IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 11TH FEBRUARY 2011 / 22ND MAGHA 1932 WP(C).No. 2016 of 2011(B) -------------------------------- PETITIONER(S): ------------------- A.M.SALAM, 40 YEARS, S/O. ARAKKAL MOHAMMED, RESIDING AT 9049, VRINDAVAN APARTMENT, PALACE ROAD, THRISSUR. BY ADV. SRI.T.O.XAVIER RESPONDENT(S): --------------------- 1. THE DEPUTY TAHSILDAR (REVENUE RECOVERY), KERALA STATE FINANCIAL CORPORATION, SMART CENTRE, KOKKALAI, THRISSUR - 680 621. 2. THE REGISTRAR OF COMPANIES,COMPANY BHAVAN, THRIKKAKARA, ERNAKULAM DISTRICT, PIN - 682 030. 3. S.K.ABDUL RASHEED, S/O. S.A.KUNJU MOHAMMED, SRAMBIYAKKAL,HOUSE NO. 675/A, VATANAPPALLY, CHAVAKKAD TALUK, THRISSUR - 680 614. 4. THE STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, GOVERNMENT SECRETARIAT, TRIVANDRUM - 695 001. * ADDL. R5 IMPLEADED 5. THE FINANCIAL CORPORATION,KALOOR, ERNAKULAM, PIN - 682 017. REPRESENTED BY ITS BRANCH MANAGER. * ADDITIONAL 5TH RESPONDENT IS IMPLEADED AS PER ORDER DATED 31/01/2011 IN I.A. NO.1582/2011 R2 BYADV. SRI.T.P.M.IBRAHIM KHAN,ASST.S.G OF INDI R5 BY SRI.M.M.SAYED MUHAMMED, SC, KFC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: svs W.P.(C). NO. 2016/2011 APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF THE PROCEEDINGS OF THE 2ND RESPONDENT DATED 17/04/1998. P2: COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT UNDER REFERENCE NO.RR.15/10/TSR DATED 22/12/2010 ISSUED BY THE 1ST RESPONDENT. P3: COPY OF THE DEMAND NOTICE U/S.34 OF THE REVENUE RECOVERY ACT UNDER REFERENCE NO.RR 15/10/TSR DATED 22.12/2010 ISSUED BY THE 1ST RESPONDENT. P4: COPY OBJECTION SUBMITTED BY THE PETITIONER DATED 17/01/2011. RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.A. TO JUDGE. svs C.K.ABDUL REHIM, J. *********************** W.P(C) No.2016 of 2011 ***************************** Dated this the 11th day of February, 2011 JUDGMENT Revenue recovery proceedings initiated against the petitioner by virtue of Exts.P2 and P3 notices are under challenge in this Writ Petition. According to the petitioner, he was one of the Directors of a company by name `Star Refineries Limited'. Subsequently he resigned from Directorship of the company on 17.04.1998 and the 3rd respondent became the Managing Director. The change of Directors was duly intimated to the Registrar of Companies as evidenced from Ext.P1. The revenue recovery steps now, initiated is for realisation of amounts due from the company to the Additional 5th respondent. Contention of the petitioner is that since he had already resigned from the company w.e.f 17.04.1998, he could not be held liable in any manner personally. But by virtue of Exts.P2 and P3, the 1st respondent had proceeded against personal properties of the petitioner. It is further stated that, even though the petitioner had submitted objections under Ext.P4, the 1st respondent has not considered the same and the coercive steps are now being pursued. W.P(C) No.2016 of 2011 2 2. Learned Standing Counsel appearing for the 5th respondent, on the basis of instructions, submitted that the petitioner was a Director of the company at the time when the loan was availed and that he had executed a personal guarantee for securing the loan. Therefore despite his resignation from Directorship, the 5th respondent is entitled to proceed against personal properties of the petitioner on the basis of the guarantee executed. Hence the recovery steps now initiated is perfectly justified, is the contention. 3. Learned counsel for the petitioner submitted that the 3rd respondent is personally liable for making payment of the arrears of the company and that appropriate steps to coerce him for such payment should be taken from the side of respondents 1 and 5. On the other hand, submission of the Standing Counsel is that, the available assets of the company were already sold through proceedings initiated under the State Financial Corporation Act (S.F.C Act) and still huge amounts are outstanding payment in the loan account. 4. Considering the fact that the petitioner had executed personal guarantee for securing the loan availed from the 5th respondent, he could not be exonerated from the liability. W.P(C) No.2016 of 2011 3 Therefore there is no infirmity with the proceedings now initiated on the basis of Exts.P2 and P3 notices. Even on an equitable basis, the respondents could be directed to proceed against the company or the 3rd respondent, since it is reported that the assets of the company were already sold by virtue of proceedings initiated under the S.F.C Act. Therefore I am of the view that the Writ Petition deserves no merit and the same is liable to be dismissed. 5. However, it is made clear that the petitioner as well as the 3rd respondent will be at liberty to approach the appropriate authority in the 5th respondent corporation to seek settlement of the account by availing benefits under the `One Time Settlement (O.T.S) Scheme' or compromise settlement scheme. It is made clear that the dismissal of this Writ Petition will not stand in the way of the authority concerned considering any such request and taking any appropriate decision. The Writ Petition is dismissed subject to reserving liberty as mentioned above. (C.K.ABDUL REHIM, JUDGE) rtr/