Supreme Court of India
K.P. KHEMKA & ANR.versusHARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED & ORS.
- Citation
- 2024 INSC 396
- Decided
- 8 May 2024
- Bench
- SURYA KANT
Holding
The statutes confer a distinct power to recover amounts due notwithstanding the bar of limitation, but the question requires a full bench and is referred to the Chief Justice of India.
Summary
The appellants, guarantors of a term loan granted by the Haryana State Industrial and Infrastructure Development Corporation (HSIDC) to Khemka Ispat Ltd, faced recovery notices under the Haryana Public Moneys (Recovery of Dues) Act, 1979 and the State Financial Corporation Act, 1951 after the loan defaulted. They contended that the debt was time‑barred under the Limitation Act, 1963 and therefore could not be pursued under those statutes, relying on the Supreme Court’s decision in State of Kerala v. V.R. Kalliyanikutty. The High Court rejected this argument, holding that limitation bars only the remedy in a civil suit and that the Recovery Acts confer a distinct power to enforce dues irrespective of limitation. The Supreme Court examined the statutory scheme, the object of the Acts, and relevant precedents, concluding that the Acts do create a separate right of recovery even when a civil suit is barred. However, the Court did not issue a definitive ruling on the matter, directing that the issue be placed before the Chief Justice of India for consideration by a three‑judge bench. The order therefore referred the matter for further adjudication.
Issues considered
- Whether a debt that is time‑barred under the Limitation Act, 1963 can be recovered under the Haryana Public Moneys (Recovery of Dues) Act, 1979 read with the State Financial Corporation Act, 1951.
Legislation cited
- Electricity Act, 2003s. 56(2)
- Haryana Public Moneys (Recovery of Dues) Act, 1979s. 2(c), s. 3, s. 4
- Limitation Act, 1963
- State Financial Corporation Act, 1951s. 32-G
Subjects
DebtTime-barred debtRemedyTime-barred debt under Limitation Act, 1963Recovery of dues under Haryana Public Moneys (Recovery of Dues) Act, 1979Limitation Act bars remedyLimitation Act does not extinguish debtRecovery of loanRight to recoverRecovery proceedingsAlternative mechanism of enforcement to recover the amount dueAdditional rights to enforce claims
Judgment
[2024] 6 S.C.R. 234 : 2024 INSC 396
K.P. Khemka & Anr.
v.
Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
(Civil Appeal No. 6144 of 2024)
08 May 2024
[Surya Kant and K.V. Viswanathan,* JJ.]
Issue for Consideration
By the impugned judgment, the High Court dismissed the writ
petitions and rejected the contention of the appellants herein that
if a debt is time-barred under the Limitation Act, 1963, the same
cannot be recovered by resorting to the Haryana Public Moneys
(Recovery of Dues) Act, 1979 read with the State Financial
Corporation Act, 1951.
Headnotes
Haryana Public Moneys (Recovery of Dues) Act, 1979 – State
Financial Corporation Act, 1951 – Limitation Act, 1963 – The
appellants herein had relied upon the judgment of a three-
Judge Bench of the Supreme Court in State of Kerala and
Others vs. V.R. Kalliyanikutty & Anr. to contend that a time-
barred debt under the Limitation Act cannot be recovered under
the Recovery of Dues Act – Respondent contended that the
impugned order of the High Court was perfectly justified in
holding that the decision of this Court in V.R. Kalliyanikutty has
not considered the holding in Bombay Dyeing and Tilokchand
Motichand:
Held: The Division Bench in the impugned order do not directly
address the holding in V.R. Kalliyanikutty that the Kerala Revenue
Recovery Act did not create any additional right to recover and
enforce the outstanding amounts due – The real question that
arises is do the State Financial Corporations Act, 1951 and the
Recovery of Dues Act create a distinct right and provided an
alternative mechanism of enforcement to recover the amount
due, even if the amounts due were time barred – While the
process of filing a civil suit may be barred because of the statute
of limitation, the power to recover vested through Section 32-G
* Author
[2024] 6 S.C.R. 235
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
of the State Financial Corporations Act read with Section 2(c)
and Section 3 of the Recovery of Dues Act is a distinct power
which continues notwithstanding that another mode of recovery
through a civil suit is barred – Understood in that sense, it does
appear that there is an additional right to enforce the claims of
the financial corporations notwithstanding the bar of limitation –
Also, in a three-judge Bench decision of the Supreme Court in
K.C. Ninan v. Kerala State Electricity Board, 2023 INSC 560, the
Court noticed the decision in V.R. Kalliyanikutty and concluded
that statute of limitation only barred a remedy, while the right to
recover the loan through ‘any other suitable manner provided’
remains untouched – For a comprehensive consideration and an
authoritative pronouncement after taking into account all aspects,
the matter needs to be placed before the Hon’ble Chief Justice
of India to constitute an appropriate three-judge Bench. [Paras
13, 14, 18, 31, 32]
Case Law Cited
State of Kerala and Others v. V.R. Kalliyanikutty & Anr.
[1999] 2 SCR 372 : (1999) 3 SCC 657; Bombay Dyeing
and Manufacturing Company Limited v. The State of
Bombay and Ors. [1958] 1 SCR 1122; Tilokchand and
Motichand and Others v. H.B. Munshi and Another
[1969] 2 SCR 824 : (1969) 1 SCC 110; Khadi Gram
Udyog Trust v. Ram Chandraji Virajman Mandir,
Sarasiya Ghat, Kanpur [1978] 2 SCR 249 : (1978) 1
SCC 44; Director of Industries, U.P. v. Deep Chand
Agarwal [1980] 2 SCR 1015 : (1980) 2 SCC 332; New
Delhi Municipal Committee v. Kalu Ram [1976] Supp.
1 SCR 87 : (1976) 3 SCC 407; K.C. Ninan v. Kerala
State Electricity Board [2023] 9 SCR 637 : 2023 INSC
560 – referred to.
Hansraj Gupta v. Dehra Dun-Mussorie Electric Tramway
Co. Ltd., AIR 1933 PC 63 – referred to.
Sri Narain v. Liquidator, Union Bank of India, ILR 4 Lah.
109 – referred to.
Books and Periodicals Cited
Salmond on Jurisprudence, 12th Edition, on concepts
of “Right” and “Power” [Page 224, 229 & 230]
236 [2024] 6 S.C.R.
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List of Acts
Haryana Public Moneys (Recovery of Dues) Act, 1979; State
Financial Corporation Act, 1951; Limitation Act, 1963.
List of Keywords
Debt; Time-barred debt; Remedy; Time-barred debt under Limitation
Act, 1963; Recovery of dues under Haryana Public Moneys
(Recovery of Dues) Act, 1979; Limitation Act bars remedy; Limitation
Act does not extinguish debt; Recovery of loan; Right to recover;
Recovery proceedings; Alternative mechanism of enforcement to
recover the amount due; Additional rights to enforce claims.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6144 of 2024
From the Judgment and Order dated 24.04.2015 of the High Court of
Punjab & Haryana at Chandigarh in CWP No. 15983 of 2013
With
Civil Appeal No. 6145 of 2024
Appearances for Parties
Rakesh Kumar, Saurabh Mishra, Ms. Preeti Kashyap, Varun Pandit,
Shrimay Mishra, Abhimanyu Tewari, Ms. Eliza Bar, Siddhant Saroha,
Sidhant Awasthy, Manav Bhalla, Praveer Singh, Advs. for the
Appellants.
Lokesh Sinhal, Sr. A.A.G. Akshay Amritanshu, Nikunj Gupta, Ms.
Himanshi Shakya, Samyak Jain, Karunakar Mahalik, Manish K.
Bishnoi, Rajat Navet, Kushagra Pandit, D. S. Mahra, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Order
K.V. Viswanathan, J.
1. Leave granted.
2. The present appeals arise from the judgment of a Division Bench of the
High Court of Punjab and Haryana at Chandigarh dated 24.04.2015
in CWP No. 15983 of 2013 and CWP No. 26452 of 2014. By the said
[2024] 6 S.C.R. 237
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
judgment, the High Court dismissed the writ petitions and rejected
the contention of the appellants herein that if a debt is time-barred
under the Limitation Act, 1963, the same cannot be recovered by
resorting to the Haryana Public Moneys (Recovery of Dues) Act, 1979
(for short “the Recovery of Dues Act”) read with the State Financial
Corporation Act, 1951. In so holding, the Division Bench applied the
well established principle that the Limitation Act, which applies to
Courts, merely bars the remedy and does not extinguish the debt.
3. The appellants herein had relied upon the judgment of a three-
Judge Bench of this Court in State of Kerala and Others vs. V.R.
Kalliyanikutty & Anr. (1999) 3 SCC 657 to contend that a time-
barred debt under the Limitation Act cannot be recovered under
the Recovery of Dues Act. While dealing with this contention, the
High Court relied upon the judgment of a Constitution Bench of this
Court in Bombay Dyeing and Manufacturing Company Limited
vs. The State of Bombay and Ors., 1958 SCR 1122 to reiterate the
principle that the Limitation Act merely bars the remedy and does not
extinguish the debt. The High Court also distinguished the judgment
in V.R. Kalliyanikutty (supra) by holding that the judgments of this
Court in Bombay Dyeing and Manufacturing Company Limited
(supra) and Tilokchand and Motichand and Others vs. H.B.
Munshi and Another, (1969) 1 SCC 110 were not brought to the
notice of the Bench deciding V.R. Kalliyanikutty (supra).
4. Facts in Civil Appeal arising out of SLP (C) No. 14213 of 2015
are as follows:
i. Respondent No.3 - M/s Khemka Ispat Limited was a Company
engaged in the business of manufacture, production, import,
export, sale and distribution of all types of Cold Rolled Strips,
steel sockets, pipe and tube products, and other allied goods.
ii. On 07.03.2003, Respondent No.3 had taken a Term Loan
under an Equipment Finance Scheme from Respondent No.1
- Haryana State Industrial and Infrastructure Development
Corporation Limited (hereinafter referred to as “the HSIDC
Ltd.”) for a sum of Rs.105.90 lakhs. In view of the said Term
Loan, Respondent No.3 had entered into a Loan Agreement
with HSIDC Ltd. along with the personal guarantees of the
appellants herein.
238 [2024] 6 S.C.R.
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iii. On 31.03.2003, the sanctioned loan amount to the tune of Rs.105
lakhs was disbursed to Respondent No.3. On 15.07.2003,
further amount of Rs. 2 lakhs was disbursed. The Loan was to
be repaid in five years with a moratorium period of six months
w.e.f. 01.10.2003.
iv. On 19.08.2004, the First Default Notice was issued to
Respondent No.3 by HSIDC Ltd. along with intimation of a
right under Section 29 of the State Financial Corporations Act.
v. In the meantime, Respondent No.3 became a Sick Company
and reference was made to the Board for Industrial and
Financial Reconstruction (for short “the BIFR”). On 31.07.2006,
the outstanding as on date to HSIDC Ltd. was Rs.99.32 lakhs.
vi. On 17.08.2006, BIFR declined Respondent No.3’s Reference
and the One-Time Settlement request. ING Vysya Bank also
informed the BIFR that it had taken over possession of the unit,
in accordance with which the BIFR ordered the reference to have
abated. Respondent No. 3 informed the said ING Vysya Bank
that the latter will not be responsible for the dues of the HSIDC
Ltd, and that the machinery is in possesison of the Company.
On 01.06.2007, HSIDC Ltd. took possession of the movables.
vii. While proceedings were carrying on against the principal
borrower, on 08.08.2007, Respondent No.1 HSIDC Ltd. issued
a show cause notice under Section 3(1)(b) of the Recovery of
Dues Act to Respondent No.3, which notice was returned back
with the remarks “closed/left”.
viii. On 25.09.2007, a winding up petition was filed by one of the
creditors of Respondent No.3 in C.P. NO. 171 of 2007 before
the High Court of Delhi, wherein a provisional order to wind-
up was passed and a provisional liquidator appointed. Further,
Final Order of winding up of Respondent No.3 appears to have
been passed on 24.03.2009.
ix. When the matter stood thus, on 29.10.2009, Respondent
No.1 issued a show cause notice under Section 3(1)(b) of the
Recovery of Dues Act to the Appellants and the same was
returned with the remarks “left/closed”.
x. Thereafter, on 10.01.2012, recovery notice sent to the appellants
by Respondent No.2, the Additional General Manager of HSIDC
[2024] 6 S.C.R. 239
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
Ltd., under Section 3(1)(b) of the Recovery of Dues Act was
returned with the remarks “left/closed”. The order determining
the amount due as Rs. 213.19 lakhs w.e.f 10.01.2012 was
passed by the HSIDC Ltd.
xi. On 02.02.2012, the HSIDC Ltd. sent a notice under the
provisions of the Recovery of Dues Act to the Appellants and
the Respondent No. 3 indicating the sum determined to be
due from them, which was to the tune of Rs.213.19 lakhs. On
01.03.2012, the appellants filed their reply. This was rejected by
the Respondent No. 2, Additional General Manager of HSIDC
Ltd., on 15.11.2012. Thereafter, the Respondent No. 2, Additional
General Manager of HSIDC Ltd., issued a Final Notice under
the provisions of the Recovery of Dues Act dated 15.11.2012
calling upon the appellants to pay Rs. 213.19 lakhs which was
determined to be due from the Appellants and Respondent No. 3.
xii. On 11.01.2013, recovery certificate under Section 3(1) of the
Recovery of Dues Act for a sum of Rs. 243.11 lakhs, was issued.
xiii. On 12.07.2013, appellants filed CWP No. 15983 of 2013
challenging the recovery notice. The relevant ground was
raised in the following terms:
“G. BECAUSE the Impugned Orders deserve to be
quashed as the recovery which has been initiated
by first sending the notice on 10.01.2012 under the
provisions of Haryana Public Moneys (Recovery of
Dues) Act, 1979 is much beyond the limitation to
recover any dues by the Corporation. The period
of limitation if any was 3 years from 31.07.2004,
when the amount stood and payable by Respondent
No. 3 Company (in Liqn.). The period to recovery
from either the Company or the Guarantors who
stood surety for the said amount expired in the year
2007. The recovery as per the notices sent by the
Respondent Corporation admittedly have been sent
on 10.01.2012 and subsequent thereto and therefore
any adjudication or determination of a sum due in
view of the above said Act is unsustainable and is
in any case time barred”
xiv. The Writ Petition was dismissed vide the impunged order.
240 [2024] 6 S.C.R.
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5. The facts in Civil Appeal arising out of Special Leave Petition
(C) No. 23041 of 2015 are as under:
i. The Haryana Financial Corporation sanctioned a term loan
of Rs.88,74,000/- to Respondent No.5 - Cosmo Flex Private
Limited on 31.01.1996. The loan was to be repaid within a
period of eight weeks by way of quarterly instalments and the
agreed rate of interest was 19.5% with half yearly rests. On
17.03.1997, the loan agreement was executed.
ii. The appellant, who was a Director of the R-5 Company, claims
that he resigned from the Directorship of the Respondent No.
5 Company on 06.04.1998.
iii. On 29.07.1998, the loan was recalled by the Haryana Financial
Corporation.
iv. In the meantime, the appellant claims that on account of his
resignation from Directorship of the Respondent No. 5 company,
he was paid a full and final settlement from the Company
on 23.10.1998. Thereafter, he claims that the Registrar of
Companies was also intimated about the fact of his resignation,
on 12.10.1998.
v. The Haryana Financial Corporation, on 19.08.1999, sent a
notice for taking over possession of the Company’s assets and
thereafter took possession on 31.08.1999.
vi. The Haryana Financial Corporation has set-out the time-line of
events where multiple recovery notices under the Recovery of
Dues Act were issued, leading up to the determination of the
sum due from the Appellants herein, in the following terms:
“4. ...On continous non-repayment of dues, the
possession of the mortgaged properties was
taken over under section 29 of the State Financial
Corporations Act, 1951. The primary security was
disposed of by the Corporation for Rs. 61.00 lakh
on 16.12.1999. The Recovery Certificate was issued
on 22.09.2000 to the Collectors Gurgaon, Delhi &
Srinagar and were returned in the year 2001 on the
ground that no immovable/movable properties were
available in the names of directors/guarantors and
[2024] 6 S.C.R. 241
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
they were not residing at the given addresses. The
fresh Recovery Certificate was issued on 10.08.2005
u/s 3 of Haryana Public Moneys (Recovery of Dues)
Act, 1979 in the name of Collectors, Sri Nagar,
Delhi & Gurgaon through Collector, Gurgaon. The
Recovery Certificate pertaining to Collectors, Sri
Nagar & Delhi were returned by Collector, Gurgaon
to send the same directly to the concerned Collectors
as there was no provisions to send the same by
one Collector to another Collector. After obtaining
legal opinion as per which, it was advised that as
per Section 3 of the Revenue Recovery Act, the
Collector may send a certificate to other Collector,
Recovery Certificates were returned to Collector,
Gurgaon. However, Recovery Certificate in the
name of Collector Gurgaon was being pursued. As
Recovery Certificate with Collector Delhi was not
traceable in his office, photocopy of the Recovery
Certificate was re-lodged with Collector Delhi on
16.04.2008. It was informed by Collector Delhi
that the Recovery Certificate lodged with them
was not in their jurisdiction and as such recovery
cannot be effected. Further, the directors residing
at Gurgaon & Delhi had shifted to some unknown
places. However, as the new addresses of one
of the Directors Sh. Charanjeet Gaba were found
out, fresh RCs were issued to Collectors Delhi
(Central, East, South & West), Gurgaon & Sri Nagar
(Kashmir) on 19.04.2010 u/s 32G of the State
Financial Corporations Act. However, the Recovery
Certificate dated 19.04.2010 was quashed by the
High Court of Punjab and Haryana vide order dated
02.12.2011 passed in CWP No. 12226 of 2010 on the
ground that the same was issued without affording
the Petitioners an opportunity of personal hearing.
The Corporation was given liberty to proceed after
hearing the petitioner and giving him opportunity to
file his objections.
xxx xxx xxx
242 [2024] 6 S.C.R.
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7. Accordingly, personal hearings were given to
defaulting borrowers/guarantors for sum determination
under Section 32-G of the State Financial Corporations
Act, 1951 on 11.12.2013, 19.03.2014 and 06.08.2014,
objection raised by Sh. Charanjeet Gaba, borrower/
guarantor verbally during the personal hearing as
well as through various representations were dealt in
detail in the proceeding of personal hearing held on
06.08.2014. However, as no constructive proposal
for repayment/settlement under the new Settlement
Policies of HFC-2011 was recived from Sh. Charanjeet
Gaba or other borrowers/guarantors, Recovery
Certificate was issued to Collectors, Srinagar, Solan
(HP), Gurgaon & Delhi on 08.10.2014 for the recovery
of Rs. 14,55,11,275/- with further interest @24%
from 01.03.2014, the same stand challenged by the
petitioner before the Hon’ble High Court as stated
above.”
(emphasis supplied)
vii. The appellant challenged the proceedings dated 06.08.2014 by
filing CWP No. 26452 of 2014. By the Impugned Order, the Writ
Petition was dismissed.
viii. In the Special Leave Petition filed before this Court, the case of
the Appellant as regards the debt being time-barred is as follows:
“A. Because the order/proceedings dated 06.08.2014
passed by Respondent No. 3 under Section 32 (G)
of the State Financial Corporation Act for recovery
of Rs. 14,55,11,275/- along with pendente lite and
future interest could not have been issued as the
recovery had already become time barred against the
petitioner. Since the recovery on the basis of mortgaged
property had already been effected by way of sale
dated 16.12.1999 the remaining amount could not
be recovered beyond the limited time of three years”
Contentions of the Parties
6. Before us, learned counsel for the appellants contend that the
judgment in V.R. Kalliyanikutty (supra) directly covers the issue
[2024] 6 S.C.R. 243
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
as according to them, in substance, there is no difference between
the provisions of the Kerala Revenue Recovery Act, with which V.R.
Kalliyanikutty (supra) was concerned, and the Recovery of Dues
Act of the State of Haryana. According to the learned counsel, V.R.
Kalliyanikutty (supra) has clearly held that Acts, like the Recovery
of Dues Act, are intended for speedy recovery of loans and do not
create a new right in the creditor. It is their contention that on that
reasoning the word “due” in the Recovery of Dues Act cannot be
interpreted to include time-barred debts.
7. Learned counsel for the respondent-Corporations strongly refuted
these contentions and contended that the impugned order was
perfectly justified in holding that the decision of this Court in V.R.
Kalliyanikutty (supra) has not considered the holding in Bombay
Dyeing (supra) and Tilokchand Motichand (supra).
Questions that arise for this Court’s consideration
8. The questions that fall for consideration are, firstly, are the appellants
right in contending that the recovery proceedings initiated against them
under the Recovery of Dues Act are barred in view of the principle
laid down in V.R.Kalliyanikutty (supra). Secondly, if they are right,
then is the decision in V.R. Kalliyainkutty (supra) contrary to the
holding in Bombay Dyeing and Manufacturing Company Limited
(supra) and if so what is the course open for this two-Judge Bench.
Reasoning in V.R. Kalliyanikutty (supra)
9. To appreciate these contentions, we need to first understand the
law laid down in V.R. Kalliyanikutty (supra). The primary question
of law involved in V.R. Kalliyanikutty (supra) was, 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,
1968. This apart, the Bench, after setting out the scheme of the
Kerala Revenue Recovery Act, examined the further question as to
whether the object of the Kerala Revenue Recovery Act was only for
speedy recovery or if the said Act also enlarged the right to recover.
Additionaly, the Bench addressed the question as to whether the
words “amount due” would refer to the amounts repayable under the
terms of the Loan Agreement executed between the debtor and the
creditor irrespective of whether the claim was time-barred or whether
the words refer to only those claims which are legally recoverable.
244 [2024] 6 S.C.R.
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10. Relying upon Hansraj Gupta vs. Dehra Dun-Mussorie Electric
Tramway Co. Ltd., AIR 1933 PC 63, the Bench in Kalliyanikutty
(supra) held that the Kerala Recovery Act did not create any new
right and that it merely provided a process for speedy recovery. In
view of the same, it held that since the Act did not create any right,
the person claiming recovery cannot claim recovery of amounts which
are not legally recoverable. The Bench thereafter distinguished the
judgment in Khadi Gram Udyog Trust v. Ram Chandraji Virajman
Mandir, Sarasiya Ghat, Kanpur, (1978) 1 SCC 44 as having no
applicability to the interpretation of the Kerala Revenue Recovery
Act. It further relied on the judgment of this Court in Director of
Industries, U.P. vs. Deep Chand Agarwal (1980) 2 SCC 332 to
reinforce its holding on the interpretation of the word ‘due’ under the
Kerala Revenue Recovery Act. The plea that the statute of limitation
merely bars the remedy and does not touch upon the right was not
accepted by the Court by holding that the rights of the parties are
not enlarged by the Kerala Revenue Recovery Act and that unless
the Act expressly provided for enlargement of claims extending to
the recovery of barred debts, that principle will not apply. Ultimately,
the Court held that under the provisions of the Kerala Revenue
Recovery Act a debt which is barred by the law of limitation cannot
be recovered.
11. The Division Bench, in the impugned order, has relied on Bombay
Dyeing (supra) to reinforce the point that the statute of limitation only
bars the remedy and does not extinguish the debt. The decision in
Bombay Dyeing (supra) was a case where the Constitution Bench
of this Court reiterarted the principle that statutes of limitation only
bar the remedy and do not extinguish the right and so holding, it
found that the definition of “unpaid accumulations” in that case did
apply to wages of employees that were time-barred. The Court went
on to hold that while time-barred wages did vest in the State, since
the Act did not, in that case, provide for disbursement of the wages
to the workers whose claims could be established and since there
was no provision for the workers making the claim, the Act was held
to be contrary to Article 31(2) of the Constitution, which then existed.
12. It is well settled that the laws of limitation only bar the remedy and
do not extinguish the right, except in cases where title is acquired
by prescription. We may note here that V.R. Kalliyanikutty (supra)
did not dispute the principle that the statute of limitation only bars
[2024] 6 S.C.R. 245
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
the remedy and does not extinguish the debt. After considering
this principle it went onto hold that there was no enlargement of
right in the Kerala Revenue Recovery Act. The impugned order, in
the present case, further holds that Bombay Dyeing (supra) and
Tilokchand and Motichand (supra) were not brought to the notice
in V.R. Kalliyanikutty (supra). The decision in Tilokchand and
Motichand (supra) was a case which inter alia dealt with extension of
the principles of laches and res judicata to writ proceedings and have
no direct relevance to the present controversy. The impugned order,
in the present case, thereafter goes on to hold that the machinery
for recovery under the Recovery of Dues Act or the State Financial
Corporations Act do not have the trappings of a Court to hold that
the provisions of the Limitation Act have no application for the same.
Discussion and Reasoning:-
13. In our view, the findings of the Division Bench in the impugned order
do not directly address the holding in V.R. Kalliyanikutty (supra)
that the Kerala Revenue Recovery Act did not create any additional
right to recover and enforce the outstanding amounts due.
14. The real question that arises is do the State Financial Corporations
Act, 1951 and the Recovery of Dues Act create a distinct right and
provided an alternative mechanism of enforcement to reover the
amount due, even if the amounts due were time barred? To answer
this question, we need to examine the relevant statutory provisions.
15. The objects and reasons of the State Financial Corporations Act are
relevant for the purposes of the present case. They read as under:
“The intention is that the State Corporations will confine
their activities to financing medium and small scale
industrial and will, as far as possible, consider only such
cases as are outside the scope of the Industrial Finance
Corporation. The State Governments also consider that
the State Corporations should be established under a
special Statute in order to make it possible to incorporate
in the Constitution necessary provisions in regard to
majority control by Government, guaranteed by the State
Government in regard to the repayment of principal, and
payment of a minimum rate of dividend on the shares,
restriction on distribution of profits and special powers for
the enforcement of its claims and recovery of dues.
246 [2024] 6 S.C.R.
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The main features of the Bill are as follows:-
(vii) The Corporation will be authorised to make long-
term loans to industrial concerns and to guarantee loans
raised by industrial concerns which are repayable within
a period of not exceeding 25 years. The Corporation will
be further authorised to underwrite the issue of stocks,
shares, bonds or debentures by industrial concerns, subject
to the provision that the Corporation will be required to
dispose of any shares, etc., acquired by it in fulfilment of
its underwriting liability within a period of 7 years.
(ix) The Corporation will have special privileges in the
matter of enforcement of its claims against borrowers”
(emphasis supplied)
Section 32-G of the State Financial Corporations Act reads as under:-
“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 Collector shall
proceed to recover that amount in the same manner
as an arrear of land revenue.”
(emphasis supplied)
16. This apart, for the purposes of the present case, the relevant
provisions of the Recovery of Dues Act, being Section 2(c) and Section
3 of the Recovery of Dues Act, are for the sake of convenience set
out hereinbelow:
“2. Definitions
In this Act, unless the context otherwise requires, -
[2024] 6 S.C.R. 247
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
(c) “defaulter” means a person who either as principal or
as surety, is a party –
(i) to any agreement relating to a loan, advance or
grant given under that agreement or relating to credit
in respect of, or relating to hire-purchase of, goods sold
by the State Government or the Corporation, by way of
financial assistance;
and such person makes any default in repayment of the
loan or advance or any instalment thereof or, having
become liable under the conditions of the grant to refund
the grant or any portion thereof, makes any default in the
refund of such grant or portion or any instalment thereof or
otherwise fails to comply with the terms of the agreement;
3. Recovery of certain dues as arrears of land revenue
(1) Where any sum is recoverable from a defaulter –
(a) by the State Governemnt, such officer as it may,
by notificaitaon, appoint in this behalf;
(b) by a Corporation or a Government company,
the Managing Director thereof, shall determine
the sum due from the defaulter.
(2) The Officer or the Managing Director, as the case
may be, referred to in sub-section (1), shall send a
certificate to the Collector mentioning the sum due
from the defaulter and requesting that such sum
together with the cost of proceedings be recovered
as if it were an arrear of land revenue.
(3) A certificate sent under sub-section (2) shall be
conclusive proof of the matters stated therein and
the Collector, on receipt of such certificate, shall
proceed to recover the amount stated therein as an
arrear of land revenue.
(4) No civil court shall have jurisdiction –
(a) to entertain or adjudicate upon any case; or
(b) to adjudicate upon or proceed with any pending
case;
248 [2024] 6 S.C.R.
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relating to the recovery of any sum due as aforesaid from
the defaulter. The proceedings relating to the recoery
of the sums due from the defaulters, pending at the
commencement of this Act in any civil court, shall abate.”
(emphasis supplied)
17. It will be clear from Section 32-G of the State Financial Corporations
Act that the Section confers a right of recovery on the financial
corporation, without prejudice to any other mode of recovery which
includes the right to file a suit. The conferment of such a right to
recover an ‘amount due’ as arrears of land revenue, notwithstanding
any other remedy, is for a public purpose and in public interest.
18. At this point, we deem it appropriate to refer to a passage from
Salmond on Jurisprudence, 12th Edition, on the concepts of “Right”
and “Power” [Page 224, 229 & 230]:
“42. Legal rights in a wider sense of the term
We must now consider the wider use of the term, according
to which rights, do not necessarily correspond with duties.
In this generic sense, a legal right may be defined as any
advantage or benefit conferred upon a person by a rule
of law. Of rights in this sense there are four distinct kinds.
These are (1) Rights (in the strict sense), (2) Liberties,
(3) Powers, and (4) Immunities. Each of these has its
correlative, namely (1) Duties, (2) No-Rights, (3) Liabilities,
and (4) Disabilities.
A debt is not the same thing as a right of action for its
recovery. A former is the right in the strict and proper
sense, corresponding to the duty of the debtor to pay; the
latter is a legal power, corresponding to the liability of
the debtor to be sued. That the two are distinct appears
from the fact that the right of action may be destroyed (as
by prescription) while the debt remains
A power may be defined as ability conferred upon a
person by the law to alter, by his own will directed to that
end, the rights, duties, liabilities or other legal relations,
either of himself or of other persons. Powers are either
public or private. The former are those which are vested
[2024] 6 S.C.R. 249
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
in a person as an agent or instrument of the functions of
the state; they comprise the various forms of legislative,
judicial, and executive authority…The correlative of power
is a liability. This connotes the presence of a power vested
in someone else, as against the person with the liability.
It is the position of one whose legal rights (in the wide
sense) may be altered by the exercise of a power…the
most important form of liability is that which corresponds
to the various powers of action and prosecution. Such
liability is independent of the question whether the
particular action or prosecution will be successful, and is
therefore independent of (say) the duty to pay damages
for a civil wrong”
(emphasis supplied)
As would be clear from the passage above, a debt is not the same
thing as the right of action for its recovery. While the debt is the
right in the creditor with the corelative duty on the debtor the right
of action for recovery is in the nature of a legal power. While the
process of filing a civil suit may be barred because of the statute of
limitation, the power to recover vested through Section 32-G of the
State Financial Corporations Act read with Section 2(c) and Section
3 of the Recovery of Dues Act is a distinct power which continues
notwithstanding that another mode of recovery through a civil suit
is barred. Understood in that sense, it does appear that there is an
additional right to enforce the claims of the financial corporations
notwithstanding the bar of limitation. The same is the case with
the provisions of the Kerala Revenue Recovery Act which fell for
consideration of this Court in V.R. Kalliyanikutty (supra).
19. No doubt, even where the statute of limitation does not apply, the
power has to be exercised within a reasonable time. In that scenario
the further question would be: Whether the time available would
analogously be the time available for execution of decrees? Since
no specific arguments have been advanced and since the Division
Bench in the Impugned Order was not engaged with that issue, we
refrain from dealing with the same.
20. In the context of the Kerala Revenue Recovery Act, the decision in
V.R. Kalliyanikutty (supra) needs to be discussed. The relevant
portions of the judgment is extracted hereinbelow:
250 [2024] 6 S.C.R.
Digital Supreme Court Reports
“3. ...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:
“71. 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.”
4. In exercise of its powers under Section 71, the State
Government has issued a notification bearing SRO No.
797 of 1979 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 SRO
No. 851 of 1979 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.
5. Explaining analogous provisions of the U.P. Public
Moneys (Recovery of Dues) Act, 1965, this Court in Director
of Industries, U.P. v. Deep Chand Agarwal [(1980) 2 SCC
332 : AIR 1980 SC 801] held that the said Act is passed
with the object of providing a speedier remedy to the State
[2024] 6 S.C.R. 251
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
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 the provisions of the Act are not violative of Article 14.
6. 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.
18. 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.”
Under the said provision, the Government in public interest could
make the Revenue Recovery Act applicable to recovery of amounts
252 [2024] 6 S.C.R.
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due to any person or class of persons or to any specified institution
or any class or classes of institutions and on such notification by the
provisions of the Act was applicable to such recovery. Admittedly,
in V.R. Kalliyanikutty (supra) a notification was issued making the
provisions of the Kerala Revenue Recovery Act applicable to the
Kerala Financial Corporation. The Kerala Financial Corporation is
also a Corporation under the said Financial Corporation Act to which
Section 32-G applied.
21. In our view, while the Court focused on the implication of a notification
under Section 71 of the Kerala Revenue Recovery Act whereunder
the Government could declare the Act applicable to any institution, the
attention of the Court in V.R. Kalliyanikutty (supra) was not drawn
to the powers envisaged under the State Financial Corporations
Act which were also applicable to the recovery of debts in Kerala.
As noticed above, the statement of objects and reasons of the
State Financial Corporations Act refers to providing State Financial
Corporations with ‘special privileges in the matter of enforcement of
claims against borrowers’. This is reflected through Section 32-G of the
State Financial Corporations Act which we have set-out hereinabove.
22. This Court in V.R. Kalliyanikutty (supra) held that the words ‘amounts
due’ occuring in the Kerala Revenue Recovery Act would only include
legally recoverable debts i.e. debts which are not time-barred. For
this purpose, it may be apposite to refer to the relevant portions from
the decision in V.R. Kalliyanikutty (supra):
“9. In the case of Hansraj Gupta v. Dehra Dun-Mussoorie
Electric Tramway Co. Ltd. [AIR 1933 PC 63 : 60 IA 13] 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.
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
[2024] 6 S.C.R. 253
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
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 the 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.
11. 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
254 [2024] 6 S.C.R.
Digital Supreme Court Reports
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.
12. In the case of New Delhi Municipal Committee v. Kalu
Ram [(1976) 3 SCC 407] relying on the Privy Council
decision in Hansraj Gupta v. Dehra Dun-Mussoorie Electric
Tramway Co. Ltd. [AIR 1933 PC 63 : 60 IA 13] 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.
16. 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
[2024] 6 S.C.R. 255
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
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 a 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
which are legally recoverable and are not time-barred on
that date can be recovered under the Kerala Revenue
Recovery Act.”
(emphasis supplied)
23. In order to arrive at the conclusion that the words ‘amounts due’
occurring in the Kerala Revenue Recovery Act would only include
legally recoverable debts i.e. debts which are not time-barred, the
Court in V.R. Kalliyanikutty (supra) relies upon three decisions. First
is the decision of the Privy Council in Hansraj Gupta (supra), second
is the decision of the this Court in New Delhi Municipal Committee
vs. Kalu Ram, (1976) 3 SCC 407 and third, is the decision of this
Court Deep Chand (supra).
24. The decision in Hansraj Gupta (supra) was in the context of an
application filed by the Official Liquidator praying that the Appellants
therein, in their capacity as contributories, must be ordered to pay
a debt owed by them to the Company. This Application was made
under Section 186(1) of the Indian Companies Act, which provides
as follows:
“Court may, at any time after making a winding-up Order,
make an order on any contributory for the time being settled
on the list of contributories to pay, in manner directed by
the order, any money due from him or from the estate of
the person whom he represents to the company exclusive
of any money payable by him or the estate by virtue of
any call in pursuance of this Act.”
256 [2024] 6 S.C.R.
Digital Supreme Court Reports
The decision in Hansraj Gupta (supra) involved interpretation of
the words ‘any money due’ occurring in Section 186(1) of the Indian
Companies Act. The Privy Council, while following and affirming the
judgment of the Lahore High Court in Sri Narain v. Liquidator, Union
Bank of India, ILR 4 Lah. 109, held that a time-barred debt could
not be enforced by a summary order under Section 186 since the
section did not create new liability or confer new rights and since it
merely created a summary procedure for enforcing existing liabilities.
25. Additionally, in Hansraj (supra) the Limitation Act applied to the
company court, since it was a ‘court’. Section 46-B of the State
Financial Corporations Act provides that the said Act was to have
effect notwithstanding anything inconsistent therewith contained in
any other law. The authority under the Recovery of Dues Act not
being a ‘court’, the provisions of the Limitation Act cannot proprio
vigore apply.
26. The decision of this Court in Kalu Ram (supra) is again based fully
on the interpretation of the Privy Council in Hansraj (supra). That
apart, the decision in Kalu Ram (supra) involved the interpretation
of the words ‘arrears of rent payable’ under Section 7 of the Public
Premises (Eviction of Unauthorised Occupants) Act, 1958. The Court
noted that the word ‘payable’ generally means ‘that which should be
paid’ and thereafter concluded that the word can only be interpreted
to mean dues which are legally recoverable. The provisions herein
use the words ‘amounts due’ and are provisions which create a right
to recover through a separate mechanism, notwithstanding the right
to file a civil suit.
27. At this juncture, we also deem it fit to note the decision of this Court in
KGU Trust (supra).The decision in KGU Trust (supra) was rendered
while interpreting the words ‘entire amount of rent due’ occurring in
Section 20(4) of the U.P Buildings (Regulation of Letting, Rent and
Eviction) Act, 1972. While the landlord could file an eviction suit on
the ground that the tenant is in arrears of rent, the Tenant was given
an option to resist this eviction suit by depositing this ‘entire amount
of rent due’. While the decision in V.R. Kalliyanikutty (supra) rightly
states that the said provision was a benefit being conferred on the
tenant, we deem it necessary to refer to the other findings of this
Court in KGU Trust (supra) which are of relevance for the purposes
of answering the questions before us. In arriving at the conclusion
[2024] 6 S.C.R. 257
K.P. Khemka & Anr. v. Haryana State Industrial and Infrastructure
Development Corporation Limited & Ors.
that the ‘entire amount of rent due’ would include even time-barred
claims, the Court in KGU Trust (supra) specifically noted the decision
in Bombay Dyeing (supra) and the principle that the Limitation Act
only bars the remedy and does not extinguish the debt. The Court
also noted Halsbury’s Laws of England where it is stated that the
Limitation Act would only take away the remedy while leaving the
right untouched, and that ‘if a creditor whose debt is statute-barred
has any means of enforcing his claim other than by action or
set-off, the Limitation Act does not prevent him from recovering by
those means’. [Paragraph 4, 5 of KGU Trust (supra)]
28. Deep Chand (supra) was a case where there was a challenge to
the constitutionality of Section 3 of the U.P Public Moneys (Recovery
of Dues) Act, 1965. The argument was that Section 3 provided two
remedies to the Government – one being a suit and another being a
remedy under the Act – and that the latter remedy was more onerous
and without any guidelines in law. [Paragraph 2 of Deep Chand
(supra)] In upholding the Constitutionality of the U.P Act, the Court
noted that the object of the U.P Act was to enable speedy recovery
of money and that therefore, the classification was valid. [Para 6 of
Deep Chand (supra)]
29. While it is true that the U.P Act, similar to the Haryana Revenue
Recovery Act [in the present case] or the Kerala Revenue Recovery
Act, was enacted with the object to have speedy recovery of dues,
this does not take away from the fact that the right was vested in
the Financial Corporations to recover the loans through the said
Acts, notwithstanding any other right, including the right to file a suit.
30. As far as the finding in V.R. Kalliyanikutty (supra) regarding
Section 70(3) of the Kerala Revenue Recovery Act, which provides
for a suit by the debtor for refund after payment under protest, is
concerned, what is to be noted is that the defence for the State
Financial Corporations that the State Financial Corporations Act
conferred an additional right to recover amounts due would still be
applicable. Therefore, the existence of the right to the debtor under
Section 70(3) of the Kerala Revenue Recovery Act cannot be said
to be determinative of the issue.
31. It would also be apposite to point out that the applicability of V.R.
Kalliyanikutty (supra) to Section 56(2) of the Electricity Act, 2003
recently fell for consideration before a three-judge Bench of this Court
258 [2024] 6 S.C.R.
Digital Supreme Court Reports
in K.C. Ninan v. Kerala State Electricity Board, 2023 INSC 560.
One of the questions which the Court was faced with was whether
the statutory bar on recovery of electricity dues after the limitation
period of two years provided under Section 56(2) of the Electricity
Act, 2003 would have an implication on the civil remedies of the
Electric Utilities to recover such arrears. The auction purchasers, who
had purchased premises where electricity had been disconnected
due to defaults of the previous owners, argued that the period of
limitation would apply to such dues and that Electric Utilities could
not demand such time-barred dues from them. The Court in K.C.
Ninan (supra), after a comprehensive analysis of the scheme of the
Electricity Act, held that the power to initiate proceedings to recover
the electricity dues was independent of the power to disconnect
electrical supply. Thereafter, the Court noticed the decision in V.R.
Kalliyanikutty (supra) and concluded that statute of limitation only
barred a remedy, while the right to recover the loan through ‘any
other suitable manner provided’ remains untouched. Having so
held, the Court rejected the argument of the auction purchasers
and concluded that the bar of limitation under Section 56(2) of the
Electricity Act would only restrict the remedy of disconnection under
Section 56 of the Electricity Act and that the Electric Utilities were
entitled to reocver electricity arrears through civil remedies or in
exercise of its statutory power.
32. In view of what has been pointed out hereinabove, we are of the
opinion that, for a comprehensive consideration and an authoritative
pronouncement after taking into account all aspects, including those
dealt with hereinabove, the matter needs to be placed before the
Hon’ble Chief Justice of India to constitute an appropriate three-
judge bench.
33. Let the papers along with this order be placed before Hon’ble the
Chief Justice of India for seeking appropriate directions from His
Lordship, in this regard.
Headnotes prepared by: Ankit Gyan Result of the case:
Matter referred to CJI to
constitute 3 Judges Bench.
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