M USMAN Vs. KERALA FINANCIAL CORPORATION

JUDGEMENT

(1.) Petitioner, a personal guarantor for the loan availed by Cedicom (India) Private Ltd., hereinafter called the "company" which is not made party in this Writ Petition, from the first respondent is challenging Exts. P1 and P2 recovery proceedings issued against him under the RR Act for recovery of arrears to the tune of Rs. 60 lakhs and odd. Petitioner is not denying the liability of the company and the petitioner's liability as personal guarantor. However, recover, proceedings initiated under the RR Act are seriously contested on the ground of limitation and on the ground that after the commencement of Recovery of Debts (due to Banks and Financial Institutions) Act hereinafter called the "DRT Act", no recovery proceedings for recovery of debt due to a financial institution can be initiated except by resorting to the provisions of the DRT Act. Another objection raised is that recovery proceedings initiated are not in accordance with mandatory provisions of the RR Act particularly Section 69 of the RR Act.

(2.) I have heard senior counsel Sri. P.G. Parameswara Panicker, appearing for the petitioner, and standing counsel for the KFC.

(3.) The admitted facts are as follows. Then company availed two loans, one for Rs. 21.3 lakhs and the other for Rs. 2 lakhs, in May, 1989, and both the loans were repayable in instalments and the last instalment of both loans was repayable by 10.10.1999. When the company committed default, the first respondent initiated revenue recovery proceedings as well as proceedings under Section 29 of the State Financial Corporations Act hereinafter called the "SFC Act". After initiation of proceedings both under the RR Act and under the SFC Act, KFC took over the industrial unit and sold it on 8.8.1996. As the sale proceeds obtained was thoroughly inadequate to take care of the balance liability remaining which was above Rs. 60 lakhs, the respondents continued revenue recovery proceedings against the petitioner, who is admittedly a personal guarantor for the loans. The revenue recovery notices produced as Exts. P1 and P2 under challenge are dated 5.3.2004. According to petitioner, these proceedings are the first revenue recovery proceedings initiated against the petitioner, and since proceedings are initiated several years after default the same are barred by limitation. Petitioner has relied on the decision of the Supreme Court in V.R. Kallyanikutty's case. 1999 (2) KLT 146 (SC) and contended that revenue recovery proceedings are liable to be vacated on account of limitation alone. The first respondent filed a counter affidavit and along with it produced Ext. R1(a), copy of Form No. 24 issued under Section 69(2) of the RR Act on 28.1.1998 through the District Collector, Trichur, and contended that there is proper initiation of revenue recovery proceedings vide Ext. R1(a) and Exts. P1 and P2 are continuation of the very same recovery proceedings at Palakkad where petitioner is residing and has properties. Therefore according to respondents 1 and 2 Exts. P1 and P2 being continuation of revenue recovery proceedings earlier initiated vide Ext.R1 (a) which was within time are not barred by limitation.