Kerala & Ors Vs. V.R.Kalliyanikutty
& ANR  INSC 119 (1 April 1999)
V.Manohar, D.P.Mohapatra, R.C.Lahoti Mrs. Sujata V. Manohar, J.
granted in S.L.P.(C) No.12051 of 1988.
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.
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.
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 (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.
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 the provisions of the Act are not violative of Article 14.
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.
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.
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.
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.
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 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.
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.
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.
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
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
case of New Delhi Municipal Committee v. Kalu 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.
7 only covers arrears not otherwise time-barred.
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
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.
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 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
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.
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
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 which are legally recoverable and are not time-barred on that date can
be recovered under the Kerala Revenue Recovery Act.
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.
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.
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.
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.
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.
will, however, be no order as to costs.