2010 (2) TMI 965 - HC - Companies Law

Kerala High Court upholds Kerala Revenue Recovery Act for debt collection, dismisses time-barred claim.

Salini Ravindran Versus Deputy Tahsildar (Revenue Recovery)

The Kerala High Court affirmed the legality of using the Kerala Revenue Recovery Act for recovering dues owed to the Kerala Financial Corporation. The ... Whether the property was sold by the appellant after the initiation of the revenue recovery proceedings, by virtue of section 44 of the Kerala Revenue Recovery Act, 1968, read with section 53 of the Transfer of Property Act, 1882, the transaction was invalid? Held that:- Since the time for repayment of the loan granted was to end only on February 10, 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. 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, 1968. Since the provisions of the State Financial Corporations Act, 1951, including section 32G, are not affected by the provisions of the Act, we find nothing illegal in the second 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.'s case (2002 (12) TMI 508 - SUPREME COURT OF INDIA), 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. Thus recovery proceedings under the Revenue Recovery Act can be resorted to 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. Appeal dismissed. Issues:1. Applicability of the Kerala Revenue Recovery Act for recovering amounts due to Kerala Financial Corporation.2. Whether the loan was barred by limitation.Issue 1: Applicability of the Kerala Revenue Recovery Act:The case involved a dispute where the appellant challenged an order and notice issued under the Kerala Revenue Recovery Act. The appellant contended that the Act could not be invoked to recover amounts due to the Kerala Financial Corporation (KFC) based on the interpretation of section 34(2) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The appellant relied on a Supreme Court decision regarding recovery under a specific act. However, the court held that since the State Financial Corporations Act, 1951, was not affected by the Act, the KFC could use the Kerala Revenue Recovery Act to recover dues. The court referred to section 32G of the State Financial Corporations Act, which allows recovery of amounts due to the financial corporation as arrears of land revenue, thus justifying the KFC's use of the Kerala Revenue Recovery Act. The court dismissed the appellant's argument based on the previous Supreme Court decision and upheld the legality of invoking the Kerala Revenue Recovery Act for recovery.Issue 2: Loan Barred by Limitation:Another contention raised was whether the loan was barred by limitation, making it ineligible for recovery under the Revenue Recovery Act. The appellant argued that the loan repayment period extended until February 10, 1997, and since recovery proceedings were initiated in 1994-95, the debt was not time-barred. The court examined the details provided by the second respondent, confirming that the loan repayment period indeed ended in 1997. Therefore, the court rejected the limitation argument raised by the appellant, concluding that the recovery proceedings initiated in 1994-95 were within the permissible timeframe for debt recovery. Consequently, the court dismissed the appeal challenging the original judgment that upheld the revenue recovery proceedings against the appellant.In conclusion, the Kerala High Court affirmed the legality of invoking the Kerala Revenue Recovery Act for recovering dues owed to the Kerala Financial Corporation. The court also rejected the argument that the loan was barred by limitation, as the recovery proceedings were initiated within the stipulated repayment period. The appeal challenging the original judgment was dismissed, upholding the validity of the revenue recovery proceedings against the appellant.