Jaya Chandran v. Kerala State Coir Corporation Ltd. and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **FRIDAY, THE 29TH DAY OF AUGUST 2014/7TH BHADRA, 1936** **WP(C).No. 11184 of 2010 (W) ----------------------------------------** ## **PETITIONER(S):** **----------------------** **JAYA CHANDRAN, AGED 42 YEARS, S/O. GANGADHARAN POTTI, PROPRIETOR, PALLAVI EXPORTS PURATHUVELLIL MADOM, CHARAMANGALAM, MUHAMMA.P.O. ALAPPUZHA.** **BY ADV. SRI.M.R.ARUN KUMAR** ## **RESPONDENT(S):** - **-------------------------** **1. THE MANAGING DIRECTOR, KERALA STATE COIR CORPORATION LTD. P.B.NO.191 ALAPPUZHA.** **2. THE DISTRICT COLLECTOR, ALAPPUZHA DIST.** **3. THE DEPUTY TAHSILDAR (R.R) CHERTHALA TALUK, CHERTHALA.** **4. THE SECRETARY, DEPARTMENT OF INDUSTRIES AND COMMERCE, THIRUVANANTHAPURAM.** **R1 BY ADV. SRI.K.N.BALACHANDRAN KARTHA,SC,COIRCRFT R2-4 BY SENIOR GOVERNMENT PLEADER SRI.P.V.LONACHAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 12-08-2014 THE COURT ON 29-08-2014, DELIVERED THE FOLLOWING:** **PJ** ## **WP(C).No. 11184 of 2010 (W)** ## **----------------------------------------** ## **APPENDIX** **PETITIONERS' EXHIBITS -----------------------------------** - **P1: TRUE COPY OF COMPLAINT FILED BY 1ST RESPONDENT IN CRL.MP.7077/2008 IN CC 265/2009 OF JFCM ALAPPUZHA DATED 12/6/08** - **P2: TRUE COPY OF AFFIDAVIT FILED BY 1ST RESPONDENT IN CC.265/2009 BEFORE JFCM ALAPPUZHA DATED 18/3/10** - **P3: TRUE COPY OF DEMAND NOTICE DATED 22/2/10 ISSUED BY 3RD RESPONDENT** - **P4: TRUE COPY OF DEMAND NOTICE DATED 22/2/10. P5: COPY OF THE JUDGMENT IN CC.265 OF 2009 JUDICIAL FIRST CLASS MAGISTRATE COURT-II, ALAPPUZHA DATED 12/8/11** ## **ANNEXURE A: TRUE COPY OF RECEIPT DATED 20/4/10.** ## **RESPONDENTS' EXHIBIT** **------------------------------------** **NIL.** **/ TRUE COPY /** **P.S. TO JUDGE** **PJ** **K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 11184 of 2010** **- - - - - - - - - - - - - - - - - - - - - - - - - - - -** ## **Dated this the 29[th] day of August, 2014** ## **J U D G M E N T** The short, and at first blush, compelling argument raised to assail the Revenue Recovery proceedings herein, is the lack of any adjudication before initiation of proceedings. The petitioner is the proprietor of a unit engaged in export, who had business dealings with the first respondent. The petitioner purchased coir products from the 1[st] respondent on credit basis. The 1[st] respondent, with respect to the alleged dues in the business transactions, initiated criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881(for short, the “N I Act” only), and while the same were pending, also initiated Revenue Recovery proceedings for recovery of amounts due. The petitioner in the instant writ petition challenges the Revenue Recovery proceedings, inter alia, on grounds of parallel WPC.No.11184/2010 : 2 : ## proceedings being per se illegal. 2. It is trite that proceedings under Section 138 of the N I Act are not necessarily for recovery, though ultimately, that may be the result. However, initiation of such proceedings would not interdict the creditor from pursuing other recovery proceedings. The illegality would be only in effecting two recoveries on the very same cause of action. Admittedly, subsequent to the filing of the writ petition, the criminal proceedings ended in acquittal by judgment dated 12.08.2011 in C C No.265 of 2009 produced herein as Ext.P5. The compelling ground taken by the petitioner and urged emphatically before this Court, is the lack of any adjudication as to the exact amounts due. 3. The learned counsel for the petitioner would contend that the petitioner had business transactions with the 1[st] respondent and goods were supplied on credit basis against which, payments were made periodically. WPC.No.11184/2010 : 3 : There was absolutely no written agreement between the parties and before proceeding for recovery, there should be determination, insofar as an exact debt or liability due from the petitioner. Without such determination, mere initiation of Revenue Recovery proceedings would be prejudicial to the petitioner. The further argument is that herein, the 1[st] respondent, who is the creditor, has taken up, on himself, the duty of determining the liability and the same also violates the fundamental principle of a person being disentitled to judge his own cause. 4. The learned counsel for the petitioner would place before me a number of decisions of this Court to buttress the above point. **Universal Marine Agencies v. State of Kerala & Others (1977 KLT 949), Chellappan v. Executive Engineer (1979 KLT 53), Sobhanadas v. State of Kerala (1984 KLJ 684), Ponnappan v. The D.F.O Chalakudy and others (1984 KLJ 853), Mohammed Kunhi v. Executive** WPC.No.11184/2010 : 4 : **Engineer (2001(3) KLT, 733), Abdul Rahiman v. Divisional Forest Officer [1988 (2) KLT 290 (F.B)] and two decisions of the Hon'ble Supreme Court in State of Karnataka v. Rameshwara Rice Mills [AIR 1987 SC 1359]** and **A P T Ispat Private Limited v. U.P Small Industries Corporation and another (2010 (5) SCC 761)** are relied. 5. With respect to the above decisions, more specifically, those of this Court; all of those deal with the question of damages for breach of contract. This Court is of the opinion that the same would not be applicable herein, since, in the present case, no damages are sought to be mulcted on the petitioner. The amounts sought to be recovered are only amounts alleged to be due to the 1[st] respondent from business transactions, which were carried on, admittedly on a credit basis. 6. In distinguishing the aforesaid decisions, this Court need not labour upon all of them. Suffice it to WPC.No.11184/2010 : 5 : notice the Full Bench decision in **Abdul Rahiman** (Supra). The said decision followed the decision of the Hon'ble Supreme Court in **Sri. Rameshwara Rice Mills** (Supra). The essential question was the quantification of the damages and whether it can be done by one of the parties to a contract. Essentially, the Court found that when breach was admitted, there is no necessity for further quantification of damages by outside agencies; if there is a provision for liquidated damages, or when the agreement authorises any of the parties, under the contract, to fix the quantum. However, the position as declared in **Chellappan** (supra), and approved in **Ponnappan** (supra), that even in the case of specification of liquidated damages, a determination of quantum by an outside agency cannot be avoided; was differed from, terming such a proposition to be “too widely stated”(sic.) 7. The principle that emanates from the Full Bench Decision of this Court and the Hon'ble Supreme WPC.No.11184/2010 : 6 : Court decision referred to hereinbefore, is that when there is a provision for imposition of damages for breach of contract and when there is also a provision for assessment of such damages by one of the parties to the agreement; then on admission of the breach, the party who claims damages can assess it and quantify the amount. But, when breach is not admitted, there could be no assessment or quantification of damages unless there is an adjudication upon the issue relating to the factum of breach of the contract. The proposition in the said decisions were elaborated upon, only to indicate that they stand on a totally different footing. 8. **APT Ispat Private Limited** (supra) was also a case in which the recovery of dues under the Revenue Recovery Act, 1968 (for short, “the R R Act” only), was possible only with respect to the recovery of debts due to the institution. The supplies against which the recovery was proceeded with in the said case, was WPC.No.11184/2010 : 7 : not even in the normal course of business but, had given rise to a criminal complaint, for alleged dishonest appropriation of goods. The decision also would not aid the petitioner to advance his contentions herein. 9. The learned Amicus Curiae would place reliance on **Rambal Co. V. Kerala State Science & Technology Museum [2000(2) KLT SN 73 (C.No.77)], Muhammed Kunhi v. Executive Engineer [2001(3)KLT 733]** , **Shriram Engineering Construction Co. Ltd., v. K.S.I.D.C [2007(2)KLT 388];** all of which again dealt with damages arising under a contract and the resort to revenue recovery for effecting recovery. **Anandan v. State of Kerala (2009 (4)KLT SN 79)** was a case in which the Panchayat terminated a work awarded to the contractor and issued coercive steps for realisation of the alleged damage caused to the Panchayat; which again, is on a similar premise. WPC.No.11184/2010 : 8 : 10. The learned Amicus Curiae would in fact, specifically refer to the discussion in **State of Kerala v. Kalliyanikutty [1999(2) KLT 146]** , with respect to the meaning to be assigned to 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” ## 11. The learned counsel would contend that WPC.No.11184/2010 : 9 : even going by the meaning assigned to the said word as seen from Section 71, there is a need for determination of the quantum. The said observation was made only with respect to the aspect of limitation, which was considered by the Hon'ble Supreme Court in the afore cited decision. As to the adjudication for determination of the exact quantum, a Division Bench of this Court has considered the issue with reference to the afore cited decision of the Hon'ble Supreme Court. By judgment dated 26.08.2013 in W.A No.1188/2013, referring to another judgment cited hereinabove relating to damages arising under a contract, it was held so in paragraphs 5, 6 and 7. “5. The learned counsel for the appellant would place reliance on a decision reported in _**Shriram Engineering Construction Co. Ltd. v. K.S.I.D.C.**_ **[2007 (2) KLT 388]** to urge the contention that without adjudication, no recovery is possible under the R.R.Act. In the cited decision, the recovery under the R.R.Act was taken; with respect to damages allegedly WPC.No.11184/2010 : 10 : caused to a Government company by reason of the petitioner therein not having fulfilled certain contractual obligations. The petitioner therein had also approached the Civil Court and it was the contention that without adjudication as to the loss caused by reason of the alleged default in complying with the contractual obligations; no determination of amount of damages is permissible unilaterally by the Government company. A Division Bench of this Court accepted the above proposition, according to us, on the facts that are disclosed in the said case. That dictum will not be applicable in the instant case where the R.R.Act has been specifically notified as applicable to recovery of dues to the Bank, in loans advanced for agricultural purposes; as arrears of land revenue. 6. The Supreme Court judgment in _**State of Kerala v. Kalliyanikutty**_ **[1999 (2) KLT 146 (SC)]** has been relied on and the following paragraph has been extracted: “The Kerala Revenue Recovery Act does not create any new right. It merely provides a process for speedy recovery WPC.No.11184/2010 : 11 : 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”. The said decision is more apposite on the facts of the instant case. The Hon'ble Supreme Court noticed that under Section 71, provisions of the R.R.Act is made applicable to the recovery of amounts due from any persons to any specified institution; under public interest. The expediency of recovering amounts granted as loans to further public policy of the State, rather than as ordinary banks; so as to again make advances to the marginalized sector was highlighted to sustain the provisions of the R.R.Act and the notifications WPC.No.11184/2010 : 12 : made thereunder. In fact the judgment in the context of deciding the applicability of the Limitation Act in recovery under R.R.Act specifically made the following observation in para 16: “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” (sic). 7. It is very clear that the three-Judge Bench upheld the entitlement of the Bank in proceeding for recovery under the Act even without filing a suit or obtaining a decree and executing it. The amounts due in the loan availed of by the appellant, is as per the accounts of the Bank, regularly maintained in the course of business. It cannot be gainsaid that the minute a dispute is raised with respect to the quantum, the Bank is rendered helpless unless it gets a decree from the competent Civil Court. It is for the debtor to approach the Civil Court or other appropriate forum for the purpose of adjudicating the actual dues and mere raising of a dispute with respect to the quantum cannot render unenforceable a method of recovery validly available to the creditor-Bank. In fact such remedy is provided under Section 70(3) to even a person making payment under protest.” WPC.No.11184/2010 : 13 : 12. Hence when an institution is notified under Section 71 of the RR Act, the normal incidence of a creditor approaching the Court for adjudication on the cause of action, of default of the debtor, is avoided. The departure from the normal course is adopted to only hasten the recovery of debts due to institutions which have a public element and character. But, such expedient recovery does not efface the remedy of adjudication, which is available to a debtor, under common law. Such remedy is provided under sub-section (3) of Section 70, but, however, only on condition of the debtor making the payment under protest. There is also a reversal of roles; insofar as when ordinarily the creditor has to approach the Court; on valid initiation of recovery under the Revenue Recovery Act, the debtor has to initiate the proceedings. Hence, there is a balance struck, between the expediency of recovering public money and the right available to the individual debtor to seek adjudication of WPC.No.11184/2010 : 14 : the sustainability of demand and for determination of the exact quantum. 13. In the present case, SRO 342/1995 has been issued under Section 71 of the RR Act, notifying the Kerala State Coir Corporation Limited and declaring the provisions of the Act to be applicable to the recovery of amounts due from any person to the said Corporation. The need for a specific agreement between the parties to enable recovery under the provisions of the RR Act, hence pails into insignificance. 14. The further ground raised by the petitioner is with respect to the dismissal of the prosecution initiated under Section 138 of the NI Act. The judgment placed at Ext.P5, would indicate that the execution of the cheque was not proved and it was also held that the various invoices and the delivery orders placed before the Court does not have any connection with the liability stated to have been attempted to be discharged by the WPC.No.11184/2010 : 15 : dishonoured cheque. That is not to say that, no amounts are due to the 1[st] respondent or that the petitioner does not have any liability as such. In this context, it is to be noticed that the petitioner does not put forward any contention of satisfaction as such in the writ petition. The petitioner also does not dispute the liability as such but only has a quarrel on the quantum, which he claims is liable to be adjudicated before recovery is resorted to, under the RR Act. This Court has found, based on the aforesaid Division Bench decision, such an adjudication is not necessary prior to the recovery under the RR Act. The petitioner is also enabled to ask for such adjudication, after payment of the amounts under protest. The petitioner could also in such suit inter alia seek for interest for amounts paid in excess of the actual liability. Suffice it to say the scope and the ambit of the reliefs that could be sought for in such a suit, need not be restricted by any observations on that count, made by WPC.No.11184/2010 : 16 : this Court. 15. The remedy for adjudication being available, this Court cannot interdict the recovery proceedings initiated hereunder under the Kerala Revenue Recovery Act. The writ petition hence is found to be devoid of merit and the same is dismissed leaving the parties to suffer their costs and reserving the liberty as aforesaid. Sd/- **K.VINOD CHANDRAN,** Judge jma //true copy// P.A to Judge