WP/8297/1993 of G.V.NARSA REDDY AND OTHERS Vs AP KHADI AND VILLAGE INDUSTRIES BOARD HYD on 22 December 2006

ORDER:

Questioning the action of the respondents, in proceedingagainst the petitioners under the Revenue Recovery Act, as illegaland void, seeking a declaration that they are not liable for theamounts due from M/s Radheshyam Khadi and Village IndustriesAssociation, Narsapur and for a direction to the respondentauthorities to forbear from proceeding against them, W.P. No.8297 of 1993 is filed.

Facts, in brief, are that the petitioners were issued a notice,under Section 8 of the Revenue Recovery Act, by the MandalRevenue Officer, Dilawarapoor Mandal for recovery ofRs.11,74,800/-. The petitioners made enquiries and learnt thatthese amounts were due from M/s Radheshyam Khandasari Unit,Narsapur, a Unit incorporated under Section 3 of the A.P. Non-trading Companies Act, 1962, of which their father was thePresident. The 1[st] respondent had sanctioned a loan ofRs.4,80,000/- on 10.09.1976 for establishing the said Unit, and, onthe Government of A.P. issuing a licence, permission was grantedby the respondent-board for purchase of machinery. However, forvarious reasons, the Unit did not commence production. Thepetitioner’s father expired in November, 1986. The petitioners preferred an appeal to the Government on 29.04.1992, against thedemand notice dated 06.03. 1992, contending that they were notliable to pay the said amount as they had not obtained any loanfrom the 1[st] respondent Board. The Government initially grantedstay of recovery. The 1[st] respondent, vide proceedings dated19.05.1992, asked the District Collector to stop recovery untilfurther orders. Thereafter the Chief Executive of the Board, videproceedings dated 14.07.1992, asked the petitioners to verify theaccounts and pay the amounts due at the earliest. Thereafter, inNovember 1992, the petitioners were called upon to arrangepayment within a week and were informed that, on their failure todo so, the Collector, Adilabad would be requested to take actionagainst them under the Revenue Recovery Act. The petitionersdis-owned their liability and called upon the Board to recover theamounts due from M/s Radheshyam Khadi and Village Industrieswhich owned substantial movable and immovable properties. Petitioners submitted a representation to the government on11.03.1993 and the then Minister for Small Scale Industries, on12.03.1993, directed further proceedings to be stayed, despitewhich a distraint order under Section 8 of the Revenue RecoveryAct was issued by the Mandal Revenue Officer, Dilawarpur on23.05.1993. Petitioners would refer to Section 19 of the A.P. Khadiand Village Industries Boards Act, 1958 which provides forrecovery of the amount due, by any institution or person, under theRevenue Recovery Act, on a certificate issued by the Board, forthe amounts due, to the Collector of the District. Under theproviso to sub-section (2) thereof no such certificate shall be

Issues

issued unless the defaulter has been given an opportunity ofmaking a representation against the action proposed. Accordingto the petitioners, they were neither put on notice nor given anopportunity of being heard before action was initiated for recoveryof the amounts due. As no liability was fixed on them, they werenot liable to repay the amounts claimed as due, and the impugnedorder was illegal. Petitioners would further submit that no noticewas given to the Association for recovery of the amounts nor wasany action taken against them though the machinery and landstood in its name. Petitioners would submit that they came toknow that their father had executed a security bond in favour ofthe respondent board on 24.01.1976 for a sum of Rs.2,68,500/-and that agricultural lands were given as security. According tothe petitioners, since the security given was not for the benefit ofthe joint family, their father had no right to give security of theirancestral property. Petitioners would submit that though thesecurity offered by the petitioner’s father was only for a sum ofRs.2,68,500/-, the amounts mentioned in the distraint order wasfor a sum of Rs.12,10,800/-. Petitioners plead ignorance of thisamount being due as they were not informed of the extent of theliability. Petitioners would contend that, before issuing thecertificate, the respondent Board had not determined any liabilityand, since the petitioners were not defaulters, these amountscould not be recovered from them as any such recovery would becontrary to Section 19 of the A.P. Khadi and Village Industries Act,1958. Petitioners would submit that, since the Board had nottaken any steps against M/s Radheshyam Khadi and Village Industries Association, Narsapur for recovery of the amount norhad they taken possession of the machinery which washypothecated to the Board which, even according to them, wasvalued at Rs.8,86,534/-, the action of the Board was not a bonafideexercise of power and ran contrary to Section 19 of the A.P. Khadiand Village Industries Act, 1958. Petitioners would plead violationof principles of natural justice on the ground that no opportunitywas given to them to establish that they were not liable to pay theamounts due from M/s Radheshyam Khadi and Village IndustriesAssociation, Narsapur. It is contended that, since the entire actionwas initiated only after the demise of their father Sri G.V.Narayana Reddy, who had given a security bond for Rs. 2,68,500/-, the petitioners, as his L.Rs, were not liable to pay any amount,their properties were not liable for attachment and, if the Boarddesired to recover the amounts, they had to first recover the samefrom M/s Radheshyam Khadi and Village Industries Association,Narsapur. Petitioners would contend that the respondent Boardwas not empowered to adjudicate disputed questions of title and ifthey intended to proceed against the ancestral properties of thepetitioners, given as security by their father late Sri G.V.NarayanaReddy, the Board had to file a suit seeking partition to the extent ofSri G.V. Narayana Reddy’s share.

In their counter-affidavit, the respondents would put the verymaintainability of the writ petition in issue on the ground that thepetitioners had invoked the jurisdiction of this Court, under Article226 of the Constitution of India, without exhausting the alternativeremedy provided for under Section 57 of the Revenue Recovery

Conclusion

Act, 1864. It is stated that the respondent Board had sanctionedfinancial assistance of Rs.4.80 lakhs to M/s. Radheshyam Khadiand Village Industries Association, Narsapur, Adilabad District,towards capital expenditure loan for machinery and equipment forthe purpose of setting up of a Hydraulic Khandsari Unit. TheAssociation was headed by the petitioner’s father Sri G.V.Narayana Reddy. It is stated that financial assistance wassanctioned by the Board as per the pattern of financial assistanceprescribed by the Khadi & Village Industries Commission,Bombay, that the Unit was not completely established and did notcommence production and that, in terms of the sanction, thepetitioner’s father Sri G.V. Narayana Reddy, the President of theAssociation, had offered his own agricultural lands and housesituated at Narsapur Village as security for ensuring duerepayment of the loans advanced to the Association. The securitybond had been registered as document No. 206/77 dated04.03.1977 in the office of the Sub-Registrar, Nirmal, AdilabadDistrict, and the Association had also mortgaged Ac.8.00cts ofland, purchased by it, in favour of the respondent-board. According to the respondents, the Association was also personallyliable to the extent of five times the share capital subscribed interms of clause 8 of the Memorandum of Association. It is statedthat the petitioner’s father expired in the year 1986 and that theother members did not evince any interest to ensure that the unitcommenced operations. According to the respondents the Board,while issuing a recovery certificate under Section 19 of the A.P.Khadi & Village Industries Board Act, 1958, had addressed a letter to the District Collector, Adilabad on 13.10.1987 requesting him torealize the amounts due from the Association as arrears of landrevenue under the provisions of the A.P. Revenue Recovery Act,1864. It is stated that the question of issuing a notice, of theproposed action to refer the matter to the Collector, did not arisesince the Association had become defunct. It is stated that theM.R.O, Dilwarpoor Mandal, acting under the instructions of theDistrict Collector, had initiated action for realizing the dues underthe Revenue Recovery Act and that he had issued notice to thepetitioners. It is contended that the petitioners have no locusstandi either to question the transaction between the respondentBoard and the Association or about the machinery purchased byit. It is stated that action was initiated against the petitioners, bythe M.R.O, since they were the sons of the surety late Sri G.V.Narayana Reddy, and were in possession of the properties offeredas security/mortgaged to the Board. It is stated that, based on arepresentation submitted by the petitioners on 29.04.1992 to theChairman of the Board, the 1[st] respondent had requested theDistrict Collector, vide letter dated 19.05.1992, to stop recoveryproceedings until further communication from the Board, that the1[st] petitioner was issued notices, on 14.07.1992 and 04.11.1992,to go over to the office of the respondent Board for verification ofthe accounts and that, despite acknowledging receipt of the noticeon 09.11.1992, the petitioners had not chosen to attend forverification of the accounts/records. It is stated that the Boardwas left with no option but to address the District Collector on06.01.1993 to proceed with the recovery proceedings, since

several opportunities given to the first petitioner were not availedby them. Respondents would deny that action was initiatedagainst the petitioners on the ground that they had availed a loanfrom the Board and would submit that it was due to the fact thatthey were the heirs of the late surety and were in possession ofthe properties mortgaged/offered as security to the Board. It iscontended that the properties, offered as security by late Sri G.V.Narayana Reddy, were his self-acquired properties, as per thedeclaration and documentary evidence produced by him and thatthe question, as to whether the properties offered as security wereself-acquired or not, would not, normally, be adjudicated in writproceedings under Article 226 of the Constitution of India and thatthe remedy available to the petitioners, if any, was to approach thecompetent civil court. It is stated that the security bond executedby late Sri G.V. Narayana Reddy, covers the total loan of Rs.4.80lakhs sanctioned by the Board and that the total dues payable,including normal and penal interest on the principal loan of Rs.4.80lakhs, was Rs.12.43 lakhs by 31[st] March 1993 itself and that, inaddition, normal and penal interest, from 01.04.1993 onwards tillthe date of realization, was also payable. It is stated that therecovery proceedings initiated against the sureties simultaneouslywas valid under Section 50 of the A.P. Revenue Recovery Act,1864 and, since the petitioners were in possession of theproperties mortgaged/secured to the Board, they were legallybound to discharge the liability incurred by their late father and thatthe action initiated by the respondent Board for recovery of thedues payable to the Board under Section 19 of the A.P. Khadi and Village Industries Boards Act, 1958 was valid and was not inviolation of Article 14 of the Constitution of India. It is stated thatthe District Collector was requested on 19.05.1992 to stoprecovery proceedings with a view to afford an opportunity to the1[st] petitioner and, since he had failed to avail the opportunity, theDistrict Collector was again requested on 06.01.1993 to proceedwith the recovery. Respondents would submit that the petitionershad rushed to this Court, without exhausting the alternativeremedy under Section 57-A of the A.P. Revenue Recovery Act1864, and that the writ petition as filed was premature and notmaintainable.

Sri A. Narasimha Reddy, learned Counsel for thepetitioners, would question the restraint order and the proceedingsof the respondents dated 06.03.1992 seeking to recover theamounts, payable by M/s Radheshyam Khadi and VillageIndustries Association, Narsapur, from the petitioners, as arbitraryand illegal on the following grounds:

1. Recovery of the amounts due, as arrears of land revenue, isgoverned by Section 19 of the A.P. Khadi and VillageIndustries Boards Act, which requires the defaulter to begiven an opportunity of making a representation against theaction proposed, before a certificate is issued to theCollector. No such opportunity was given to the petitioners.governed by Section 19 of the A.P. Khadi and VillageIndustries Boards Act, which requires the defaulter to begiven an opportunity of making a representation against theaction proposed, before a certificate is issued to theCollector. No such opportunity was given to the petitioners.

2. Section 8 of the Revenue Recovery Act only speaks ofattachment of movable property and not immovable propertyand it is Section 25 which relates to immovable property. Action taken, under Section 8 of the Revenue Recovery Act,attachment of movable property and not immovable propertyand it is Section 25 which relates to immovable property. Action taken, under Section 8 of the Revenue Recovery Act, is without jurisdiction.

3. Since the arrears fell due in 1976, the claim is barred bylimitation under Sections 62 and 63 of the Limitation Act.limitation under Sections 62 and 63 of the Limitation Act.

4. Under Section 7 of the Revenue Recovery Act the intereston arrears of revenue cannot exceed 6% per annum whereasthe arrears due was sought to be recovered along withnormal and penal interest. on arrears of revenue cannot exceed 6% per annum whereasthe arrears due was sought to be recovered along withnormal and penal interest.

Learned Counsel would submit that, under Section 19 of theA.P. Khadi and Village Industries Boards Act, 1958, while any loanor advance granted by the Board may, without prejudice to anyother mode of recovery, be recovered as arrears of land revenue,on the basis of a certificate issued by the Board for the amountdue, to the Collector of the District concerned, no such certificateunder sub-section (1) of Section 19 could be issued unless thedefaulter was given an opportunity of making a representationagainst the proposed action. Learned Counsel would submit that,since the petitioners had not been put on notice, they had beendenied the opportunity prescribed under the first proviso to Section19 of the Act.

On the question as to whether any prejudice was caused in thisregard, and since the fact that the petitioner’s father had givensecurity for the amount was not in dispute, learned Counsel wouldrefer to paragraph 6 of the affidavit to submit that since theproperty given as security, by the petitioners’ father, was theirancestral property and the security offered was only forRs.2,68,500/-, while the amounts mentioned in the restraint orderwas Rs.12.10.800/-, the petitioners had clearly suffered prejudice in this regard in not being given an opportunity of being heard. Learned Counsel would place reliance on Canara Bank Vs.Debasis Das[[1]].

Learned Counsel would submit that, while Section 8 of the A.P.Revenue Recovery Act relates to seizure and sale of movableproperty, section 25 relates to attachment of land and thereunderthe Collector is required to cause a written demand to be servedupon the defaulter specifying the amount due. Learned Counselwould refer to the certificate given by the Chief Executive of theBoard, authorizing the Mandal Revenue Inspector to recover thedues from the petitioner, which is an auction notice under Section8. Learned Counsel would submit that, since action was takenunder Section 8 of the Revenue Recovery Act which does notrelate to immovable properties, the entire action of therespondents in this regard is without jurisdiction.

On the question of limitation, learned Counsel would submitthat under Article 63(b) of the Limitation Act, the period oflimitation is 12 years and since the year, as shown in the distraintorder, is 1976 and the 12 years period expired by 1988, thecertificate issued in 1992 is barred by limitation. While fairlyconceding that no plea of limitation had been taken, in the affidavitfiled in support of the writ petition, learned Counsel would submitthat failure to take such a plea was of no consequence as once theclaim was barred by limitation the amounts, even if due, could notbe recovered. Learned Counsel would place reliance on State ofKerala Vs. V.R. Kalliyanikutty[[2]],Narne Rama Murthy Vs.

Ravula Somasundaram[[3]]and N.A. Radha Vs. State of Andhra Pradesh[[4]]in this regard.

Arguments

Learned Counsel would refer to Section 7 of the A.P. RevenueRecovery Act which provides that the arrears of revenue shallbear interest at the rate of 6% p.a. and would submit that neitherinterest in excess of 6% p.a. nor penal interest could be collected,even if the respondents were held entitled to recover the amountmentioned as due in the certificate. Learned Counsel wouldsubmit that, since the respondents had chosen to invoke theprovisions of the Revenue Recovery Act, the jurisdiction of theCivil Court was impliedly barred and it must be held that therespondents were entitled to claim interest, on the arrears due,only upto a maximum of 6% per annum.

Sri V.T.M. Prasad, learned Standing Counsel for theRespondent Board, would refer to the provisions of the A.P. Khadiand Village Industries Boards Act to submit that the said Act wasmade with the laudable object of promoting Khadi and VillageIndustries in the State of Andhra Pradesh. Learned StandingCounsel would submit that the amount sanctioned as loan to theAssociation had still not been recovered despite a lapse of morethan two decades. He would submit that the dispute, if any, wascontractual in nature and the remedy was not by invoking thejurisdiction of this Court under Article 226 of the Constitution ofIndia, but by approaching the Civil Court of competent jurisdiction. Learned Standing counsel would refer to the letter addressed bythe petitioner’s father to the Chief Executive Officer of the Boardon 10.12.1976 wherein he had stated that on 01.12.1976 he had deposited the title deeds of the immovable properties referred to inthe said letter with the intent to secure repayment of all the moniesdue to the A.P. Khadi and Village Industries Board, from time totime, from M/s Radheshyam Khadi and Village IndustriesAssociation, Narsapur, Adilabad District. The petitioners fatherhad stated that the Association and himself, either solely or jointlywith any other person, would be liable for the amount advanced asloan including commission and expenditure. The property given assecurity was of an extent of Ac.8.00cts of land from out ofAc.13.27 cts situated in Sy. No. 638 of Narsapur village in NirmalTaluq in Adilabad District and the sale deed dated 08.10.1976, withregistration as document No. 2168/76, was deposited with theRespondent Board. Learned Standing Counsel would refer to theorder of this Court, in W.V.M.P. No. 2641 of 1994 in W.P. No.8297 of 1993 dated 26.02.1996, wherein this Court had noted thesubmissions made on behalf of the petitioners that they had noobjection if the property of the Association was sold and theamount realized notwithstanding the fact that the said land wasmutated in the Revenue Records. This Court granted liberty to theBoard to execute the certificate and realize the amount by sellingthe said land.

Before examining the rival contentions, it is necessary tonote the relevant statutory provisions. The A.P. Khadi and VillageIndustries Boards Act, 1958 came into force on 03.11.1958. Section 2(2) thereof defines the “Board” to mean the A.P. Khadiand Village Industries Board constituted under Section 3. Section3 relates to establishment and constitution of the Board and

Issues

thereunder the A.P. Khadi and Village Industries Board shall be abody corporate having perpetual succession and a common seal. Section 19 of the Act relates to recovery of arrears and readsthus:

“Where any loan or advance granted by Board to any institution orperson is not repaid before the date specified therefore, or where any otheramount is due to the Board, from any person or institution either under acontract or otherwise, the Board may without prejudice to any other mode ofrecovery, issue a certificate for the amount due to the Collector of the Districtconcerned and the Collector proceed to recover the amount in the samemanner as an arrear of Land Revenue.

i.“Provided that no certificate under this sub-section shall be issued unless the defaulter has been given an opportunity ofmaking a representation against the action proposed:making a representation against the action proposed:

ii.Provided further that it shall be lawful for the Board to issuesuccession Certificates under this sub-section to the Collector forthe realization of its dues in full, if it is satisfied that the defaulterhas come into possession of assets from which it can recover itsdues”.succession Certificates under this sub-section to the Collector forthe realization of its dues in full, if it is satisfied that the defaulterhas come into possession of assets from which it can recover itsdues”.

The Board may write off irrecoverable losses with the previous sanctionof the Government or the Commission as the case may be subject to suchlimits as may be laid down in thfe regulations.”

Section 7 of the A.P. Revenue Recovery Act, 1864 relates to interest on arrears and thereunder arrears of revenue shall bearinterest at the rate of 6% p.a. Section 8 prescribes the Rules forseizure and sale of movable property and Section 25, whichrelates to the demand to be served prior to attachment of land and the mode of service, reads thus:- Before a Collector, or other officer empowered by the Collector on thatbehalf proceeds to attach the land of the defaulter, or buildings thereon, heshall cause a written demand to be served upon the defaulter, specifying theamount due, the estate or land in respect of which it is claimed, the name ofthe party in arrear, the batta due to the person who shall serve the demand,and the time allowed for payment, which shall be fixed with reference to thedistance from land on which the arrear is due to the place at which themoney is to be paid. Such demand shall be served by delivering a copy tothe defaulter, or to some adult male member of his family at his usual pale ofabode, or to his authorized agent, or by affixing a copy thereof on some conspicuous part of his last known residence, or on some conspicuous partof the land about to be attached.

Section 52-A, which relates to recovery of sums due to certain banks and other public bodies as arrears of land revenue, readsas under:

Without prejudice to any other mode of recovery which is being taken ormay be taken, all loans granted and all advances made to any person-

i.by any bank to which the repayment of the said loans andadvances is guaranteed by the State Government or;advances is guaranteed by the State Government or;

ii.by such Corporation established by or under the CentralProvincial or State Act, or Government Company as defined inSection 617 of the Companies Act, 1956, or such other publicbody as ;may be notified in this behalf by the State Government inthe Andhra Pradesh Gazette;Provincial or State Act, or Government Company as defined inSection 617 of the Companies Act, 1956, or such other publicbody as ;may be notified in this behalf by the State Government inthe Andhra Pradesh Gazette; together with interest on such loans and advances and all sums, such asrents, margin money and the like, due to the bodies mentioned aforesaidmay be recovered in the same manner as arrears of land revenue underthe provisions of the Act:

Provided that the State Government may, by notification in AndhraPradesh Gazette, specify the loans and advances together with interesttherein, and other sum due to the bodies mentioned in item (ii) abovewhich may be recoverable under the provisions of this section.Explanation:- In this sub-section, “bank”, means any banking companyas defined in clause (c) of Section 5 of the Banking Regulation Act, 1949,and includes- a.the Reserve Bank of India constituted under the Reserve Bank ofIndia Act, 1934.India Act, 1934.

b.The State Bank of India constituted under the State Bank of IndiaAct,1955.Act,1955.

c.Any subsidiary bank as defined in the State Bank of India(Subsidiary Bank) Act, 1959;(Subsidiary Bank) Act, 1959; d.Any corresponding new bank constituted under Section3 of theBanking Companies (Acquisition and Transfer of Undertaking) Act,1970.Banking Companies (Acquisition and Transfer of Undertaking) Act,1970.

2. Out of the proceeds of the dues pertaining to the bodies mentioned initem (ii) of sub-section (1) so recovered ten per centum thereof shall bededucted towards the collection charges and the balances shall be paidby the Collector or other officer empowered by the Collector in thatbehalf, to the respective bodies.

Section 54 relates to interest and charges recoverable as arrears and read as under:- The batta mentioned in the foregoing section, as well as interest, andall costs and charges incurred under the authority of this Act, shall berecoverable from the defaulter and his sureties in the same manner asarrears of land revenue.

Part V of the schedule to the Limitation Act, pertains to suitsrelating to immovable property and Articles 62 and 63thereunder read thus:

The first proviso to Section 19 of the A.P. Khadi and VillageIndustries Boards Act, 1958 requires the defaulter to be given anopportunity of making a representation, against the actionproposed, before a certificate for the amount due is given by theBoard to the District Collector for recovery of the amounts due asarrears of land revenue. While Sri A. Narasimha Reddy, learnedCounsel for the petitioner, would contend that, failure to give suchan opportunity to the petitioners herein would render the certificateissued by the Board invalid, Sri V.T.M. Prasad, learned StandingCounsel for the Respondent Board, would contend that theopportunity of making a representation is required to be provided

to the defaulter and since it was Sri G.V. Narayana Reddy, theirfather and not the petitioners herein, who was the defaulter, thefirst proviso to Section 19 of the Act has no application to thepetitioners herein. Learned Standing counsel would contend that,in any event, the petitioners were issued notices, on 14.07.1992and 04.11.1992, to go over to the office of the respondent Boardfor verification of the accounts and that, despite acknowledgingreceipt of the notice on 09.11.1992, the petitioners had not chosento attend for verification of the accounts/records and since theopportunity provided, was not availed of by the petitioners herein,it was not open to them to turn around and contend that they weredenied the opportunity prescribed under the first proviso to Section19 of the Act. Learned Standing Counsel would contend that thepetitioners herein have successfully dragged on the proceedingsand, as a result, the Board has not been able to recover theamounts due to it for the past more than two decades.

The ultimate test is of prejudice and this Court would,ordinarily, not exercise its discretion, under Article 226 of theConstitution of India, to interfere, unless failure of justice isoccasioned or it would not be in public interest to dismiss thepetition.

In Debasis Das[1], the Supreme Court observed:

“…… Natural justice is another name for common-sense justice.Rules of natural justice are not codified canons. But they are principlesingrained into the conscience of man. Natural justice is the administration ofjustice in a common-sense liberal way. Justice is based substantially onnatural ideals and human values. The administration of justice is to be freedfrom the narrow and restricted considerations which are usually associatedwith a formulated law involving linguistic technicalities and grammaticalniceties. It is the substance of justice which has to determine its form.

The expressions natural justice and legal justice do not present awatertight classification. It is the substance of justice which is to be securedby both, and whenever legal justice fails to achieve this solemn purpose,natural justice is called in aid of legal justice. Natural justice relieves legaljustice from unnecessary technicality, grammatical pedantry or logicalprevarication. It supplies the omissions of a formulated law. As LordBuckmaster said, no form or procedure should ever be permitted to excludethe presentation of a litigants defence.

The adherence to principles of natural justice as recognized by allcivilized States is of supreme importance when a quasi-judicial bodyembarks on determining disputes between the parties, or any administrativeaction involving civil consequences is in issue. These principles are wellsettled. The first and foremost principle is what is commonly known as audialteram partem rule. It says that no one should be condemned unheard.Notice is the first limb of this principle. It must be precise and unambiguous.It should apprise the party determinatively of the case he has to meet. Timegiven for the purpose should be adequate so as to enable him to make hisrepresentation. In the absence of a notice of the kind and such reasonableopportunity, the order passed becomes wholly vitiated. Thus, it is butessential that a party should be put on notice of the case before any adverseorder is passed against him. This is one of the most important principles ofnatural justice. It is after all an approved rule of fair play. The concept hasgained significance and shades with time. When the historic document wasmade at Runnymede in 1215, the first statutory recognition of this principlefound its way into the Magna Carta. The classic exposition of Sir EdwardCoke of natural justice requires to vocate, interrogate and adjudicate. In thecelebrated case of Cooper v. Wandsworth Board of Works 2the principlewas thus stated: (ER p. 420)

[E]ven God himself did not pass sentence upon Adam before he was calledupon to make his defence. Adam (says God), where art thou? Hast thou noteaten of the tree whereof, I commanded thee that thou shouldest not eat?

Since then the principle has been chiselled, honed and refined, enriching itscontent. Judicial treatment has added light and luminosity to the concept, likepolishing of a diamond.

Principles of natural justice are those rules which have been laiddown by the courts as being the minimum protection of the rights of theindividual against the arbitrary procedure that may be adopted by a judicial,quasi-judicial and administrative authority while making an order affectingthose rights. These rules are intended to prevent such authority from doinginjustice.

“……. Concept of natural justice has undergone a great deal of changein recent years. Rules of natural justice are not rules embodied always expressly in a statute or in rules framed thereunder. They may be impliedfrom the nature of the duty to be performed under a statute. What particularrule of natural justice should be implied and what its context should be in agiven case must depend to a great extent on the facts and circumstances ofthat case, the framework of the statute under which the enquiry is held. Theold distinction between a judicial act and an administrative act has witheredaway. Even an administrative order which involves civil consequences mustbe consistent with the rules of natural justice. The expression civilconsequences encompasses infraction of not merely property or personalrights but of civil liberties, material deprivations and non-pecuniary damages.In its wide umbrella comes everything that affects a citizen in his civillife…….”

…….. How then have the principles of natural justice been interpretedin the courts and within what limits are they to be confined? Over the yearsby a process of judicial interpretation two rules have been evolved asrepresenting the principles of natural justice in judicial process, includingtherein quasi-judicial and administrative process. They constitute the basicelements of a fair hearing, having their roots in the innate sense of man forfair play and justice which is not the preserve of any particular race orcountry but is shared in common by all men. The first rule is nemo judex incausa sua or nemo debet esse judex in propria causa sua as stated in Earlof Derbys case 16that is, no man shall be a judge in his own cause. Cokeused the form aliquis non debet esse judex in propria causa, quia non potestesse judex et pars (Co. Litt. 1418), that is, no man ought to be a judge in hisown case, because he cannot act as judge and at the same time be a party.The form nemo potest esse simul actor et judex, that is, no one can be atonce suitor and judge is also at times used. The second rule is audi alterampartem, that is, hear the other side. At times and particularly in continentalcountries, the form audietur et altera pars is used, meaning very much thesame thing. A corollary has been deduced from the above two rules andparticularly the audi alteram partem rule, namely qui aliquid statuerit, parteinaudita altera acquum licet dixerit, haud acquum fecerit that is, he who shalldecide anything without the other side having been heard, although he mayhave said what is right, will not have been what is right [see Boswels case 17(Co Rep at p. 52-a)] or in other words, as it is now expressed, justice shouldnot only be done but should manifestly be seen to be done. Whenever anorder is struck down as invalid being in violation of principles of naturaljustice, there is no final decision of the case and fresh proceedings are leftupon (sic open). All that is done is to vacate the order assailed by virtue of itsinherent defect, but the proceedings are not terminated.

……..As was observed by this Court we need not go intouseless formality theory in detail; in view of the fact that no prejudicehas been shown. As is rightly pointed out by learned counsel for theappellants, unless failure of justice is occasioned or that it would notbe in public interest to dismiss a petition on the fact situation of a case, this Court may refuse to exercise the said jurisdiction (see GaddeVenkateswara Rao v. Govt. of A.P. 30). It is to be noted that legalformulations cannot be divorced from the fact situation of the case.Personal hearing was granted by the Appellate Authority, though notstatutorily prescribed. In a given case post-decisional hearing canobliterate the procedural deficiency of a pre-decisional hearing. (SeeCharan Lal Sahu v. Union of India 31.)

Additionally, there was no material placed by the employee to showas to how he has been prejudiced. Though in all cases the post-decisionalhearing cannot be a substitute for pre-decisional hearing, in the case at handthe position is different. The position was illuminatingly stated by this Court inManaging Director, ECIL v. B. Karunakar1 (SCC at p. 758, para 31) whichreads as follows:

“Hence, in all cases where the enquiry officers report is not furnished to thedelinquent employee in the disciplinary proceedings, the courts and tribunals shouldcause the copy of the report to be furnished to the aggrieved employee if he has notalready secured it before coming to the court/tribunal and give the employee anopportunity to show how his or her case was prejudiced because of the non-supply ofthe report. If after hearing the parties, the court/tribunal comes to the conclusion thatthe non-supply of the report would have made no difference to the ultimate findingsand the punishment given, the court/tribunal should not interfere with the order ofpunishment. The court/tribunal should not mechanically set aside the order ofpunishment on the ground that the report was not furnished as is regrettably beingdone at present. The courts should avoid resorting to short cuts. Since it is thecourts/tribunals which will apply their judicial mind to the question and give theirreasons for setting aside or not setting aside the order of punishment, (and not anyinternal appellate or revisional authority), there would be neither a breach of theprinciples of natural justice nor a denial of the reasonable opportunity. It is only if thecourt/tribunal finds that the furnishing of the report would have made a difference tothe result in the case that it should set aside the order of punishment. Where afterfollowing the above procedure, the court/tribunal sets aside the order of punishment,the proper relief that should be granted is to direct reinstatement of the employee withliberty to the authority/management to proceed with the inquiry, by placing theemployee under suspension and continuing the inquiry from the state of furnishing himwith the report. The question whether the employee would be entitled to the backwages and other benefits from the date of his dismissal to the date of hisreinstatement if ultimately ordered, should invariably be left to be decided by theauthority concerned according to law, after the culmination of the proceedings anddepending on the final outcome. If the employee succeeds in the fresh inquiry and isdirected to be reinstated, the authority should be at liberty to decide according to lawhow it will treat the period from the date of dismissal till the reinstatement and to whatbenefits, if any and the extent of the benefits, he will be entitled. The reinstatementmade as a result of the setting aside of the inquiry for failure to furnish the report,should be treated as a reinstatement for the purpose of holding the fresh inquiry fromthe stage of furnishing the report and no more, where such fresh inquiry is held. Thatwill also be the correct position in law…..” (emphasis supplied)

With a view to ensure that no injustice was caused to thepetitioners herein, the respondents were directed to produce the

records and make available the same for verification. LearnedCounsel for the petitioner, after perusal of the records, and oninstructions, would submit that, while the manner in which and themethod of computation of the amounts due may not be incorrect,the petitioners herein had claimed that the property, which wasmortgaged to the respondent Board by Sri G.V. Narayana Reddy,was his ancestral property and that Sri G.V. Narayana Reddy wasnot entitled to mortgage the ancestral property in favour of theBoard more so since the said mortgage was not for the benefit ofthe joint family. Sri V.T.M. Prasad, learned Standing Counsel forthe Respondent Board, on the other hand, would contend thatvarious documents submitted by Sri G.V. Narayana Reddy to theBoard would establish that the property mortgaged was the self-acquired property of Sri G.V. Narayana Reddy and not hisancestral property and that the claim of the petitioners in thisregard was without basis. This is the only contention, which thepetitioners herein, intended to put across to the Respondent Boardin case they were given an opportunity of making a representationagainst the action proposed before a certificate was issued by theBoard to the District Collector. Since the petitioners’ claim, of themortgaged property being ancestral property, is disputed by theRespondent Board and it is their case that the mortgaged propertywas the self-acquired property of Sri G.V. Narayana Reddy, evenif an opportunity of making a representation had been provided tothe petitioners herein, their contention would only have beenrejected. The opportunity of making a representation, in thesefacts and circumstances, would only have been an empty formality. The petitioners cannot be said to have been prejudicedas a result of their being denied such an opportunity. Lest it beconstrued otherwise, it is made clear that this Court has notexpressed any opinion on the question whether the mortgagedproperty was the ancestral or self-acquired property of late SriG.V. Narayana Reddy. Suffice it to state that it is not for thisCourt, in proceedings under Article 226 of the Constitution of India,to determine these disputed questions of fact. If the petitionershave any grievance in this regard the forum, for adjudication, isthe Civil Court of competent jurisdiction and not by invoking thepublic law remedy under Article 226 of the Constitution of India,since the disputes are not in the public law domain. Except for theaforesaid contention no other reasons are forthcoming, in theaffidavit filed in support of the writ petition, as to how thepetitioners have been prejudiced on their not being given anopportunity of being heard. Since the requirement of providing anopportunity of being heard, under the first proviso to Section 19, isto prevent failure of justice and since neither prejudice has beenshown to have been caused by denial of such an opportunity norhave the petitioners been able to substantiate as to how, providingsuch an opportunity, would have resulted in the certificate notbeing issued I see no reason to exercise the discretionaryjurisdiction of this Court, under Article 226 of the Constitution ofIndia, to interfere in their favour.

The contention, that Section 8 of the A.P. RevenueRecovery Act, which is referred to in the certificate, relates tomovable property and as the property sought to be attached and proceeded against, for recovery of the amounts due, is immovableproperties, the proceedings initiated by the respondents is withoutjurisdiction, is only to be noted to be rejected. It is well settledthat as long as the power is traceable to an enabling provisionunder the statute, even if the said provision is not specificallyreferred to, or instead a wrong provision has been referred to, theaction must be deemed to have been taken and the order deemedto have been passed under the enabling provision. (M/s. Pine

Chemicals Ltd. Vs. Assessing Authority[[5]], Indian Aluminium Company Vs. Kerala State Electricity Board[[6]]; PeerlessGeneral Finance & Investment Co. Ltd Vs. Reserve Bank of India[[7]]; B.S.E. Brokers Forum Vs. SEBI[[8]]). It is not in disputethat action could have been taken and the certificate issued underSection 25 of the A.P. Revenue Recovery Act. The mere fact thatSection 8 has been referred to in the certificate is, therefore, of noconsequence.

The plea of the claim being barred by limitation, does notalso merit acceptance. Sri A. Narasimha Reddy, learned Counselfor the petitioner, while fairly conceding that no such plea has beentaken in the affidavit filed in support of the writ petition, wouldsubmit that even in the absence of such a plea, this contention canbe raised even during the course of hearing. It is thereforenecessary to refer to the judgments cited. In V.R.Kalliyanikutty[2], the Supreme Court observed:

“……. In our view if such a wide interpretation is put on the wordsamount due under the Kerala Revenue Recovery Act, there is everylikelihood of the provisions of Article 14 being attracted. This Court in the case Director of Industries, U.P. v. Deep Chand Agarwal1 justified thespecial procedure for recovery of certain debts under the U.P. PublicMoneys (Recovery of Dues) Act, 1965 on the ground that the amountswhich were advanced by the State or by the financial institutions were for theeconomic betterment of the people of that State. Speedy recovery of theseamounts was necessary so that these amounts could be reutilized for thesame public purpose. It is doubtful if this public purpose would extend togranting exemption to these claims from the statute of limitation. The law oflimitation itself rests on the foundations of public interest. The courts haveexpressed at least three reasons for supporting the existence of statutes oflimitation:

(1) that long dormant claims have more of cruelty than justice in them;

(2) that a defendant might have lost the evidence to disprove a stale claim;and

(3) that persons with good causes of action should pursue them withreasonable diligence.

(See Halsburys Laws of England, 4th Edn., Vol. 28, para 605.)

In Nav Rattanmal v. State of Rajasthan5the statutes of limitation have beenconsidered as statutes of repose and statutes of peace. The generallyaccepted basis for such statutes is that they are designed to effectuate abeneficent public purpose. Whether public purpose of speedy recoverywould outweigh public purpose behind a statute of limitation is a moot point.But we need not examine this aspect any further in view of our interpretationof the words amounts due in Section 71.

It has been submitted before us that the statute of limitation merelybars the remedy without touching the right. Therefore, the right to recover theloan would remain even though the remedy by way of a suit would be time-barred. Reliance was placed on Khadi Gram Udyog Trust v. Ram ChandrajiVirajman Mandir4 in this connection. The Court there observed that though adebt may be time-barred, it would still be a debt due. The right remainsuntouched and if a creditor has any means of enforcing his right other thanby action or set-off, he is not prevented from doing so. In Punjab NationalBank v. Surendra Prasad Sinha6(SCC at pp. 503-504) this Court held thatthe rules of limitation are not meant to destroy the rights of parties. Section 3of the Limitation Act only bars the remedy but does not destroy the rightwhich the remedy relates to. Excepting cases which are specificallyprovided for, as for example, under Section 27 of the Limitation Act, the rightto which the remedy relates subsists. Though the right to enforce the debt byjudicial process is barred, that right can be exercised in any manner otherthan by means of a suit. For example, a creditors right to make adjustmentagainst time-barred debts exists.

There is no question, however, in the present case of any paymentvoluntarily made by a debtor being adjusted by his creditor against a time-barred debt. The provisions in the present case are statutory provisions forcoercive recovery of amounts due. Although the necessity of filing a suit by acreditor is avoided, the extent of the claim which is legally recoverable is notthereby enlarged. Under Section 70(2) of the Kerala Revenue Recovery Actthe right of a debtor to file a suit for refund is expressly preserved. Instead ofthe bank or the financial institution filing a suit which is defended by thedebtor, the creditor first recovers and then defends his recovery in a suit filedby the debtor. The rights of the parties are not thereby enlarged. The processof recovery is different. An Act must expressly provide for such enlargementof claims which are legally recoverable, before it can be interpreted asextending to the recovery of those amounts which have ceased to be legallyrecoverable on the date when recovery proceedings are undertaken. Underthe Kerala Revenue Recovery Act such a process of recovery would startwith a written requisition issued in the prescribed form by the creditor to theCollector of the district as prescribed under Section 69(2) of the said Act.Therefore, all claims which are legally recoverable and are not time-barredon that date can be recovered under the Kerala Revenue Recovery Act…….

……….In the premises under Section 71 of the Kerala RevenueRecovery Act claims which are time-barred on the date when a requisition isissued under Section 69(2) of the said Act are not amounts due underSection 71 and cannot be recovered under the said Act. Our conclusion isbased on the interpretation of Section 71 in the light of the provisions of theKerala Revenue Recovery Act.

In N.A. Radha[4], this Court held:-

“……In view of the decision of the Supreme Court in State of KeralaVs. Kaliyani Kutty: AIR 1999SC 1305” , proceedings under the Actcannot lie for recovery of amounts that are barred by limitation. Thequestion that arises is whether the claim of the respondent-Corporation is barred by limitation and whether this question would beadjudicated in these proceedings…….

………On the facts pleaded in response to the specific plea of thepetitioners that the claim is barred by limitation it is clear that the claimwas barred by limitation even by 5.10.1988 the date of demand by theCorporation. Both an action for enforcement of payment of moneysecured by a mortgage or otherwise charged upon an immovableproperty (12 years under Article 62 of the Limitation Act, 1963, for short‘the Limitation Act’) and an action where no period of limitation isprovided (Article 137 of the Limitation Act), was not available by1988……” (emphasis supplied)

In Narne Rama Murthy Vs. Ravula Somasundaram[[9]], the Supreme Court observed:

“…….. We also see no substance in the contention that the suit wasbarred by limitation and that the courts below should have decided thequestion of limitation. When limitation is the pure question of law andfrom the pleadings itself it becomes apparent that a suit is barred bylimitation, then, of course, it is the duty of the court to decide limitationat the outset even in the absence of a plea. However, in cases wherethe question of limitation is a mixed question of fact and law and thesuit does not appear to be barred by limitation on the face of it, then thefacts necessary to prove limitation must be pleaded, an issue raisedand then proved. In this case the question of limitation is intricatelylinked with the question whether the agreement to sell was entered intoon behalf of all and whether possession was on behalf of all. It is alsolinked with the plea of adverse possession. Once on facts it has beenfound that the purchase was on behalf of all and that the possession was onbehalf of all, then, in the absence of any open, hostile and overt act, therecan be no adverse possession and the suit would also not be barred bylimitation. The only hostile act which could be shown was the advertisementissued in 1989. The suit filed almost immediately thereafter…….” (emphasissupplied)

In cases where limitation is a pure question of law and fromthe pleadings itself it becomes apparent that the suit is barred bylimitation, it is the duty of the court to decide limitation at theoutset, even in the absence of a specific plea. The questionwhich, therefore, arises is as to whether from the pleadings anddocuments on record, it is apparent that the claim of therespondents, for recovery of the amounts due, is barred bylimitation. Sri A. Narasimha Reddy, learned Counsel for thepetitioner, would place reliance on column 5 of the distraint orderwhich prescribes the date on which the arrears fell due. Thereinthe year is mentioned as 1976. Learned Counsel would contendthat, since under Articles 62 and 63 of the Limitation Act, thelimitation prescribed is 12 years, the right to recover the arrears

was barred by limitation after 1988 and since the certificate wasissued only in the year 1992, the entire proceedings under the A.P.Revenue Recovery Act were barred by limitation and are requiredto be quashed. Along with their counter-affidavit, the respondentshave filed documents wherein details are furnished of the scheduleof repayment. The schedule would reveal that the loan amountwas liable to be repaid in instalments commencing from10.09.1978 till 10.09.1986. The sanction order itself is dated10.09.1976. The distraint order, (a typed copy of which has beenfiled by the petitioners), has obviously erroneously mentioned theyear of sanction of the loan as the date on which the arrears felldue. As is clear from the sanction order, no arrears fell due in theyear 1976 as the first instalment fell due only in September, 1978. Except for the erroneous reference in the distraint order, there isnothing else on record from which it is apparent that the claim ofthe respondents is barred by limitation. In any event, this Courtwould not, ordinarily, entertain a plea of limitation in proceedingsunder Article 226 of the Constitution of India. Narne RamaMurthy[8], was not a case which arose in writ proceedings underArticle 226 of the Constitution of India but was an appeal arisingfrom a civil suit. Reliance placed by the petitioners on the saidjudgment is therefore misplaced. The plea of the claim beingbarred by limitation must, therefore, be rejected.

The submission of Sri A. Narasimha Reddy, learnedCounsel for the petitioner, that the arrears due cannot berecovered with penal interest, as Section 7 of the A.P. RevenueRecovery Act provides that interest on arrears of revenue cannot exceed 6% per annum, however, merits acceptance. While it isopen to the respondents to proceed, pursuant to the certificateissued by the respondent Board to recover the amounts due asarrears of land revenue, in view of the prohibition under Section 7of the A.P. Revenue Recovery Act, the arrears as mentioned inthe certificate can only be recovered along with interest at 6% p.a.and not in excess thereof. The remedy available to therespondents, to recover the excess interest claimed, if any, is onlyby invoking the jurisdiction of the Civil Court of competentjurisdiction and not under the provisions of the A.P. RevenueRecovery Act. I am, however, unable to accept the submission ofSri A. Narasimha Reddy, learned Counsel for the petitioner, thatby invoking the provisions of the A.P. Revenue Recovery Act, therespondents, in effect, had waived their right to claim interestbeyond 6% p.a. on the arrears due. No such inference of waivershould be easily drawn, more so, when the claim of interest iscontractual and the parties to the contract have specifically agreedupon the rate of interest, both normal and penal. While thestatutory provisions under the A.P. Revenue Recovery Act providethat the arrears of revenue shall bear interest not beyond 6% p.a,that would not disentitle the respondents from taking recourse tosuch other remedies, as are available to them in law, for recoveryof the remaining contractual portion of the interest due, as agreedupon between the petitioner’s father and the 1[st] respondent.

Except to the limited extent that the interest which can beclaimed by the respondents, on the arrears due, under the A.P.Revenue Recovery Act, cannot exceed 6% p.a., the writ petition fails and is accordingly circumstances, without costs.

dismissed. However, in the

____________________________

Date: -12-2006 RAMESH RANGANATHAN,JMRKR/ASP

[1]2003(4) SCC 557[2]AIR 1999 SC 1305[3]2005(6) SCC 614[4]2000(2) ALD 560[5]1992)2 SCC 683[6]1975(2) SCC 414[7]1992(2) SCC 343[8]2001(3) SCC 482[9](2005)6 SCC 614