The Andhra Pradesh State ... vs A. Laxmipathi, Hyd. 3 Others
2022 Latest Caselaw 1792 Tel

 THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                                      AND
      THE HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI

     WRIT APPEAL Nos.1814 & 1815 of 2008 and 409 of 2009

COMMON JUDGMENT: (Per the Hon'ble the Chief Justice Satish Chandra Sharma)

       Regard being had to the controversy involved in the

aforesaid cases, they were heard together and are being decided

by a common order.

       The facts of W.A.No.1814 of 2008 are reproduced as

under:-

       The present writ appeal is arising out of the order dated

16.09.2008        passed      by     the    learned       Single     Judge   in

W.P.No.26014 of 2005.

       The undisputed facts of the case reveal that the writ

petition was preferred by the respondent Nos.1 and 2/writ

petitioners being aggrieved by the action initiated by the Andhra

Pradesh State Financial Corporation Limited (for short "the

Corporation") for recovery of dues by taking shelter of the

Andhra Pradesh Revenue Recovery Act, 1864 (for short "the

Recovery Act"). The Corporation sanctioned term loan and soft

loan for a sum of Rs.11,60,000/- to M/s.Nagarjuna Cable

Industries Private Limited and the respondent Nos.1 and 2/writ

petitioners stood as sureties in respect of the loan granted by

the Corporation. The borrower did not repay the loan in time

and therefore, the unit was seized and sold in accordance with

Section 29 of the State Financial Corporations Act, 1951.

Thereafter, as the Corporation was not able to recover the dues

from the borrower, notice was issued to the respondent

Nos. 1 and 2/writ petitioners, who stood as sureties, by

invoking the provisions of the Recovery Act. The learned Single

Judge, based upon the judgment delivered by the Hon'ble

Supreme Court, in similar circumstances, in the case of State

of Kerala vs. V.R.Kalliyanikutty1 has allowed the writ petition.

Paragraph 10 of the order passed by the Hon'ble Supreme

Court in the case of V.R.Kalliyanikutty (supra) is reproduced

as under:-

"10. The 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

AIR 1999 SC 1305

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."

In the considered opinion of this Court, once the

controversy involved in the present case stands concluded on

account of the judgment delivered by the Hon'ble Supreme

Court in the case of V.R.Kalliyanikutty (supra), the question of

recovery by taking shelter of the Recovery Act does not arise.

The learned Single Judge while allowing the writ petition

has held as under:-

"The question directly fell for consideration in Kalliyanikutty (supra) with reference to Section 71 of the Kerala Revenue Recovery Act, 1968. The purport of Section 71 of the said Act is same as that of Section 52A of RR Act. It enabled - as in the case of proviso to Section 52A(1) of A.P.Act, the public authorities to recover "amounts due" as land revenue. But, the Supreme Court observed that the amount "due" normally refers to the amounts, which a creditor has right to recover. When such amount or debt amount is time barred, the same cannot be described as the amount due which a creditor can recover. In view of this,

while holding that under Section 71 of the Kerala Revenue Recovery Act, the claims, which are time barred on the date of requisition is issued, are not "amounts due". The Supreme Court observed as under.

          "There        is        no      question,         however,        in     the
       present        case       of    any      payment      voluntarily         made
       by a      debt       or    being adjusted            by    his    credit or

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 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 Sect ion 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."

In N.A.Radha v State of Andhra Pradesh (2000 (2) ALD

560), the action of the SFC to enforce its dues by notices under Section 52A of RR Act was challenged. This Court following Kalliyanikutty (supra) held as under.

The only question that survives and has been urged at the hearing of this writ petition is that the

demand by the Corporation of the amounts due from the petitioners is barred by limitation and as such unenforceable per se or under the provisions of the Act.

In view of the decision of the Supreme Court in State of Kerala v Kaliyani Kutty, AIR 1999 SC 1305, proceedings under the Act cannot lie for recovery of amounts that are barred by limitation. The question that arises is whether the claim of the respondent - Corporation is barred by limitation and whether this question would be adjudicated in these proceedings.

In Kumar Chemicals and Fertilizers (P) Limited v Andhra Pradesh Industrial Development Corporation Limited (AIR 2008 AP 101) on which strong reliance is placed by the learned Standing Counsel for SFC also does not deviate from the ratio of Supreme Court's decision. It is observed therein that when Section 32G of the Act is invoked the ratio in Kalliyanikutty (supra) may get attracted because a similar expression "amounts due" is also contained in the said section. This Court also held that when the action was initiated under Section 29 of the Act for sale of assets of the borrower, the period of limitation would not apply, and it is only in cases where SFC invokes Section 52A of RR Act read with Section 32G of the Act, period of limitation applies. To get over this aspect of the matter learned Standing Counsel has placed before this Court Xerox copy of the notice dated 05.10.1999 issued by the third respondent to the petitioners in both the writ petitions calling upon them to pay an amount of Rs.7,20,000/-, failing which action was proposed under RR Act. This Court is not able to comprehend as to how a notice demanding payment by the creditor to the debtor extends period of limitation as per Section 18 of the Limitation Act, 1963. Secondly, there is not even a whisper about issue of such notices in the counter affidavit filed by SFC. For the first time copy is produced before this Court without any evidence of service of such notices on petitioners. Therefore, importance cannot be attached to

this aspect of the matter. SFC sanctioned loans to the borrower on 23.02.1988, and therefore, notice proposing to initiate action under Section 52A of RR Act issued on 08.08.2005. Hence recovery of debt is wholly time barred, and same cannot be recovered under said provision. In the result, for the above reasons, the writ petitions must succeed, and they are allowed accordingly. But, in the circumstances of the case, there shall be no order as to costs."

In the considered opinion of this Court, the learned Single

Judge was justified in allowing the writ petition and this Court,

in the light of the judgment delivered by the Hon'ble Supreme

Court in the case of V.R.Kalliyanikutty (supra) does not find

any reason to interfere with the order passed by the learned

Single Judge, as facts have not been disputed at all before the

learned Single Judge nor before this Court.

Resultantly, the present writ appeals stand dismissed.

Pending miscellaneous applications, if any, shall stand

closed. There shall be no order as to costs.

________________________ SATISH CHANDRA SHARMA, CJ

_______________________ ABHINAND KUMAR SHAVILI, J 08.04.2022 JSU