KSFE Entitled To Resort To Revenue Recovery Proceedings Under Kerala Revenue Recovery Act, Not Barred By Chit Funds Act: Kerala High Court

Section 71 of the Kerala Revenue Recovery Act provides power to the government to declare the provisions of the Act applicable to any institution for recovery of amounts, in public interest.

Justice N.Nagaresh stated that under a deeming provision of the Revenue Recovery Act, amounts owed to KSFE are considered as public revenue for recovery.

“The Government of Kerala has issued Notification SRO No.250/70 dated 16.06.1970 whereby the Kerala State Financial Enterprises Limited has been declared as an institution to which the provisions of the Revenue Recovery Act, 1968 shall be applicable. Once the institution is declared under Section 71, then the amounts due to such institution from any person or class of persons can be recovered as public revenue by a legally deeming fiction.”

KSFE issued notice of attachment against the petitioners for recovery of dues invoking the Kerala Revenue Recovery Act 1968.

The petitioners claim that KSFE is not entitled to invoke the Kerala Revenue Recovery Act for recovery of dues as KSFE is governed by Chit Funds Act, 1982. It was contended that Chit Funds Act is a central legislation enacted by the Government to bring uniformity to regulate chit fund institutions in the country. It was argued that as per Section 64 of Chit Funds Act, disputes relating to chit business must be referred to Registrar for Arbitration, and that civil courts are barred from entertaining any suits or proceedings related to chit business disputes.

The KSFE argued that Section 64 only prescribes to disputes relating to conduct of chit business.

The Court stated that the Kerala Revenue Recovery Act makes provisions for attachment and sale of movable and immovable properties to recover public revenue in the State.

The Court stated that KSFE is designated as an institution under Section 71 of the Kerala Revenue Recovery Act entitled to recover amounts from subscribers by treating the dues as public revenue.

Further, the Court clarified that Section 64 of the Chit Funds Act does not nullify the notification issued under Section 71 of the Revenue Recovery Act.

The Court said, “Resolution of disputes under Section 64 of the Chit Funds Act and recovery of public revenue under the Revenue Recovery Act, 1968 operate in two different fields. As the Chit Funds Act and Revenue Recovery Act, 1968 play in two different and distinct fields, the non obstante clause in Section 64 of the Chit Funds Act will not nullify the notification under Section 71 of the Revenue Recovery Act and consequences flowing therefrom.

Referring to Premanandan v. State of Kerala (2020), the Court laid down that the Kerala Revenue Recovery Act is a self-contained statute enacted to recover amount of dues to the Government, statutory bodies and Corporations and other notified institutions.

As such, the Court dismissed the petitions.

Counsel for Petitioner: Advocates Albin A. Joseph, Sidharth O, Susanth Shaji, Luke J Chirayil

Counsel for Respondents: Advocate Bindu Mohan, Government Pleader Resmi Thomas, Senior Government Pleader Sheeja C S

Case Number: WP(C) NO. 35389 OF 2023

Case Title: Benzy Martin v State of Kerala

Citation: 2024 Live Law (Ker) 548

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