Mumbai Kerosene Dealers'' Association and Others vs The State of Maharashtra and Others

S.C. Dharmadhikari, J—Rule. Respondents waive service. By consent, heard forthwith.

The petitioner No. 1 is an unregistered organisation of the kerosene dealers in Mumbai who are holding licences issued by the second respondent under the provisions of the Maharashtra Kerosene Dealers'' Licencing Order, 1966. The petitioner Nos. 2 to 49 are members of this organisation and they are licence holders as well.

It is common ground that the Maharashtra Kerosene Dealers'' Licencing Order, 1966, has been issued in exercise of powers conferred by clauses (c), (d), (i) and (j) of sub-section (2) of section 3 of the Essential Commodities Act, 1955, and all other enabling powers.

The Central Government has also issued the Kerosene (Fixation of Ceiling Price) Order, 1970. A copy thereof is at Annexure-C to the Writ Petition. The petitioners rely upon the licences issued in their favour and submit that they are wholesale kerosene dealers. They purchase kerosene from the oil companies. Then this kerosene is sold to authorized ration-shops who are known as retail dealers. The retail dealers, in turn, sell the said kerosene to the consumers who are beneficiaries of the Public Distribution System, after verifying the ration-cards and following procedure established by the State. As far as the wholesale dealers are concerned, they are entitled to dealer''s commission. This is also fixed by the Government of India and revised and notified through its Ministry of Petroleum and Natural Gas from time to time. The petitioners state that the rate at which the wholesale dealers are required to sell the kerosene to the authorized ration shops is calculated, revised, fixed and notified by the State of Maharashtra from time to time by adding to the prevailing basic ex-depot price of kerosene, all other elements at the prevailing rates such as State taxes paid by the oil companies, the wholesale dealers'' commission as fixed by the Central Government, the kerosene transportation charges, leakage and shrinkage allowance, octroi, State taxes at wholesalers'' level and the rounding-off benefit etc. The State of Maharashtra also revises, calculates, fixes and notifies the price at which the kerosene should be sold by retail dealers to the actual consumers. There are several Notifications, Government Resolutions and Circulars issued in view of the revisions in the wholesale dealers'' commission declared by the Central Government as also other revisions. There are examples of upward revisions as well as downward revisions and cited by the petitioners. They have set out in details the computation and submitted that the State taxes include the erstwhile sales tax, surcharge on sales tax, turn-over tax, the erstwhile resale tax and value added tax (VAT for short) etc. The petitioners pointed out to the State that due to the introduction of resale tax @ 0.5% with effect from 1st May, 2002, there was upward revision of kerosene selling rate by the respondent No. 1 on 15th May, 2002. Due to this revision, the wholesale as well as the retail sale rates were increased with effect from 15th May, 2002, as resale tax at 0.5% was levied with effect from 15th May, 2002. It is then stated that a representation was made in advance by the petitioners that the actual inclusion of the 0.5% resale tax in the price was delayed till 15th May, 2002. It is, therefore, the obligation of the State to effect appropriate adjustments so that the dealers do not suffer losses. In other words, if there was increase in the retail price by 9% per litre from 22nd May, 2002, consequent upon the delay in intimation by the respondents to the petitioners, then, the revision of price did not come into effect from 1st May, 2002, but with effect from 22nd May, 2002. If the decision of upward revision in kerosene selling rate was not informed in time, there is a financial loss sustained by the members of the petitioners and on account of the acts of omission and commission of the respondents. Later on, this resale tax was withdrawn. Even though the announcement was made in the Budgetary speech as well as in the Budget in May 2004, the Finance Department of the State took as many as 7 months to issue a Notification in the Official Gazette. The Notification was issued and published on 2nd December, 2004. Thus, even this delay was without any justification much less a proper explanation. Therefore, a representation was made and despite that the implementation of the withdrawal of resale tax was given effect from 22nd May, 2005. The retail sale price of kerosene was reduced by Rs. 9/- per litre and that is why until the petitioners members were intimated, the actual reduction in kerosene did not come into effect. It is in these circumstances that the petitioners rely upon the letter dated 17th February, 2005 from the Commissioner of Sales Tax. The petitioners also rely upon the fact that their share in the price which is charged is not what is being projected but 4.3 paisa only per litre. The petitioners, therefore, rely upon the audit conducted by the Government Auditor of the accounts maintained by the Controller of Rationing, Mumbai. The Audit enquiry No. 10 is relied upon and the remarks of the auditor are that the reduction of price of kerosene due to abolition of resale tax was given effect from 1st April, 2005. Till 1st April, 2005, this resale tax was allowed to be charged and levied. From December, 2004 to March, 2005, total 103679.7 kilo litres of kerosene was lifted and distributed. Therefore, it was commented by the auditor in the enquiry and on point No. 10 that there is an undue benefit amounting to Rs. 94,31,742/- which is jointly retained by the wholesale dealers like the present petitioner Nos. 2 to 49 and the retail dealers also. The wholesale dealers share in this amount was pegged at 50% viz. approximately Rs. 47 lakhs only.

The petitioners then rely upon the introduction of the VAT with effect from 1st April, 2005. They point out in paragraph 19, the position prior to the introduction of VAT, particularly that 5.9% sales tax was levied and collected by the oil companies on the kerosene which came down to 4% VAT with effect from 1st April, 2005. On account of reduction in the tax there was a reduction in the purchase price of kerosene and in spite of giving effect to this reduction of the sale price, the Government delayed the same till 30th May, 2005. Thus, the benefit of the reduction of the sale price of kerosene was not passed on to the consumers for about sixty days from the date of reduction. It is in these circumstances that the petitioners submit that the auditor''s remarks or the auditor''s objections could not have led to the impugned show cause notice. They also rely upon the fact that the commission to them is determined and if the wholesale price is revised, then, there has to be some effect even in this commission. If there is a upward revision in the rate of the wholesale dealers'' commission, then, that results in an increase in the final retail selling price. Therefore, as soon as there is an upward revision of the rate of commission by the Central Government, the State of Maharashtra is bound to take into consideration the upward revision in petitioners-dealers'' commission and fix the final sale price of the kerosene with immediate effect. The delay in the same has an effect and which has been set out from paragraphs 24 of this Writ Petition. They pointed out that the delay in revision of wholesale dealers'' commission in one instance took about four years and nine months. From paragraph 26 they set out the cascading effect of such delays. Therefore, in paragraph 28 they submit that there is a loss to the petitioners-members and to the tune of Rs. 96,22,080/-. This amount cannot be recovered by the petitioners from the consumers and that too with retrospective effect.

It is in the above circumstances that the petitioners question the notice and seek to recover the arrears.

Our attention has been invited by Mr. Warunjikar appearing for the petitioners to paragraphs 28 to 32 of this petition to eventually submit that the audit enquiry should have resulted in invitation of proposals which would result in the petitioners demand of setting off the alleged recovery against the loss suffered because of the delayed implementation of the revised dealers'' commission. Mr. Warunjikar has invited our attention to several representations and which were made and in his submission, if there is such a delay, then, the petitioners have rightly relied upon the State''s own document a copy of which is to be found at pages 177 to 179 of the paper-book. Mr. Warunjikar submits that this is a communication dated 16th October, 2008, addressed to the Deputy Auditor General and on the subject of recovery of Rs. 117.77 lakhs from wholesale dealers and retailers of PDS kerosene on account of price reduction in kerosene. Mr. Warunjikar submits that the State has given its clarification to the queries raised by the auditor and this would denote as to how the Food & Civil Supplies Department of the State understood the matter to be. They were sympathetic and agreed with the stand of the wholesalers. Reliance is also placed on the communication of the Deputy Accountant General from the Office of the Accountant General, Commercial Audit, Maharashtra, at page 186 of the paper-book dated 13th April, 2010, and which, according to Mr. Warunjikar, fortifies the stand of the petitioners that the Mumbai Kerosene Dealers'' Association''s grievances needed to be looked into and for that purpose, a meeting of the Secretary of the Department of Food and Civil Supplies with the Dealers'' Association was proposed to be held.

It is in these circumstances that on the earlier occasion Mr. Warunjikar had invited our attention to the figures and which are to be found in the Government Resolution copy of which is at Annexure-DD at pages 194 and 195 of the paper-book. Our attention is also invited to the fact that it is in these circumstances that nothing can be called upon to be deposited in Government Treasury by the petitioners. If the benefit of the abolition of the resale tax and allegedly retained by the petitioners is sought to be recovered from them, then, the grievances of the petitioners'' Association as noted by another wing of the State should be redressed.

There is, therefore, no warrant for such recoveries and to be effected from the petitioners. Mr. Warunjikar has, therefore, submitted that the equitable and discretionary jurisdiction of this Court should be exercised to call for the necessary records and to quash the recovery commenced by the show cause notice.

Our attention was invited on the earlier occasion to the affidavit-in-reply filed by the Assistant Controller of Rationing and particularly paragraph 3 thereof. Mr. Mattos, learned AGP appearing for the State sought to justify the action of the State. He would submit that new wholesale prices came into effect from April 2005. All the members of the petitioners Association had, therefore, charged the retailers at the old rate till March, 2005. They collected the sale price inclusive of the resales tax. Some members of the petitioners have not paid the same in the Government Treasury and it is, therefore, that the recovery/demand notices have been issued. These demand notices have been issued so as to take care of the profiteering in essential commodities by the wholesalers. They could not have collected a price over and above the determined and fixed price by the State. In the circumstances Mr. Mattos also submitted that there is no question of any adjustment towards payment of wholesalers'' commission. There is a dispute about the same and from whom these commissions are due and payable. An earlier writ petition was filed on the same cause of action. Thereafter, a Notification dated 31st July, 2009, is referred to in this affidavit and it is submitted that the petitioners'' demand on account of upward revision or increment in commissions payable to them is not lawful in the light of this Government Resolution.

On the earlier occasion, it is on these materials that we had heard both sides. However, when the petition was argued at great length and our attention was invited to pages 109, 110 and 114 of the paper-book, we called upon Mr. Mattos to satisfy us as to the source of the power to issue the communications at pages 200 and 201 of the paper-book. These communications are nothing, but the show cause notices and in which the stand of the State and as noted above has been reflected. At the request of Mr. Mattos the matter was placed today.

Mr. Mattos has relied upon Kerosene (Restriction on Use and Fixation of Ceiling Price) Order 1993 issued by the Ministry of Petroleum & Natural Gas in exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955. He would submit that this is an order dealing with restriction on use and fixation of ceiling price. The term "dealer" appearing in paragraph 2(c) of this Notification (definition clause) and paragraph 2(d) is relied upon to submit that if the declared price is a concept defined to mean in relation to kerosene sold under the Public Distribution System as the one declared by the Central Government from time to time with reference to an area and inclusive of such other charges, rates and duties and tax prescribed by the State Government or District Collector of the State in an area of the State, then, in Mr. Mattos'' submission such declaration would bind the petitioners in terms of the declared price and the components thereof, the retailers should be charged. If the retail price includes some of the components such as resale tax which stands abolished, then, Mr. Mattos relies upon the terms and conditions of the issuance of the licences and particularly Form-II of clause (5) of the Maharashtra Kerosene Dealers'' Licencing Order, 1966, the licence copy of which is at page 76 and condition No. 6 therein. He would submit that this is a source of the power to issue the demand notice. These provisions would enable the Government to call upon the petitioners to deposit the excess amounts charged in the Government Treasury. Mr. Mattos would submit that this is an unjust enrichment by the wholesale dealers. Any sum unjustly retained or any act by which parties like the petitioners are unfairly and unjustly enriched should not be permitted and the money retained but must be deposited in the Government Treasury. For that principle he relies upon the judgment of the Hon''ble Supreme Court in the case of Jay Vee Rice and General Mills Vs. State of Haryana and Others, (2010) 10 JT 559 : (2010) 10 SCALE 280 : (2010) 10 SCC 687 : (2010) 35 VST 576 : (2010) AIRSCW 6103 : (2010) 7 Supreme 64 .

We have given our careful consideration to the rival contentions. We have, with the assistance of Mr. Mattos, perused this decision of the Hon''ble Supreme Court as well. We are unable to agree with him for the following reasons. As far as the source of the power and which is sought to be traced to the Control Order styled as Kerosene (Restriction on Use and Fixation of Ceiling Price) Order, 1993 (for short "1993 Order") is concerned, we find that it enables the Central Government to impose restriction on use of kerosene supplied under the Public Distribution System (see clause 3). By clause 3-A, there is a restriction on sale and use of kerosene imported under Parallel Marketing System. By clause 3-B there is a restriction on sale of kerosene by persons not authorized. Then, by clause 3-C there is a restriction on sale and use of kerosene indigenously produced or imported and marketed by oil companies. By clause 4 procurement, storage and sale of kerosene under the Public Distribution System is dealt with. By clause 5, display of stock and price by dealers appointed under the PDS is contemplated. By clause 6, maintenance of registers, account books and submission of returns by the dealers under the PDS is mandated. Equally, by clause 7 similar obligation and duty is cast on parallel marketer. Thereafter, assessment and certification and rating of parallel marketers is dealt with by clause 7-A. Kerosene under the PDS is made distinguishable by clause 8. By clause 9, there is a power of entry, search and seizure and then the overriding effect to this 1993 Order is given vide Clause No. 10. Clause No. 11 confers a power to exempt and Clause 12 is titled as "Repeal and Saving".

We do not, therefore, find anything in this order which would enable us to conclude that the recovery as is sought to be effected and by the show cause notice is contemplated, much less permitted. The State is seeking to recover particularly the difference between the resale tax which is included in the retail price component and charged by the wholesalers to the retailers. With the abolition of that resale tax, the price ought to be scaled down and the differential amount, namely, by deducting the tax paid from the total price charged to the retailers be deposited in the Government Treasury is the demand in the show cause notice. For such a demand to be raised, adjudicated and the amount recovered, we ought to find some specific power and conferred in the State.

Then, what is relied upon are the terms and conditions of the licence issued under the Maharashtra Kerosene Dealers'' Licencing Order, 1966. That enables the State to issue a licence to carry on a business in wholesale as far as kerosene is concerned. There is a mandate that the licencee shall not sell kerosene exceeding the maximum price prescribed by the Government. He shall prominently display a notice stating these maximum prices. The licencee being an agent of the oil company, shall not sell kerosene oil to any other person than the licenced dealers. He is obligated to maintain true and proper accounts of all purchases and sales of kerosene and issue cash memo to customers. He shall give all facilities at all reasonable times to the licensing authority or any officer authorised by him for inspection of his stocks and accounts of kerosene and produce the licence for inspection on demand. Condition No. 6 is relied upon and it reads as under :

"6. The licensee shall comply with any directions that may be issued to him by the State Government or by the licensing authority or any officer authorised by the licensing authority in this behalf, in regard to the methods of collection, delivery, transport, sale or storage of kerosene and the hours of sale or any other matter relating to kerosene which the State Government or licensing authority or such officer may think fit to regulate."

A bare perusal thereof would indicate as to how the licencee must comply with any direction that may be issued to him by the State Government or by the licensing authority or any officer authorised by the licensing authority in this behalf in regard to the methods of collection, delivery, transport, sale or storage of kerosene and the manner of its sale or matters related therewith.

In the decision reported in Jay Vee Rice and General Mills Vs. State of Haryana and Others, (2010) 10 JT 559 : (2010) 10 SCALE 280 : (2010) 10 SCC 687 : (2010) 35 VST 576 : (2010) AIRSCW 6103 : (2010) 7 Supreme 64 , the Hon''ble Supreme Court was concerned with two issues. The first issue was whether upon true and correct interpretation and construction of Note (i) to Schedule III under clause 2(i) of the Haryana Rice Procurement Levy Order, 1985, the appellants/dealers having collected purchase tax on paddy from the Government or its agencies along with procurement price of levy fixed under the said Levy Order, what would be the effect of such collection and secondly whether the State is empowered to recover certain amounts as purchase tax in the light of the scheme envisaged under the Haryana General Sales Tax Act, 1973 and keeping in view that no sales tax was payable, as payment of the same was specifically excluded. The Hon''ble Supreme Court found that the companies engaged in the business of purchase of paddy and manufacture of rice are registered as dealers under the Haryana General Sales Tax Act. The Haryana Value Added Tax Act, 2003, also applied to them. They were granted exemption from payment of sales tax under Rule 28A of the Haryana Sales Tax Rules, 1975 for a period of seven years from 3rd October, 1995 to 2nd October, 2002 under Exemption Certificate. By virtue of Note (i) of the Harayana Government Notification dated 17th October, 1996, which was incorporated vide an amendment to clause 2(i) of Schedule III of the Rules, the appellants while supplying rice to District Food Supplies Controller (for short "DFSC") collected purchase tax among other things by way of price received from the DFSC. The Note was relied upon and though exempted from payment of sales tax but since they had collected purchase tax on paddy from the DFSC as part of the price that the Government of Haryana took up the plea that they were required to pay purchase tax so collected as tax or as the amount as tax collected and the amount which since collected was required to be deposited in the Government Treasury. The dealers on the other hand relied upon the exemption in their favour and from payment of both taxes.

It is negativing these contentions and interpreting the Rules, the Exemption Notification and the Note below that the Hon''ble Supreme Court applied the doctrine of unjust enrichment. We do not find any argument being made or canvassed with regard to the source of the power of the State to recover the amounts. If that was a tax and which was collected after the burden thereof was passed on the eventual beneficiaries, then, that was required to be remitted by deposit in the Government Treasury. Retaining of that sum would amount to unjust enrichment. We are not concerned with the application of the Rule of unjust enrichment and to the given facts and circumstances. Assuming that there is any such enrichment and unjust as termed by Mr. Mattos, still, to make good the loss allegedly sustained by the State, there must be a power of recovery. One does not dispute that recovery of tax by coercive means is contemplated in tax legislations. Further, any dues payable to the Government is also recoverable under The Revenue Recovery Act, 1890.

This legislation enables recovery of public demands. Any arrear of land revenue or a sum recoverable as an arrear of land revenue and payable to a Collector by the defaulter. Thus, every demand of the nature involved in this case is not a public demand or public dues. Assuming it is one, it must be recoverable from the persons like the petitioner by a summary process and as an exception to the normal and ordinary legal mode of recovery. In the context of such an Act, the Hon''ble Supreme Court in a decision reported in the case of State of Kerala and Ors Vs. V.R. Kalliyanikutty and Anr, AIR 1999 SC 1305 : (1999) 96 CompCas 613 : (1999) 2 JT 540 : (1999) 2 SCALE 374 : (1999) 3 SCC 657 : (1999) 2 SCR 372 : (1999) AIRSCW 996 : (1999) 3 Supreme 451 has held :

"8. Looking to the object of Section 71 we have to examine whether time-barred claims of the State Financial Corporation and the banks can be recovered under it. Is the object is only speed of recovery or is it also enlargement of the right to recover? The respondent-institutions rely on the words "amount due" in Section 71 as encompassing time-barred claims also. Now, what is meant by the words "amounts due" used in Section 71 of the Kerala Revenue Recovery Act as also in the notifications issued under Section 71? Do these words refer to the amounts repayable under the terms of the loan agreements executed between the debtor and the creditor irrespective of whether the claim of the creditor has become time-barred or not? Or do these words refer only to those claims of the creditor which are legally recoverable ? An amount "due" normally refers to an amount which the creditor has a right to recover. Wharton in Law Lexicon defines "due" as anything owing; that which one contracts to pay to another. In Black''s Law Dictionary, 6th Edn. at page 499 the following comment appears against the word "due". The word "due" always imports a fixed and settled obligation or liability; but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context. It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at sometime in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived. But commonly and in the absence of any qualifying expressions, the word "due" is restricted to the first of these meanings, the second being expressed by the term "overdue" and the third by the word "payable". There is no reference in these definitions to a time-barred debt. In every case the exact meaning of the word "due" will depend upon the context in which that word appears.

In the case of Hansraj Gupta and Others vs. Official Liquidators of The DehraAIR 1933 63 (Privy Council) the Privy Council was required to interpret the words "money due" under Section 186 of the Companies Act, 1913. Section 186 dealt with the recovery of any money due to the Company from a contributory. Interpreting the words "money due", the Privy Council said that the phrase would only refer to those claims which were not time-barred. It noted that the section is concerned only with moneys due from a contributory. A debtor who is not a contributory is not affected by it. Moneys due from him can be recovered only by a suit in the Company''s name. Secondly, the section creates a special procedure for obtaining payment of money. It is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights. Thirdly, the power of the Court to order payment under that Section is discretionary. It may refuse to act under that section, leaving the liquidator to sue in the name of the Company. Therefore, the respondent under the procedure of Section 186 cannot be deprived of some defence or answer open to him in a suit for the same moneys.

The same reasoning would apply in the present case also. The Kerala Revenue Recovery Act does not create any new right. It merely provides a process for speedy recovery of moneys due. Therefore, instead of filing a suit, (or an application or petition under any special Act), obtaining a decree and executing it, the bank or the financial institution can now recover the claim under the Kerala Revenue Recovery Act. Since this Act does not create any new right, the person claiming recovery cannot claim recovery of amounts which are not legally recoverable nor can a defence of limitation available to a debtor in a suit or other legal proceeding be taken away under the provisions of the Kerala Revenue Recovery Act. In fact, under Section 70 of the Kerala Revenue Recovery Act, it is provided that when proceedings are taken under this Act against any person for the recovery of any sum of money due from him, such person may, at any time before the commencement of the sale of any property attached in such proceedings, pay the amount claimed and at the same time deliver a protest signed by himself to the officer issuing the demand or conducting the sale as the case may be. Sub-section (2) of Section 70 provides that when the amount is paid under protest, the officer issuing the demand or the officer at whose instance the proceedings have been initiated, shall enquire into the protest and pass appropriate orders. If the protest is accepted, the officer disposing of the protest shall immediately order the refund of whole or part of the money paid under protest. Under sub-section (3) of Section 70, the person making a payment under protest shall have the right to institute a suit for the refund of the whole or part of the sum paid by him under protest.

Therefore, under Section 70(3) a person who has paid under protest can file a suit for refund of the amount wrongly recovered. In law he would be entitled to submit in the suit that the claim against which the recovery has been made is time-barred. Hence no amount should have been recovered from him. When the right to file a suit under Section 70(3) is expressly preserved, there is a necessary implication that the shield of limitation available to a debtor in a suit is also preserved. He cannot, therefore, be deprived of this right simply by making a recovery under the said Act unless there is anything in the Act which expressly brings about such a result. Provisions of the said Act, however, indicate to the contrary. Moreover, such a wide interpretation of "amount due" which destroys an important defence available to a debtor in a suit against him by the creditor, may attract Article 14 against the Act. It would be ironic if an Act for speedy recovery is held as enabling a creditor who has delayed recovery beyond the period of limitation to recover such delayed claims.

... ... ......

In our view if such a wide interpretation is put on the words "amount due" under the Kerala Revenue Recovery Act, there is every likelihood of the provisions of Article 14 being attracted. This Court in the case Director of Industries, U.P. and Others Vs. Deep Chand Agarwal, AIR 1980 SC 801 : (1980) 2 SCC 332 : (1980) 2 SCR 1015 : (1980) 12 UJ 374 justified the special procedure for recovery of certain debts under the U.P. Public Moneys (Recovery of Dues) Act, 1965 on the ground that the amounts which were advanced by the State or by the financial institutions were for the economic betterment of the people of that State. Speedy recovery of these amounts was necessary so that these amounts could be re-utilised for the same public purpose. It is doubtful if this public purpose would extend to granting exemption to these claims from the status of limitation. The law of limitation itself rests on the foundations of public interest. The Courts have expressed at least three reasons for supporting the existence of statutes of limitation; (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 with reasonable diligence. (See Halsbury 4th Edn. Vol. 28 Paragraph 605). In Nav Rattanmal and Others Vs. The State of Rajasthan, AIR 1961 SC 1704 : (1962) 2 SCR 324 , the Statutes of Limitation have been considered as Statutes of Repose and Statutes of Peace. The generally accepted basis for such statutes is that they are designed to effectuate a beneficent public purpose. Whether public purpose of speedy recovery would 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 interpretation of the words "amounts due" in Section 71.

It has been submitted before us that the statute of limitation merely bars the remedy without touching the right. Therefore, the right to recover the loan would remain even though the remedy by way of a suit would be time-barred. Reliance was placed on Khadi Gram Udyog Trust Vs. Ram Chandraji Virajman Mandir, Sarasiya Ghat, Kanpur, AIR 1978 SC 287 : (1978) 1 SCC 44 : (1978) 2 SCR 249 : (1977) 9 UJ 799 in this connection. The Court there observed that though a debt may be time-barred, it would still be a debt due. The right remains untouched and if a creditor has any means of enforcing his right other than by action or set-off, he is not prevented from doing so. In Punjab National Bank and others Vs. Surendra Prasad Sinha, AIR 1992 SC 1815 : (1992) 1 BC 579 : (1992) 75 CompCas 699 : (1992) CriLJ 2916 : (1992) 2 Crimes 297 : (1992) 3 JT 46 : (1992) 1 SCALE 926 : (1993) 1 SCC 499 Supp : (1992) 2 SCR 528 at page 503-504 : (1992 AIR SCW 2046 at Pp. 2048-2049), this Court held that the rules of limitation are not meant to destroy the rights of parties. Section 3 of the Limitation Act only bars the remedy but does not destroy the right which the remedy relates to. Excepting cases which are specifically provided for, as for example, under Section 27 of the Limitation Act, the right to which the remedy relates subsists. Though the right to enforce the debt by judicial process is barred, that right can be exercised in any manner other than by means of a suit. For example, a creditor''s right to make adjustment against time-barred debts exists."

Therefore, a right of recovery on the principle of unjust enrichment may arise. To that principle one can have no quarrel or dispute. How that enrichment has to be then dealt with and the recoveries effected is the moot question before us. We, therefore, do not find that Mr. Mattos can derive any assistance from the principles in the above Supreme Court decision. Rather, the principle referred by us and culled out from the above Supreme Court judgment in State of Kerala would enable us to hold that we have not found any source of power to recover the moneys and in the manner done. The recovery by a show cause notice simplicitor and without any summary power of nature derived from The Revenue Recovery Act, 1890, is thus not permissible. It is not a case of recovery of tax either. That is amount due as tax and collected but not remitted to the State. That may be recoverable as arrears of land revenue under the relevant tax legislation.

It is not then for us to state as to what is the power in the State to recover the above alleged sums and from the petitioners. There are other modes legally permissible and available which can be resorted to. If what is sought to be recovered is a tax, then, equally the taxing powers of the State enable such recovery. If any arrears or amounts due are to be recovered as arrears of land revenue, then, the Maharashtra Land Revenue Code, 1966, enacts a complete measure. We are not, therefore, required to find out the source of power and assist the State. It is for the State to decide as to how to recover the sums.

Once we do not find any justification and in law for issuance of the show cause notice, then, the same cannot be sustained. We proceed to quash and set aside the show cause notice but by clarifying that it would be open to the State to resort to such remedies as are permissible in law. In the view that we have taken, it is not necessary to consider the other contentions of Mr. Warunjikar and Mr. Mattos and whether any adjustment or set off can be claimed by the petitioners. As and when the State seeks to recover any amounts from the petitioners, they can avail of all the defences available in law. Equally, nothing prevents the petitioners from instituting such legal proceedings as are permissible in law, in the event they wish to recover any amounts from the State. With the above observations and clarifications we allow the Writ Petition and grant relief in terms of prayer clause (b).

The Rule, accordingly, is made absolute. No order as to costs.