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PETITIONER: STATE OF KERALA & ORS.

       Vs.

RESPONDENT: V.R.KALLIYANIKUTTY & ANR.

DATE OF JUDGMENT:       01/04/1999

BENCH: Sujata V.Manohar, D.P.Mohapatra, R.C.Lahoti

JUDGMENT:

Mrs. Sujata V. Manohar, J.

       Leave granted in S.L.P.(C) No.12051 of 1988.

     All  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. The  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.

     The  Kerala  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

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(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.

     Explaining  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

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the provisions of the Act are not violative of Article 14.

     The  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.

     Civil 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.

     Looking 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. But   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.

     In  the  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

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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. It  is  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.

     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 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.

     Therefore,  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 the Act. It  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 delayed claims.

     In  the case of New Delhi Municipal Committee v.  Kalu

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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. Section 7 only covers arrears not otherwise time-barred.

     The  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 Recovery Act.

     In  our  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. It  is  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

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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  4th  Edn. Vol.   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.

     It  has  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 exists.

     There  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

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which  are  legally recoverable and are not  time-barred  on that date can be recovered under the Kerala Revenue Recovery Act.

     In  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. Section  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. Section  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.

     In the 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.

     In the 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. There will, however, be no order as to costs.