IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR & THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN THURSDAY, THE 25TH FEBRUARY 2010 / 6TH PHALGUNA 1931 WA.No. 2078 of 2007 --------------------- AGAINST THE JUDGEMENT IN OP.9984/1997 Dated 14/03/2007 .................... APPELLANT: PETITIONER IN OP ------------------------------- SALINI RAVINDRAN, W/O. T.P.RAVINDRAN, "THE COTTAGE", GLASS FACTORY ROAD, KALAMASSERY, COCHIN. BY ADV. SRI.K.P.DANDAPANI, SENIOR ADVOCATE SRI.MILLU DANDAPANI RESPONDENT(S): RESPONDENTS IN OP --------------------------------- 1. THE DEPUTY TAHSILDAR (R.R.), REVENUE RECOVERY, KERALA FINANCIAL CORPORATION, CALICUT. 2. THE KERALA FINANCIAL CORPORATION, TRIVANDRUM, REPRESENTED BY ITS GENERAL MANAGER. ADV. SRI.R.S.KALKURA, SC, KFC FOR R2 GOVERNMENT PLEADER SMT.R.BINDU FOR R1 THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 25/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.R. K. BALAKRISHNAN NAIR & P.N.RAVINDRAN, JJ. ------------------------------ W.A.No.2078/2007 ------------------------------ Dated this, the 25th day of February, 2010 JUDGMENT Balakrishnan Nair, J. The writ petitioner is the appellant. The Writ Petition was filed by her, challenging Ext.P9 order of the Deputy Tahsildar (Revenue Recovery), Kerala Financial Corporation, Kozhikode and Ext.P10 notice issued under Section 36 of the Kerala Revenue Recovery Act. 2. The brief facts of the case are the following: The appellant was a Director of M/s. Southern Poly Bags Private Limited (hereinafter referred to as “the Company”). According to her, she was in its Board only for a period of one year from 14.2.1987. The Company availed a term loan of Rs.26,20,000/- and a bridge loan of Rs.3,52,000/- from the Kerala Financial Corporation (for short “KFC”). According to the appellant, the term loan was availed on 2.2.1987 and the bridge loan on 18.3.1988, when she was not a member of the Board of WA No.2078/2007 - 2 - Directors of the Company. Since the Company defaulted to pay the amounts due under the loan agreements, the 2nd respondent KFC took over the factory run by the Company under Section 29 of the State Financial Corporations Act, 1951, in 1991. In March, 1994, the properties of the Company were auctioned for an amount of Rs.18,10,000/-. Since the amount so raised by auction was not sufficient to wipe off the liability of the KFC, revenue recovery proceedings were taken against the appellant, on the ground that she was a guarantor for the said loans. There is some dispute regarding the date of service of notice by affixture. But, it is common ground that the same was served by affixture in 1995, at the last known address of the appellant. The appellant owned a landed property with a building thereon in Kozhikode district. That property was sold by her to a third party by sale deeds dated 3.9.1995, 2.10.1995 and 4.10.1995. The revenue recovery officials took steps against the property covered by those sale deeds, ignoring the sale made to the third party. In that context, motion was made before this Court and as per the direction of this Court, Ext.P9 order was passed by WA No.2078/2007 - 3 - the Deputy Tahsildar (Revenue Recovery), KFC, Kozhikode. The said officer decided to ignore the sale deeds, for the reason that the transfer was made after the notice of default was served on the appellant. Pursuant to Ext.P9, notice of attachment under Section 36 of the Revenue Recovery Act was served as per Ext.P10. In the above context, the Original Petition was filed, challenging Exts.P9 and P10. The learned Single Judge dismissed the Original Petition, taking the view that since the property was sold by the appellant after the initiation of the Revenue Recovery proceedings, by virtue of Section 44 of the Revenue Recovery Act read with Section 53 of the Transfer of Property Act, the transaction was invalid. Therefore, the Original Petition was dismissed. Challenging the said judgment, this Writ Appeal is preferred. 3. We heard the learned senior counsel Sri.K.P.Dandapani for the appellant and learned standing counsel for the 2nd respondent KFC. We also heard the learned Government Pleader for the 1st respondent. The learned senior counsel mainly raised two points before us. The first point was that in WA No.2078/2007 - 4 - view of the interpretation given to Section 34(2) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as”the Act”), the provisions of the Kerala Revenue Recovery Act cannot be invoked. It is brought to our notice that the Apex Court in Unique Butyle Tube Industries (P) Ltd. v. U.P. Financial Corporation [(2003)2 SCC 455] held that for recovery of moneys due to the U.P. Financial Corporation, the provisions of U.P. Public Moneys (Recovery of Dues) Act, 1972 cannot be invoked, as the said Act is not specifically mentioned in sub-section (2) of Section 34 of the Act. Going by the said reasoning, the learned senior counsel submitted that in the absence of specific saving of the Kerala Revenue Recovery Act, the provisions of the same cannot be pressed into service, to recover the amounts due to the 2nd respondent. The second point urged by the learned senior counsel was that the loan was barred by limitation and therefore, a time barred debt cannot be recovered invoking the provisions of the Revenue Recovery Act. In support of that submission, reliance was placed on the decision in State of WA No.2078/2007 - 5 - Kerala v. R.Kalliyanikutty [1999(2) KLT 146 (SC)]. Therefore, the learned senior counsel prayed for allowing the appeal. 4. The learned standing counsel for the 2nd respondent, on the other hand, submitted that the first point regarding inapplicability of the Revenue Recovery Act for recovering the moneys due to the KFC, is covered by the decision of this Court in Amritha Cyber Park (P) Ltd. v. Kerala Financial Corporation [2006(2) KLT 394] and the Division Bench decision of this Court in Usman v. Kerala Financial Corporation [2007(2) KLT 604]. The learned standing counsel also submitted that since the loan sanctioned was to be repaid in 94 monthly instalments commencing from 10.3.1990 and ending on 10.2.1997, the recovery of the loan was not time- barred in 1994-95, when steps were taken under the Revenue Recovery Act. 5. The learned senior counsel for the appellant, in answer, submitted that the decision of the Division Bench of this Court in Usman (supra) cannot stand with the decision of the Apex WA No.2078/2007 - 6 - Court in Unique Butyle Tube Industries (P) Ltd. (supra). So, the said decision requires re-consideration. 6. We considered the rival submissions made at the Bar and perused the materials on record. We will first deal with the contention of the appellant regarding limitation. In para 3 of the counter affidavit filed by the 2nd respondent, it is stated as follows: “Without prejudice to the aforesaid objection the 2nd respondent respectfully submits as follows. The petitioner was one of the directors of a private limited company by its name M/s. Southern Poly Bags Pvt. Ltd. The said company had availed of a term loan of Rs.26,20,000/- and bridge loan of Rs.3,52,000/- from the respondent Corporation for the purpose of setting up an industrial unit. The borrower company had executed agreements undertaking to repay the loan in 94 monthly instalments commencing from 10.3.1990 and ending on 10.2.1997. The petitioner and other directors of the company had executed a deed of guarantee dated 2.3.1987 by which they had personally guaranteed the repayment of all the amounts due from the borrower company to the 2nd respondent WA No.2078/2007 - 7 - Corporation. A true copy of the deed of guarantee dated 2.3.1987 is produced herewith and marked as Exhibit R2(a). The borrower company had mortgaged and hypothecated immovable and movable properties in favour of the Corporation towards security. The borrower company and the guarantors including the petitioner had committed default of payment of instalments of principal and interest due under the agreements executed by them. In these circumstances the respondent Corporation took possession of the properties mortgaged and hypothecated by the borrower company. Therefore the respondent Corporation took possession of the assets in exercise of the powers under Sec.29 of the State Financial Corporations Act. Thereafter the aforesaid properties were sold for a sum of Rs.18,10,000/- and sale proceeds were credited in the account of the company on 21.3.1994. After giving credit to the sale proceeds a sum of Rs.42,69,225/- was outstanding in the loan account of the company. The 2nd respondent issued a requisition dated 3.11.1994 to the District Collector for initiating revenue recovery proceedings under the Kerala Revenue Recovery Act against the petitioner and other guarantors for realisation of the balance WA No.2078/2007 - 8 - amount due under the loan account. Accordingly the 1st respondent initiated proceedings under the Revenue Recovery Act against the petitioner and other Directors and their assets. It is submitted that there is no illegality or irregularity in the action taken by the respondents.” Since the time for repayment of the loan granted was to end only on 10.2.1997, 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. 7. The next point to be considered is whether the decision of the Apex Court in Unique Butyle Tube Industries (P) Ltd. (supra), relied on by the learned senior counsel, will apply to the facts of this case. It was a case of recovery of amounts due to the U.P. State Financial Corporation, which is admittedly, a Corporation constituted under the State Financial Corporations Act, like the 2nd respondent herein. The amounts were sought to be recovered, invoking the provisions of the U.P. Public Moneys (Recovery of Dues) Act,1972. The Apex Court, after WA No.2078/2007 - 9 - referring to Section 32 of the Act, held that since the U.P. Public Moneys (Recovery of Dues) Act, 1972 is not mentioned in sub- section (2) of Section 34, the recovery was bad. According to the learned senior counsel, the provisions of the Kerala Revenue Recovery Act are similar to the provisions of the U.P. Public Moneys (Recovery of Dues) Act, 1972. Therefore, the said decision of the Apex Court will squarely apply to the facts of this case. 8. Section 34 of the Act reads as follows: “34. Act to have over-riding effect:--(1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act,1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of WA No.2078/2007 - 10 - 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act,1989 (39 of 1989).” So, the provisions of the Act are not in derogation of the provisions of the various enactments mentioned in sub-section (2), quoted above. The same includes the State Financial Corporations Act, 1951. Section 32G of the State Financial Corporations Act, 1951 reads as follows: “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 WA No.2078/2007 - 11 - Collector shall proceed to recover that amount in the same manner as an arrear of land revenue.” Going by the above provision, 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. Since the provisions of the State Financial Corporations Act, including Section 32G, are not affected by the provisions of the Act, we find nothing illegal in the 2nd 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. (supra) 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. This view taken by us finds support from the decision in Usman v. Kerala Financial Corporation [2007(2) KLT 604], wherein a Division Bench of this Court upheld the decision of the learned Single Judge in WA No.2078/2007 - 12 - Amritha Cyber Park (P) Ltd. v. Kerala Financial Corporation [2006(2) KLT 394] that recovery proceedings under the Revenue Recovery Act can be resorted 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. In the result, the Writ Appeal fails and it is dismissed. K. Balakrishnan Nair, Judge. P.N.Ravindran, Judge. nm.