1. Petitioner is challenging revenue recovery proceedings initiated under Section 69(2) of the Kerala Revenue Recovery Act, 1968, hereinafter called the “RR Act” for recovery of arrears of loan availed by the petitioner from the first respondent-Corporation. The arrears sought to be recovered is above Rs. 1.53 crores. Petitioner is not disputing the loan transaction which led to the liability and recovery and the only contention raised is that the amount cannot be recovered by resort to the provisions of the RR Act. Standing counsel appearing for the respondents contended that the Government of Kerala has issued notification SRO 851/79, under Section 71 of the RR Act permitting Kerala Financial Corporation to recover arrears due to it by resorting to the RR Act. According to standing counsel, for the last several years, recoveries have been made under the RR Act in the case of hundreds of defaulters and the contention of the kind raised by the petitioner is not raised by any of the defaulters. The specific case of the petitioner is that after commencement of the Recovery of Debts due to Banks and Financial Institutions Act, 1999, hereinafter called the “DRT Act”, the debt above Rs. 10 lakhs could be recovered by financial institutions only by approaching the Debt Recovery Tribunal through an application under Section 19 of the DRT Act. Counsel for the petitioner also relied on the decision of the Supreme Court in Unique Butyle Tube Industries P. Ltd. v. U.P Financial Corporation, (2003) 2 SCC 455 where in the Supreme Court has held that no recovery of debt due to financial institution is permissible under the UP Public Monies (Recovery of Dues) Act, 1972 after the commencement of the DRT Act Standing counsel on the otherhand contended that the decision of the Supreme Court should be confined to the facts of that case and by virtue of notification SRO 851/79 issued under Section 71 of the RR Act, read with Section 32G of the State Financial Corporations Act, 1951, hereinafter called the “SFC Act”, recovery can be initiated and continued against the petitioner under the RR Act.

2. In order to appreciate the contentions raised, the relevant provisions of the above referred statutes have to be gone into, and for easy reference the sections are extracted hereunder:

Section 34(1) & (2) of DRT Act.

34. Act to have overriding effect.— (1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force orlin any instrument having effect by virtue of any law other than this Act.

(2) The provisions of this Act or the rules made thereunder shall be in addition to and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989)

Section 32G of the SFC Act.

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 concerned, 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. Sections 69 & 71 of the RR Act.

69. Procedure for recovery of public revenue due on land when defaulter or surety resides outside the district and for the recovery of dues other than public revenue due on land.—

(1) When public revenue due on land is in arrear and the defaulter or his surety resides or holds property outside the district wherein default has been made, the Collector of the District in which the arrear arose shall sign a certificate in the prescribed form specifying therein the amount of the demand, the name of the defaulter, and such other particulars as may be necessary for the identification of the defaulter or his surety or both and forward the certificate to the Collector of the district in which the defaulter or his surety resides or holds property.

(2) When any amount, other than public revenuel due on land, which is recoverable under this Act, is due, the Officer charged with its realisation may send to the Collector of the district in which the demand arose a written requisition in the prescribed form, duly verified and certified by him,

(3) On receipt of the requisition under sub-section (2), the District Collector, if he is satisfied that the demand is recoverable under this Act, may sign a certificate to that effect in the prescribed form specifying therein the amount of the demand, the account on which it is due the name of the defaulter, and such other particulars as may be necessary for his identification, and shall cause the certificate to be filed in his office.

(4) If the defaulter resides or owns property in any other district, the District Collector shall forward a copy of the certificate referred to in Sub-section (3) of the Collector of such other district.

(5) When a certificate is received under sub-section (1) or sub-section (4), the Collector of the district shall proceed against the defaulter and his surety and his or their property in the same manner as if the default had been made in his own district. Every certificate filed under sub-section (3) or received under subsection (1) or sub-section (4) shall be conclusive proof as to the amount due and the party in arrear in all proceedings taken by the Collector acting under such certificate or by any person acting under his authority and no proof of the seal or signature or official character of the District Collector issuing the certificate shall be required, unless the officer dealing with such certificate has reason to doubt it's genuineness, provided always that nothing herein contained shall affect the right of any party to issue in his own district the District Collector who issued the certificate.

(6) The certificate issued under sub-section (1) and the requisition issued under sub-section (2) may be modified from time to time by the issuing officer and the certificate or requisition so modified shall be the authority of the Collector or the authorised officer to modify the demand.

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.

3. It is clear from Section 34(2) of the DRT Act that exclusive right conferred on the Financial Institutions by the said Act is in addition to, and not in derogation of the rights vested in such institutions by the six legislations referred to therein one of which is the SFC Act. DRT Act is enacted essentially to help Financial Institutions and Bank for easy and fast recovery of debts due to them without taking away the protection and benefits enjoyed by them under existing special statutes mentioned in Section 34(2) of the said Act. Eventhough these institutions are given exclusive privilege under the DRT Act to approach DRT with application for appropriate relief, by virtue of Section 34(2) of the said Act, the provisions of the said Act shall be applicable in addition to and not in derogation of the rights and privileges available to those financial institutions under the Legislations referred to therein which include the SFC Act. In fact the Supreme Court in Andhra Pradesh State Financial Corporations' case reported in (1994) 2 SCC 647 : A.I.R 1994 SC 2151, considered and recognised a situation wherein Financial Institutions enjoy powers for recovery under two statutes. All what is stated is that the Financial Institution should elect between the two remedies and at a time it can pursue only one. Therefore be examined is whether the impugned recovery against the petitioner under the RR Act can be treated to the powers and privileges conferred on the financial institutions under the SFC Act. It is clear from Section 32G of the SFC Act that a financial institution which has granted loan to an industrial concern can without prejudice to any “other mode of recovery”, make an application to the State Government for recovery of amount due to it and if the State Government or the authority delegated by the Government for the purpose of section 32G certifies that the amount claimed by the financial institution is due from the industrial concern, it can issue a certificate for that amount to the Collector and the collector shall collect the same in the same manner as “arrear on land revenue”. It is clear from the exception clause contained in Section 32G of the SFC Act that recovery on application to Government; is “without prejudice to any other mode of recovery” available to the financial institution. In other words, it is optional for the financial institution to apply to the State Government under Section 32G for a certificate for recovery of the amount to be issued to the District Collector, or otherwise otherwise to proceed for recovery through any “other mode of recovery” available to it. A well recognised mode of recovery provided by the State Government to financial institutions is to notify such institution under Section 71 of the RR Act. As already stated, the first respondent has got a notification issued in their favour way back in 1979 and ever since they are recovering arrears from defaulters by resorting to RR proceedings. Eventhough in the case decided by the Supreme Court in State of Kerala v. V.R Kalliyanikutty, (1999) 2 KLT 146 (SC), the Supreme Court considered and decided the applicability of Limitation Act to Revenue recovery proceedings initiated by Kerala Financial Corporation based on same notification referred above, no dispute was raised about the maintainability of revenue recovery proceedings for recovery of arrears due to KFC based on notification issued under Section 71 of the RR Act. It is obvious from Section 32G of the SFC Act that two modes of recovery are provided therein; one on application to Govt. by the creditor and the other, i.e, “any other mode of recovery” referred to in the very same Section which obviously includes revenue recovery based on notification issued under Section 71 of the RR Act. This only means that even without any notification under Section 71 of the RR Act, a financial institution can directly make an application under Section 32G of the SFC Act to the Government for Recovery or arrears due from industrial concern. If Government is satisfied about liability, it can issue certificate to the District Collector to proceed to recover the certified amount as if it is arrears of land revenue, that is by following the provisions of the RR Act. However, if the financial institution has a notification issued under Section 71 of the RR Act in it's favour it can directly make an application to the Collector under Section 69(2) of the RR Act. In other words, so long as the above referred notification is admittedly in force, the first respondent is entitled to proceed for recovery under the RR Act which is permissible by virtue of Section 32G of the SFC Act.

4. Eventhough counsel for the petitioner contended that the provisions of the UP Public Moneys (Recovery of Dues) Act, 1972 has provisions similar to the RR Act and therefore the above decision of the Supreme Court applies to this case also, I find the Supreme Court has in the above decision declared the law as follows:

Even a bare reading therein makes it clear that it is intended to be in addition to and not in derogation of certain statutes one of which is the Financial Act. In other words, a Bank or a financial institution has the option or choice to proceed either under the Act or under the modes or recovery permission under the Financial Act.

5. Eventhough counsel for the petitioner contended that “other modes of recovery” referred to in Section 32G only refer to recoveries provided under the SFC Act, that is Sections 29 and 31 of the SFC Act. I do not find any such limitation is provided in Section 32G of the SFC Act. The Supreme Court has also not stated that “other modes of recovery” should be confined to Sections 29 and 31 of the SFC Act. In fact the SFC Act came into force in 1951 and the Kerala RR Act was enacted only in 1968 and ever since the notification was issued in favour of the first respondent in 1979 under Section 71 of the RR Act, recoveries have been effected against defaulters through revenue recovery authorities by initiation of proceedings under Section 69(2) of the RR Act. There is no prohibition under the SFC Act against any Financial Corporation from proceeding for recovery even in accordance with State legislation. The provisions of the DRT Act and SFC Act are mutually complementary and both the statutes are intended to achieve the very same objective, that is easy recovery of loans by financial institutions. Therefore the financial institution enjoys freedom to choose any easy method of recovery. Therefore I do not find any illegality in the initiation of recovery proceedings under Section 69(2) of the RR Act based on the notification above referred issued under Section 71 of the RR Act.

6. W.P.C is therefore devoid of any merit and is dismissed. However, if petitioner remits ten per cent of the demand outstanding as of now, and makes an application for OTS within a period of three weeks from the date of receipt of a copy of this judgment, the KFC will grant eligible incentives to the petitioner, fixing the amount payable under the OTS and the time within which it is to be paid. However, if payments not made within the time granted by the KFC, then petitioner will forfeit the benefit if any granted and respondents will be free to proceed for recovery of entire amount. Revenue recovery proceedings will be kept in abeyance for three months from now and if 10% of the demand outstanding as of now is paid and application is made within three months, then recovery will be continued only after default in payment of OTS amount by the petitioner within the time granted by the KFC.