Kathayee Cotton Mills Limited v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** **MONDAY, THE 20TH DAY OF OCTOBER 2014/28TH ASWINA, 1936** ## **WP(C).No. 16647 of 2012 (E)** **-------------------------------------** ## **PETITIONER(S):** **-----------------------** **KATHAYEE COTTON MILLS LIMITED, 24, PERUMBAVOOR ROAD, ALUVA, ERNAKULAM DISTRICT, PIN-683 101, REPRESENTED BY ITS DIRECTOR, V.S.GOPALAKRISHNAN.** **BY ADVS.SRI.M.T.SURESH KUMAR SRI.V.V.RAJA** **RESPONDENT(S): -------------------------** ## **1. STATE OF KERALA,** **REPRESENTED BY THE PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.** ## **2. THE DISTRICT COLLECTOR,** **COLLECTORATE, KAKKANAD, ERNAKULAM - 682 030.** **3. SPECIAL TAHASILDAR, REVENUE RECOVERY, ALUVA, ERNAKULAM DISTRICT - 683 101.** ## **4. VILLAGE OFFICER,** - **ALUVA WEST VILLAGE, ALUVA TALUK, ERNAKULAM DISTRICT - 683 101.** **5. THE SUPERINTENDENT OF CENTRAL EXCISE, ALUVA RANGE, ALUVA, ERNAKULAM DISTRICT - 683 101.** **R1 TO R4 BY SENIOR GOVERNMENT PLEADER SRI.SHYSON P. MANGUZHA R5 BY ADV. SRI.JOHN VARGHESE,SC** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20-10-2014, ALONG WITH WPC. 25127/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **msv/** ## **WP(C).No. 16647 of 2012 (E)** ## **----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **-------------------------------------** - **EXT.P1 - TRUE COPY OF THE RECEIPT DATED 21.11.2006 ISSUED BY THE SPECIAL THAHSILDAR ON PAYMENT OF THE AMOUNTS IN THE REVENUE RECOVERY PROCEEDINGS.** - **EXT.P2- TRUE COPY OF THE LETTER DATED 21-11-2006 CONTAINING THE DEMAND DRAFT NUMBER AND THE AMOUNT SUBMITTED BEFORE THE REVENUE AUTHORITIES.** **EXT.P3- TRUE COPY OF THE LETTER DATED 24-4-2007** **EXT.P4 - TRUE COPY OF THE NOTICE DATED 23-2-2012.** - **EXT.P5 - TRUE COPY OF THE REPLY NOTICE DATED 7-3-2012 ISSUED ON BEHALF OF THE COMPANY.** - **EXT.P6 - DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE SPECIAL TAHASILDAR DATED 5.7.2012.** - **EXT.P7 - TRUE COPY OF DEMAND NOTICE IN FOR 10 UNDER SECTION 34 OF THE REVENUE RECOVERY ACT DATED 15-3-2012.** ## **RESPONDENT(S)' EXHIBITS** ## **---------------------------------------** ## **NIL** ## **//TRUE COPY//** ## **P.S.TO JUDGE.** Ms **v/** ## **P.R.RAMACHANDRA MENON, J.** **= = = = = = = = = = = = = = = = W.P.(C) Nos.16647 of 2012 & 25127 of 2014** **= = = = = = = = = = = = = = = = = = = = = Dated this the 20th day of October, 2014** ## **JUDGMENT** The petitioner is same in both the above cases and the grievance is with regard to the continuation of the Revenue Recovery proceedings for the amount allegedly due from the petitioner. The petitioner company, incorporated under the relevant provisions of the Companies Act 1956, was established about six decades ago, and is engaged in the manufacture of cotton and synthetic yarn and such other textile products. It is stated that it became a sick industrial unit and was declared so by the BIFR in 1987. After a short span of three years, though the company recommenced its business in 1990, due to some labour issues, it was finally stopped in the year 1997. 2. The case of the petitioner is that, by virtue of the adverse circumstances, the company became liable to various institutions including the Electricity Board and the Central Excise Department. The liability payable to the Central Excise Department towards the principal amount was cleared on **W.P.(C) Nos.16647/12 & 25127/14** **2** 27.11.2006 and by virtue of the plight of the company, petitioner company was not in a position to satisfy interest. Years after satisfaction of the principal amount as above, the petitioner was required to satisfy interest for the said period from 27.10.1997 to 27.11.2006 by serving Ext.P4 notice dated 23.11.2012. The petitioner submitted Ext.P5 reply, despite which, the machinery under the RR Act was set in motion by serving Exts.P6 and P7 notices dated 07.03.2012 and 07.05.2012 respectively. This made the petitioner to approach this Court by filing WP(C) No. 16647/2012, wherein an interim order of 'status quo' was ordered to be maintained on 20.07.2012. The 5[th] respondent has filed a counter affidavit pointing out that the amount satisfied by the petitioner was only towards the 'principal' and by virtue of Scheme of the Statute, interest is automatic, particularly by virtue of Section 11AB of the Central Excise Act, 1944. It is stated that the period of limitation is not applicable to the petitioner and hence the concerned respondent is justified in proceeding with appropriate steps recovery of interest as well. **W.P.(C) Nos.16647/12 & 25127/14** **3** 3. In W.P.(C).No.25127/2014, the liability of the petitioner was in respect of the electricity arrears. Pursuant to the steps taken by the Electricity Board, the petitioner had approached this Court by filing W.P.(C).No.21485/2008 challenging the revenue recovery proceedings. The said writ petition was disposed of as per judgment dated 31.01.2013, directing the KSEB to consider the OTS application filed by the petitioner. It is stated that the dispute between the petitioner and the KSEB has been settled as per Ext.P1 proceedings dated 21.05.2014. The version of the petitioner is that, the entire amount due as covered by Ext.P1 was satisfied and that nothing is pending clearance towards the Electricity Board. In spite of the fact that the liability of the Board was cleared as above, the respondents 2 and 4 proceeded with steps under the Revenue Recovery Act, referring to the requisition made by the Central Excise Authorities, which made the petitioner to approach this Court, seeking to intercept Ext.P6 and for such other reliefs. 4. Heard both the sides including the learned Government Pleader and the learned Standing Counsel for the Central Excise. **W.P.(C) Nos.16647/12 & 25127/14** **4** 5. The learned Standing Counsel for the 5[th] respondent in W.P.(C) No.16647/2012 submits that, by virtue of law declared by the Full Bench in **Kerala Fisheries Corporation v. P.S.John** (1996(1)KLT 814) and the subsequent Single Bench in **Kerala Agro-Industries Corporation Ltd. v. Amminikutty Amma** (1997(2) KLT 931) the relief sought for by the petitioner is not liable to be entertained and that the said respondent is entitled to prosecute the proceedings for realisation of the amount stated as due. 6. The issue considered by the Bench was as to the rights and liberties of the requisitioning authorities, to proceed with steps by virtue of the notification status of the establishment pursuant to notification under Section 71 of the RR Act. The Court observed that the remedy provided by virtue of inclusion as a notified institution under Section 71 of the Act only enables the concerned establishment to have recovery by way of an alternative method, instead of getting the amount by approaching the civil court. In other words, the position made **W.P.(C) Nos.16647/12 & 25127/14** **5** clear was that, merely for the reason that the institution stands declared as an institution under Section 71 of the Act, it will not curtail the rights of the institution to proceed with steps for recovery of the due amount through the machinery of the Civil court. There cannot be any dispute with regard to the said position of law. The issue herein is whether the machinery under the RR Act could be set in motion, for recovery of a time barred debt. 7. The above question was specifically considered by the Apex Court in the subsequent decision reported in **State of Kerala v. Y.R.Kalyanikutty** (1999 (2) KLT 146). It was categorically made clear that the time barred debt cannot be recovered by invoking the machinery under the RR Act. Now the question is whether the factual position in the instant case will justify the cause of action now sought to be pursued. 8. Admittedly, the principal amount was satisfied with the petitioner on 27.11.2006 and demand for interest was raised for the first time, vide Ext.P4, in the year 2012. This was followed by Exts.P6 and P7 notices under the RR Act, issued **& 25127/14** **6** ## **W.P.(C) Nos.16647/12** subsequently. By the time the requisition was made by the 5[th] respondent, to the authorities of the Revenue, leading to the issuance of Exts.P6 and P7 notices under the RR Act, the time for recovery of the due amount had already expired. In the above facts and circumstances, this Court finds that the machinery under the RR Act is not liable to be invoked for recovery of the alleged amount due to the 5[th] respondent as interest. The case of the petitioner stands squarely covered by the decision rendered by the Apex Court cited supra. The impugned proceedings are set aside and writ petitions are allowed to the said extent. No costs. ## **P.R.RAMACHANDRA MENON, JUDGE** sj