Kozhikode Municipal Corporation v. Kerala Agro Industries Corporation Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY,THE 20TH DAY OF MARCH 2019 / 29TH PHALGUNA, 1940** ## **WP(C).No. 34234 of 2015** ## **PETITIONER/S:** **KOZHIKODE MUNICIPAL CORPORATION, REPRESENTED BY ITS SECRETARY, BEACH ROAD, KOZHIKODE, PIN-673 032.** **BY ADVS. SRI.G.SANTHOSH KUMAR, SC, KOZHIKODE MUNICIPAL CORPORATION. SRI. K.D. BABU, SC** ## **RESPONDENT/S:** **1 THE MANAGING DIRECTOR, THE KERALA AGRO INDUSTRIES CORPORATION LTD., KISSAN JYOTHI, FORT, THIRUVANANTHAPURAM-695 023. 2 THE DEPUTY TAHSILDAR (RR), COLLECTORATE, KOZHIKODE-673 032. 3 THE VILLAGE OFFICER, NAGARAM VILLAGE OFFICE, KOZHIKODE-673 032.** **BY ADVS. R1 - SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS R2 & R3 - SMT. PRINCY XAVIER, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.34234 of 2015 2 ## **JUDGMENT** This writ petition is filed by the petitioner Municipal Corporation seeking to quash Exts.P1, P2 and P4 revenue recovery notices issue under Sections 7 and 34 of the Kerala Revenue Recovery Act, and the order of the Tahsildar dated 02.07.2015, affirming the action of issuing demand notices under the Kerala Revenue Recovery Act. Brief material facts for the disposal of the writ petition are as follows: 2. Apparently, the recovery notices were issued at the instance of the 1[st] respondent company, i.e., the Kerala Agro Industries Corporation Ltd., to recover the amounts due from the Municipal Corporation towards repair of the vehicles. The paramount contention advanced by the petitioner is that, the recovery sought for against the petitioner to recover an amount of Rs.25,14,309/- is illegal, because it is a time barred debt allegedly due from the petitioner on 29.06.1994. It is also pointed out that, there was no demand raised by the 1[st] respondent Corporation against the petitioner with respect to any amounts due. It is further pointed out that, the amounts were recovered from the account of the petitioner, which is not a legal due entitled to be recovered by the 1[st] respondent. That apart, it is W.P.(C) No.34234 of 2015 3 submitted that, the requisition to recover the amount for the period 1994 was issued by the 1[st] respondent Corporation to the revenue authorities only during the year 2011. It is further submitted that, as per Article 113 of the Limitation Act, 1963, there is only a period of three years to recover any amounts due. The 1[st] respondent Corporation cannot be treated as a State, so as to secure the benefit of Article 112 of the Limitation Act. Therefore, the sum and substance of the contention advanced by the petitioner is that, the action initiated against the petitioner and the recovery effected are arbitrary and illegal, liable to be interfered with by this Court under Article 226 of the Constitution of India. 3. The 1[st] respondent has filed a detailed counter affidavit, refuting the allegations and claims and demands raised by the petitioner. Among other contentions, it is stated that, the repair work of sanitation vehicles of Health Department of Kozhikode Municipal Corporation, such as tractors, lorries etc., were undertaken by the company, i.e., the Kerala Agro Industries Corporation Ltd., in its Kozhikode unit from 1990 to 2012. During the said period, there were huge amounts of outstanding payments against the petitioner W.P.(C) No.34234 of 2015 4 Corporation towards cost of spare parts, repair charges etc. incurred for repairing various vehicles, tractors, sign board fabrication, repair of fogging machine, fabrication and erecting of safety grills, erecting and maintenance of bio-gas plant, excavator, AMC of various vehicles etc. by the petitioner, and the total amount outstanding as on 01.10.2012 was Rs.22,63,559/-. 4. It is also stated that, the non-settlement of the outstanding amounts by the petitioner came to the notice of the company, and in the meanwhile, the company was put to financial stringency and was facing various financial constraints, including settlement of retirement benefits to its employees. It was under the said circumstances, the company was constrained to initiate steps to recover the outstanding dues from its various clients, including the petitioner. It is also the case of the 1[st] respondent that, despite numerous reminders and letters, no steps were taken by the petitioner to repay the amounts. That apart, the amounts due from the petitioner to the 1[st] respondent is not disputed by the petitioner, and it was thereupon that requisition was given to recover the amounts. 5. So also, the Government has issued Ext.R1(a) notification in order to settle the dispute between 5 W.P.(C) No.34234 of 2015 Public Sector Undertakings, Government Departments, Local Self Governments etc. etc. A High Power Committee is constituted to settle such disputes as per the Government Order. Therefore, petitioner had every statutory remedy to resolve the disputes. That apart, it is stated that, the outstanding settlement for the works undertaken is for a continuous period during 1994 to 2012 and the amounts outstanding are acknowledged debt and have never been denied by the petitioner and the petitioner has never objected to any of the claims made by the company, and therefore, the claim is not time barred, and it was thereupon that the recoveries were effected through revenue recovery proceedings. 6. The 2[nd] respondent has also filed a counter affidavit, justifying the initiation of the recovery proceedings, and it is further submitted that, it was on the basis of the requisition received from 1[st] respondent, action was initiated as is provided under Sec.69(2) of the Kerala Revenue Recovery Act. Therefore, there was no manner of legal infirmity on the part of the 2[nd] and 3[rd] respondents in recovering the amounts from the accounts of the petitioner. 7. A reply affidavit is filed by the petitioner, reiterating the stand adopted in the writ petition. W.P.(C) No.34234 of 2015 6 8. I have considered the rival submissions made across the Bar and perused the pleadings and the documents on record. 9. The case projected by the petitioner is that, the amounts are allegedly the amounts fell due as on 29.06.1994 and any recovery action initiated during the year 2011 on the basis of the requisition issued by the 1[st] respondent cannot be sustained under law, since Article 113 of the Limitation Act provides only for a period of three years for recovery of the money due. However, Article 113 is a residuary provision to tackle with any situation wherein no limitation period is prescribed. Going by the pleadings put forth by the petitioner as well as the 1[st] respondent, what I could gather is that, a running account was maintained as per the arrangement entered into by and between the petitioner Corporation and the 1[st] respondent, and according to the 1[st] respondent, acknowledgements were being issued by the petitioner which enabled the 1[st] respondent to proceed in recovery to recover the amounts due on a running account maintained against the petitioner. Therefore, the provision that will come into play is Article 26 of the Limitation Act, 1963, which read thus: W.P.(C) No.34234 of 2015 7 |“26. For money<br>payable to the<br>plaintiff<br>for<br>money found to be<br>due<br>from<br>the<br>defendant to the<br>plaintiff<br>on<br>accounts<br>stated<br>between them.|Three<br>years|When the accounts<br>are<br>stated<br>in<br>writing signed by<br>the defendant or<br>his agent duly<br>authorised in this<br>behalf,<br>unless<br>where the debt is,<br>by a simultaneous<br>agreement<br>in<br>writing signed as<br>aforesaid,<br>made<br>payable<br>at<br>a<br>future time, and<br>then when that<br>time arrives.”| |---|---|---| 10. It is surprising to note that, neither the petitioner nor the respondents have specified the date of issuance of the requisition under Sec.69(2) of the Kerala Revenue Recovery Act, which is the foundation for calculating the starting point of limitation. Neither the petitioner nor the 1[st] respondent has produced the statement of accounts before this Court or any acknowledgement to substantiate that the claim raised by the 1[st] respondent is barred under law, and the claim of the 1[st] respondent, that it is not time barred and they are entitled to recover the same. Apparently, it is a disputed question of fact and on the basis of the pleadings and the documents produced by the rival parties, I am unable to arrive at a safe conclusion with respect to the rival claims raised by ## W.P.(C) No.34234 of 2015 8 the parties. However, it is clear that the Kerala Agro Industries Corporation is a Government company, and therefore, any issues that have arisen by and between the parties can be settled by resorting to the modalities prescribed under Ext.R1(a) Government notification dated 07.01.2011, wherein a High Power Committee is constituted to resolve the disputes by and between any Public Sector Undertakings, Corporation etc. 11. In that view of the matter, I think it is only appropriate that the petitioner is relegated to raise a claim before the High Power Committee constituted in accordance with Ext.R1(a) Government Order. The findings rendered by the Tahsildar (Revenue Recovery), Kozhikode in Ext.P2 are only to the effect that they have acted on the basis of requisition made by the 1[st] respondent to the District Collector, Kozhikode, and therefore, they were only concerned with the recovery to be initiated on the basis of the requisition and it is quite evident and clear that, Tahsildar has not considered the issue with respect to the limitation raised by the petitioner. W.P.(C) No.34234 of 2015 9 12. Therefore, this writ petition is partly allowed, Ext.P4 issued by the Tahsildar is quashed, and the petitioner is given the liberty to approach the High Power Committee constituted as per Ext.R1(a), within a month from the date of receipt of a copy of this judgment, with appropriate claim, which, if received, shall be considered by the High Power Committee, at the earliest possible, and at any rate, within three months thereafter, after providing notice of hearing to the petitioner as well as the 1[st] respondent, taking into account the question of limitation raised by the petitioner with specific reference to the judgment of the Full Bench of this Court in ' _**Raveendran Nair v. State of Kerala**_ ' [2014 (4) KLT 625 (F.B.)], and the provisions of the Indian Limitation Act, 1963. **Sd/-** ## **SHAJI P.CHALY** **JUDGE** W.P.(C) No.34234 of 2015 10 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE DEMAND NOTICE DATED 26/2/2015 ISSUED BY THE 2ND RESPONDENT U/S.7 OF THE REVENUE RECOVERY ACT. EXHIBIT P2 TRUE COPY OF THE DEMAND NOTICE DATED 26/2/2015 ISSUED BY THE 2ND RESPONDENT U/S.34 OF THE REVENUE RECOVERY ACT. EXHIBIT P3 TRUE COPY OF THE OBJECTION PREFERRED BY THE PETITIONER DATED 21/3/2015 TO THE 2ND RESPONDENT.** **EXHIBIT P4 EXT.P4. TRUE COPY OF THE LETTER DATED 2/7/2015 ISSUED BY THE 2ND RESPONDENT.** **RESPONDENTS' EXHIBITS:** **EXHIBIT R1(A) TRUE COPY OF G.O.(MS)NO.06/2011/LSGD DATED 07.01.2011 ISSUED BY THE LOCAL SELF GOVERNMENT DEPARTMENT.** //TRUE COPY// P.S. TO JUDGE St/-