*THE HON’BLE SRI JUSTICE GHULAM MOHAMMED AND THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.No. 22161 of 2004 % 05-02-2010 Between: # V.Chakrapani ... Petitioner vs The State Bank of India, Main Branch, Bank Street, Koti, Hyderabad represented By its Branch Manager and five others …Respondents ! COUNSEL FOR PETITIONER: Smt.N.V.V.L.Prasanna ^ COUNSEL FOR RESPONDENTS : Mr.Narender Reddy for R1 to R3 Mr.Ponnam Ashok Goud, Assistant Solicitor General for R4 & 6 < Gist: > Head Note: ? CITATIONS: [1] (2000) 4 SCC 406 2 (2002)4 SCC 275 3 (2000) 6 SCC 655 4 (2007) 2 SCC 230 5 AIR 2007 SC 712 6 [2002] 121 Taxman 10 (Mad.) 7 AIR 1939 PC 47 8Emperor v. Benoarilal Sarma, AIR 1945 PC 48, p. 53 9Kanailal Sur v. Paramnidhi Sadhu Khan, AIR 1957 SC 907, p. 910 Para- 6. 10 AIR 2002 SC 1334 11 AIR 1952 SC 181 12 AIR 1966 SC 330 13 AIR 1983 SC 303 14 AIR 1989 SC 1160 15AIR 1994 SC 1818 16 1953 APPEAL CASES 267 THE HON’BLE SRI JUSTICE GHULAM MOHAMMED AND THE HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO W.P.NO.22161 OF 2004 ORDER: 1. This writ petition is directed against an order passed on 22.4.2004 by the Debt Recovery Appellate Tribunal at Chennai in MA No. 37 of 2003, which appeal has been moved by the 1st respondent – State Bank of India, henceforth referred to as `Bank’. 2. The writ petitioner was a Promoter and the Managing Director of the 5th respondent company, which was ordered to be wound up pursuant to the proceedings initiated in RC No. 10 of 1994 before the Board for Industrial Finance and Reconstruction (BIFR). The Official Liquidator attached to this court has taken charge of the assets of the company under liquidation on 29.3.1998. Respondents 1, 2, 3 herein which are public sector undertakings, acting in consortium through the 1st respondent – Bank, initiated recovery proceedings for a sum of Rs.13,12,48,000/- (Rupees Thirteen crores twelve lakhs and forty eight thousand only) by instituting OA No. 1144 of 1995 before the Debts Recovery Tribunal, Bangalore, which was allowed on 13.1.1997 as against the company as the principal debtor and the writ petitioner herein in his capacity as the guarantor of the debts of the said company. Since no appeal has been preferred against the order passed by the Debts Recovery Tribunal in OA No. 1144 of 1995, it became final and consequently a Recovery Certificate was issued on 16.5.1997. A notice of demand was raised by the Recovery Officer, which was served on the 5th respondent company on 20.8.1997. The facts relating to this aspect have been pleaded in para III of the affidavit filed in support of this writ petition, as under: “…. A Recovery Certificate which was signed on 16.5.1997, and was thus treated as of that date, was issued by the said Tribunal enabling the Recovery Officer to proceed against the assets of the company for the recovery of the amounts mentioned in the Schedule to the Recovery Certificate in case of non- payment. Thereafter, a Notice of Demand was issued by the Recovery Officer which was received by the 5th respondent company herein on 20.8.1997. The said Notice of Demand was issued under Rule 2 of the Second Schedule to the Income Tax Act, 1961 which provided the procedure for recovery of tax….” 3 . Since the notice of demand was not honoured, an order of attachment of immoveable properties belonging to the writ petitioner was issued in Form No. 16 on 31.7.2001. A sale proclamation under Rule 53 of the Second Schedule of the Income Tax Act was also published putting up the immoveable properties of the writ petitioner to sale on 7.10.2002. At this stage, the writ petitioner moved Misc. Petition No. 3 of 2001, in Recovery Proceedings No. 375 of 2001 objecting to the proposed sale of his immoveable properties on 7.10.2002. It was inter alia pleaded by the petitioner that the proclamation of sale is barred by the period of limitation contained in Rule 68B of the Second Schedule to the Income Tax Act inasmuch as the order of attachment dated 31.7.2001 should be treated to have dated back to 20.8.1997, the date on which the demand was raised by the Recovery Officer and hence the proclamation of sale is bad in law. The Recovery Officer dismissed the said objection. The writ petitioner carried the matter in appeal against that order of the Recovery Officer by instituting Recovery Appeal No. 1 of 2002 before the Debts Recovery Tribunal. That appeal was initially dismissed on 4.10.2002. However, the writ petitioner has moved a review application by instituting MA No. 95 of 2002. The Debts Recovery Tribunal allowed this review application on 6.1.2003 and it has set aside the earlier order dated 4.10.2002. It was held that the proposed sale of immovable property of the petitioner is barred by limitation. The 1st respondent – Bank then went in appeal by instituting MA No. 37 of 2003 before the Debts Recovery Appellate Tribunal, Chennai. That appeal was allowed on 22.4.2004, holding that the period of limitation for execution of the recovery order was 12 years and hence the proclamation of sale on 7.10.2002 is not barred by period of limitation. Calling in question the legality and validity of this order, the present writ petition has been instituted. 4. We have heard Sri J.V.Suryanarayana, learned Senior Counsel for the writ petitioner and Sri Deepak Bhattacherji, learned Standing Counsel for the 1st respondent – Bank. 5. Sri J.V.Suryanarayana, learned Senior Counsel would contend that that Section 25 of the Recovery of debts Due to Banks and Financial Institutions Act, 1993 for short `DRT Act’ has provided for various modes of recovery of debts as under: (1) Attachment and sale of movable and immoveable properties. (2) Arrest and detention of the defendant and (3) Appointing a receiver for the management of the movable or immovable properties of the defendant. 6. It was further contended that Section 28 has also provided for other modes of recovery than those set out under Section 25. Section 29 of the DRT Act has provided that the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall, as far as possible, apply with necessary modifications, as if the said provisions and the rules referred to are made under the DRT Act instead of the Income Tax Act. Therefore, the learned Senior Counsel contended that the entire scheme of recovering the debts due under the DRT Act is liable to be regulated in accordance with the provision enunciated under Section 29 of the DRT Act. Learned Senior Counsel would further contend that in view of the overriding effect provided to the provisions of the DRT Act, under Section 34, only the procedure as contemplated and provided for under Section 29 alone will have to be applied in the matter of recovery of debts due. Learned Senior Counsel would submit that in terms of Rule 51 of the Second Schedule to the Income Tax Act, the order of attachment must necessarily relate back to the notice of demand. Since the notice of demand has been served on the 5th respondent company on 20.8.1997, for all purposes, it is that date which will have a bearing. It was then contended that Rule 68B of the Second Schedule has clearly stipulated that no sale of immoveable property shall be made after the expiry of three years (which was later amended to four years) from the end of the financial year in which the order giving rise to a demand for recovery of which amount the immoveable property has been attached, has become conclusive or final. Therefore, the learned Senior Counsel would contend that the demand notice of recovery having been served on the company on 20.8.1997, the relevant financial year would end by 31.3.1998 and from that date when the period of three years or even subsequently amended period of four years is so reckoned, the same would have expired either on 31.3.2001 or 31.3.2002 and therefore the proclamation of sale of immoveable property of the writ petitioner ordered on 7.10.2002 is clearly impermissible under law. 7. Sri J.V.Suryanarayana has placed reliance upon the following judgments: Allahabad Bank v. Canara Bank[1] Union of India v. Delhi High Court Bar Association[2]; Punjab National Bank v. Chajju Ram[3]; Raghunath Rai Bareja v. Punjab National Bank[4]; M/s. Transcore v. Union of India[5]; Noorudin v. Tax Recovery Officer[6]. 8. It will be appropriate to note right at this stage that though several other contentions have also been raised in the writ petition, but the learned senior counsel has preferred to confine his attack only in terms of the aforementioned contention that the proposed sale of immovable property undertaken is barred by limitation. Therefore, we have also confined our scrutiny to this issue alone. 9. The 1st respondent – Bank has contested the factual statements made by the writ petitioner, by disputing the same in the following manner: “5. I state that after passing of the said recovery order dated 13.01.1997, the Debts Recovery Tribunal, Bangalore issued demand notices to the petitioner and the 5th respondent and the same were received by them on 20.08.1997. As the petitioner and the 5th respondent have failed to pay the debt due to the respondents 1 to 3 as per the recovery order dated 13.01.1997, the respondents 1 to 3 have filed a petition on 23.06.1988 before the Recovery Officer, Debts Recovery Tribunal, Bangalore for attachment of the house property bearing Plot No. 168 ademasuring 2493 sq yards of Shaikpet village (presently known as Jubilee Hills), Hyderabad and for sale of the same to realize the debt. The said petition was kept pending for long time as the constitution of the Debts Recovery Tribunal for Hyderabad was in progress and also as the post of Recovery Officer of the Tribunal was vacant. On constitution of the Tribunal for Hyderabad, the matters were got transferred from the Debts Recovery Tribunal, Bangalore. Therefore, consideration of the said petition for attachment was delayed. After appointment of the Recovery Officer for the Tribunal at Hyderabad, the respondents 1 to 3 have pursued their application for attachment before the Hon’ble Recovery Officer, Debts Recovery Tribunal, Hyderabad. The Hon’ble Recovery Officer after considering the matter passed attachment orders on 31.07.2001 and issued order of attachment of immovable property (Form No.16) and notice for setting sale proclamation (Form No.17) to the petitioner and the 5th respondent and accordingly the above said house property was attached and the Form Nos. 16 and 17 were served on the petitioner on 3.8.2001. Proclamation of sale was also issued for sale of the above said property on 7.10.2001…” 10. Learned Standing Counsel for the respondent – Bank Sri Deepak Bhattacherji, would contend that that Section 24 of the DRT Act has provided for the applicability of the provisions of the Limitation Act, 1963 and hence the order passed by the Debt Recovery Appellate Tribunal holding that the period for execution of a Recovery Certificate issued by the Debt Recovery Tribunal as 12 years is correct in law and does not warrant any interference at our hands. 11. Therefore, the all important question that falls for our consideration is, whether the period of limitation for recovering a debt due in terms of the Recovery Certificate issued by the Debt Recovery Tribunal, is liable to be reckoned as 12 years or 4 years? 12. The DRT Act has been ushered in providing for establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions. The Parliament felt it appropriate to provide for a specialized mechanism for adjudication and recovery process of debts due to banks and financial institutions as the enormity of debts due to such institutions was nearly crippling the economy and threatening the very efficacy of the banking system and the banks and financial institutions. For achieving this greater objective, special fora have been created for adjudication and recovery of the debts under Section 3. Section 17 of the DRT Act has conferred jurisdiction and powers on the Debt Recovery Tribunal to entertain and decide applications from banks and financial institutions for recovery of debts due to them. Section 18 has correspondingly barred the jurisdiction of all other courts excepting the Supreme Court and the High Courts in respect of matters specified under Section 17. Chapter IV of the DRT Act, which begins with Section 19 and ends with Section 24, has spelt out in detail the procedure to be followed and adopted by the Tribunals. Chapter V which starts with Section 25 and ends up with Section 30, dealt with recovery aspects of debts determined by the Tribunal. It is important to bear in mind that the adjudication process, pursuant to an application moved by a bank or a financial institution, is undertaken by the Tribunal, while the recovery process in accordance with Section 25 of the Act, is taken up by the Recovery Officer. 13. Section 19 has spelt out that any bank or financial institution which seeks to recover any debt from any person may make an application to the tribunal situated within the local limits. Thus, the process of recovering debts due to the banks and financial institutions commences with the application to be made by them. In this context, it is important to notice that Section 24 has been incorporated in Chapter IV. Section 24 reads as follows: “24. The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far as may be, apply to an application made to a Tribunal.” 14. The crucial expressions to understand the scope and width of applicability of Section 24 can be found in the following words: “The provisions of the Limitation Act ….. apply to an application made to a tribunal.” 15. If this provision is construed by the plain language employed therein, the provisions of Limitation Act, 1963, shall apply only to an application, liable to be made to a Tribunal. As already noticed, it is by way of an “application” under Section 19 of the DRT Act that the process of recovering the debts due to banks and financial institutions is initiated. Therefore, it is in that sense, the provisions of the Limitation Act have been rendered applicable only to an application to be moved before the tribunal. In other words, the provisions of the Limitation Act, 1963, have not been rendered applicable to the rest of the proceedings that follow the stages beyond making of an application to the tribunal. 16. It will be apt at this stage to decipher the legislative intent as to whether the applicability of the provisions of the Limitation Act, 1963 has been confined only to applications which are liable to be made to the Tribunal or even to proceedings, which are in the nature of recovery of the debt so determined by the Tribunal, which proceedings are liable to be made before the Recovery Officer. 17. The intention of the Legislature is normally understood to have comprised of two aspects. The first relates to the concept of `meaning’, i.e., the commonly understood meaning of the expressions chosen to be used and the second aspect conveys the `purpose and object’ or the `reason and spirit’ pervading through the statute. The process of construction of a statute, therefore, combines both literal and purposive approaches. The true or legal meaning of an enactment is derived by considering the plain meaning of the words used in an enactment, in the light of any discernible purpose or object which comprehends the mischief and its remedy for which the enactment is intended. In normal circumstances, primarily the language employed in the statute is the determinative factor of legislative intention. The first and primary rule of construction, therefore, is that the intention of the Legislature must be gathered from the words used by the Legislature itself. 18. Lord Atkin, when confronted with the question whether an alleged statement of the accused made to the police before his arrest was protected by Section 162 Criminal Procedure Code or not, had occasion to consider the principles relating to the Interpretation of Statutes, in Pakala Narayana Swami Vs. Emperor[7] and has said as under: If such an exception were intended one would expect to find it expressed: and their Lordships cannot find sufficient grounds for so departing from the plain words used. If one had to guess at the intention of the Legislature in framing a Section in the words used, one would suppose that they had in mind to encourage the free disclosure of information or to protect the person making the statement from a supposed unreliability of police testimony as to alleged statements or both. In any case the reasons would apply as might be thought a fortiori to an alleged statement made by a person ultimately accused. But in truth when the meaning of words is plain it is not the duty of the Courts to busy themselves with supposed intentions. I have been long and deeply impressed with the wisdom of the rule, now I believe universally adopted, at least in the Courts of law in Westminster Hall, that in construing wills and indeed statutes, and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther: Lord Wensleydale in Grey v. Pearson (1857) 6 H.L.G. 61 at p. 106. My Lords, to quote from the language of Tindal C.J. when delivering the opinion of the Judges in Sussex Peerage Case (1844) 11 C.L. & F 85 at page 143, 'The only rule for the construction of Acts of Parliament is that they should be construed according to the intent of the Parliament which passed the Act. If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do in such case best declare the intention of the lawgiver. But if any doubt arises from the terms employed by the Legislature, it has always been held a safe means of collecting the intention, to call in aid the ground and cause of making the statute, and to have recourse to the preamble which according to Dyer C.J. Stowel v. Lord Zouch (1562) 1 Plowd 353 at p. 369] is a key to open the minds of the makers of the Act, and the mischiefs which they are intended to redress': Lord Halsbury L.C. in Income-tax Commissioners v. Pemsel (1891) A.C. 531 at p. 542. 11. In this case the words themselves declare the intention of the Legislature. It therefore appears inadmissible to consider the advantages or disadvantages of applying the plain meaning whether in the interests of the prosecution or the accused. (Emphasis is brought out) 19. Therefore, the question is not what may be supposed to have been intended by those words in the Statute but what exactly has been said. 20. If the words used in a statute are precise and unambiguous, then there may not be anything necessary to do, to expand those words. When clear and unambiguous words are used, they convey the force of intent of the Legislature and when the words used in a statute admit of only one meaning, the question of construction of a statute by any other process would not arise. “Again and Again”, said Viscount Simonds, L.C., “this Board has insisted that in construing enacted words we are not concerned with the policy involved or with the results, injurious or otherwise, which may follow from giving effect to the language used.[8]” Gajendragadkar,J, as the learned Chief Justice of India then was, speaking for the Court in Kanailal Sur v. Paramnidhi Sadhu Khan[9], said : However, in applying these observations to the provisions of any statute, it must always be borne in mind that the first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. If the words used are capable of one construction, only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act. The words used in the material provisions of the statute must be interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise. When the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the courts would prefer to adopt the latter construction. It is only in such cases that it becomes relevant to consider the mischief and defect which the Act purports to remedy and correct. 21. Therefore, not only by its setting, imminently in Chapter IV but by employing the words “to an application” and “made to a Tribunal”, it is reasonable to decipher that the Legislature has indeed intended the provisions of the Limitation Act, 1963 to be applied only to cases of applications made to the Tribunal, but not to all other proceedings. 22. Learned counsel Sri Deepak Bhattacherji has placed strong reliance upon the judgment rendered by the Supreme Court in Raghunath Rai Bareja v. Punjab National Bank (supra) and contended that the issue relating to the period of limitation for execution proceedings has been concluded by the Supreme Court in the above judgment holding that it is 12 years and hence he suggested that this question does not require any further examination on our part. It is true that the Supreme Court in the above case cited supra has held as under: “24. Since Section 24 of the RDB Act applies the provisions of the Limitation Act, 1963, to applications filed before the Tribunal, and since Article 136 of the Limitation Act provides a period of limitation of 12 years for filing an Execution Petition, hence now no such application can be filed since that period of 12 years expired on 15. 1. 1999. Hence, in our opinion the debt became time barred after 15. 1. 1999.” 23. As is well known, the ratio laid down by the Supreme Court is what carries with it the weight of a binding precedent. It is well settled that an order of the Supreme Court must be construed having regard to the text and context in which the same was passed. A judgment cannot be read as a statute. Construction of a judgment should be made in the light of the factual matrix involved therein. More important is to see the issue involved therein and the context wherein the observations were made. Any observation made in a judgment should not be read in isolation and out of context. [See Bombay Dyeing v. Bombay Environmental Action Group – (2006) 3 SCC 434 (para 312)]. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said in the judgment that constitutes a precedent. The only thing in a decision binding is the principle upon which a case is decided and for this reason it is important to analyse a decision and to isolate from it the ratio decidendi. Every decision contains three basic postulates. (i) findings of material facts, direct and inferential. (ii) statements of the principles of law