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2025 Supreme(Online)(KER) 9238
HIGH COURT OF KERALA
Murali Purushothaman, J
ABDHUL RAZAK P.M – Appellant
Versus
KERALA STATE FINANCIAL ENTERPRISES LTD – Respondent
WP(C) NO. 1930 OF 2025
For the Appellants/Petitioners: P.M.UNNI NAMBOODIRI
For the Respondents: P.C.ANIL KUMAR
Recovery proceedings under the Kerala Revenue Recovery Act cannot proceed without ascertaining the relevant chit arrears as mandated by law.
Headnote:(A) Kerala Revenue Recovery Act, 1968 - Chit Funds Act, 1982 - The petitioners, subscribers to various chitties, challenged the recovery proceedings initiated by the Kerala State Financial Enterprises Ltd for default in repayments. The court deferred the recovery proceedings for two months to allow the petitioners to initiate arbitration proceedings. (Paras 1-3)
(B) Judicial Review - The court affirmed the right of the petitioners to seek remedies under the Chit Funds Act, emphasizing that recovery actions must comply with legal provisions. (Para 2)
Facts of the case:
The petitioners alleged that the recovery proceedings initiated against them were unlawful without ascertaining chit arrears. They sought to quash the recovery notices issued by the respondents.
Findings of Court:
The court ordered the deferral of recovery proceedings for two months, allowing the petitioners to pursue arbitration.
Issues: The main issues were the legality of recovery proceedings initiated without proper ascertainment of chit arrears and the petitioners' entitlement to alternative remedies.
Ratio Decidendi: The court held that recovery proceedings cannot be initiated without compliance with legal requirements, thereby protecting the petitioners' rights to arbitration.
Result: Writ petition disposed of with directions for deferral of recovery proceedings.
| Table of Content |
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| 1. petitioners intend to initiate arbitration proceedings. (Para 2) |
| 2. recovery proceedings deferred for two months. (Para 3) |
JUDGMENT The petitioners are subscribers to various Chitties with the Kerala State Financial Enterprises Ltd (for short, ‘KSFE’). Alleging default in repayment, recovery proceedings were initiated under the Kerala Revenue Recovery Act , 1968 by the 2nd respondent at the instance of the KSFE. They have filed this writ petition for the following reliefs:-
“i. Issue a writ in the nature of certiorai or any other appropriate writ, order or direction calling for the records leading to Exhibits issued by the respondents and quash the same.
ii. Declare that the respondent is not entitled to initiate revenue recovery proceedings under the Kerala Revenue Recovery Act , 1968 against the petitioner and the mortgaged property without ascertaining the chit arrears in accordance with law as held by this Hon’ble Court in Lt. Col. L. V. Krishnan & Others v. State of Kerala &
Others [2023 (4) KHC 274);”
2. When the writ petition came up for consideration today, the learned Counsel for the petitioners submitted that, in view of the statement dated 04.02.2025 filed by the learned Standing Counsel for the KSFE, the petitioners intend to initiate arbitration proceedings under Section 64 of the Chit Funds Act , 1982.
3. To enable the petitioners to avail the said remedy or any other remedy as may be available in law, the recovery proceedings initiated against the petitioners shall stand deferred for a period of two months.
The writ petition is disposed of. All the contentions of the petitioners are left open.
