned
on the interpretation of Section 20 of the U.P. Buildings
(Regulation of Letting, Rent and Eviction) Act, 1972. Under
Section 20(2)(a) a suit for eviction against a tenant may be
instituted on the ground that the tenant is in arrears of
rent for not less than four months and has failed to pay the
same to the landlord within one month from the date of
service upon him of a notice of demand. A further
opportunity of payment of rent is provided to the tenant
under Section 20(4) which provides that if, at the first
hearing of the suit, the tenant unconditionally pays or
tenders the entire amount of rent and damages due from him
together with interest the court may pass an order relieving
the tenant against his liability for eviction. The Court
said that Section 20(4) is meant to give a last opportunity
to the tenant to retrieve his position. It confers a
benefit on the tenant to avoid a decree of eviction. Hence
the entire amount of arrears due would have to be tendered
including time-barred rent also. This reasoning, however,
does not have any application to the Kerala Revenue Recovery
Act. There is no indication in any of the sections of the
said Act that the entire amount due whether time-barred or
not, can be recovered by resorting to the procedure under
the Kerala Revenue Recovery Act.
In our view if such a wide interpretation is put on
the words "amount due" under the Kerala Revenue Recovery
Act, there is every likelihood of the provisions of Article
14 being attracted. This Court in the case The Director of
Industries, U.P. and Ors. v. Deep Chand Agarwal (Supra)
justified the special procedure for recovery of certain
debts under the U.P. Public Moneys (Recovery of Dues) Act,
1965 on the ground that the amounts which were advanced by
the State. or by the financial institutions were for the
economic betterment of the people of that State. Speedy
recovery of these amounts was necessary so that these
amounts could be re-utilised for the same public purpose.
It is doubtful if this public purpose would extend to
granting exemption to these claims from the statute of
limitation. The law of limitation itself rests on the
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foundations of public interest. The courts have expressed
at least three reasons for supporting the existence of
statutes of limitation; (1) that long dormant claims have
more of cruelty than justice in them; (2) that a defendant
might have lost the evidence to disprove a stale claim; and
(3) that persons with good causes of action should pursue
them with reasonable diligence. (See Halsbury 4th Edn.
Vol. 28 paragraph 605). In Nav Rattanmal and Ors. v.
State of Rajasthan (AIR 1961 SC 1704), the Statutes of
Limitation have been considered as Statutes of Repose and
Statutes of Peace. The generally accepted basis for such
statutes is that they are designed to effectuate a
beneficent public purpose. Whether public purpose of speedy
recovery would outweigh public purpose behind a statute of
limitation is a moot point. But we need not examine this
aspect any further in view of our interpretation of the
words "amounts due" in Section 71.
It has been submitted before us that the statute of
limitation merely bars the remedy without touching the
right. Therefore, the right to recover the loan would
remain even though the remedy by way of a suit would be
time-barred. Reliance was placed on Khadi Gram Udyog Trust
v. Ram Chandraji Virajman Mandir, Sarasiya Ghat, Kanpur
(Supra) in this connection. The Court there observed that
though a debt may be time- barred, it would still be a debt
due. The right remains untouched and if a creditor has any
means of enforcing his right other than by action or
set-off, he is not prevented from doing so. In Punjab
National Bank and Ors. v. Surendra Prasad Sinha (1993
Supp. (1) SCC 499 at page 503- 504), this Court held that
the rules of limitation are not meant to destroy the rights
of parties. Section 3 of the Limitation Act only bars the
remedy but does not destroy the right which the remedy
relates to. Excepting cases which are specifically provided
for, as for example, under Section 27 of the Limitation Act,
the right to which the remedy relates subsists. Though the
right to enforce the debt by judicial process is barred,
that right can be exercised in any manner other than by
means of a suit. For example, a creditor’s right to make
adjustment against time-barred debts exists.
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 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 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
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which are legally recoverable and are not time-barred on
that date can be recovered under the Kerala Revenue Recovery
Act.
In view of the interpretation which we have put on
Section 71 of the Kerala Revenue Recovery Act it is not
necessary for us to consider whether by making a requisition
under Section 69(2) a creditor sets in motion a process of
recovery which is a judicial process which would attract the
Law of Limitation. There is a clear provision for
adjudication under Section 70(3) of the said Act. This
right under Section 70(3) is not affected by Section 72 of
the said Act as was contended before us by the respondents.
Section 72 merely provides that every question arising
between the Collector or the authorised officer and the
defaulter relating to execution, discharge or satisfaction
of a written demand issued under this Act will be determined
not by a suit but under the provisions of the said Act.
Section 72 does not cover the right of a person making a
payment under protest to institute a suit which is expressly
provided for under Section 70 Sub-section(3). Looking to
the scheme of recovery and refund under Sections 70 and 71,
"amounts due" under Section 71 are those amounts which the
creditor could have recovered had he filed a suit.
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.
In the premises, Civil Appeal Nos. 12393 and 12394 of
1996 are allowed while Civil Appeal Nos. 4211 of 1988, 4393
of 1988, 4175 of 1988 and Civil Appeal No........./1999
(Arising out of SLP(C) No.12051 of 1988) are dismissed.
There will, however, be no order as to costs.