Rubber 'O'Malabar Products (P) Ltd. and Alwaye Techno Engineering (P) Ltd. v. The Kerala State Electricity Board and others and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **THURSDAY, THE 10TH DAY OF OCTOBER 2013/18TH ASWINA, 1935** ## **WP(C).No. 10563 of 2009 (M)** ## **----------------------------** ## **PETITIONER(S):** **--------------------------** **1. RUBBER 'O'MALABAR PRODUCTS(P)LTD, ADMINISTRATIVE OFFICE, AMEEN ARCADE, P.O.ROAD SHORANUR, REPRESENTED BY ITS DIRECTOR, K.M.ASHRAF.** **2. ALWAYE TECHNO ENGINEERING (P)LTD, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, REP/BY ITS MANAGING DIRECTOR, E.K.JALEEL** **RESIDING AT ENJAKUDI HOUSE, NORTH EDATHALA.PO, ALWAYE.** **BY ADVS.SRI.K.K.CHANDRAN PILLAI SRI.A.S.SAJUSH PAUL** ## **RESPONDENT(S):** - **----------------------------** **1. THE KERALA STATE ELECTRICITY BOARD, REPRESENTED BY ITS SECRETARY, VYDHYUTHI BHAVAN, PATTOM THIRUVANANTHAPURAM.** **2. THE SPECIAL OFFICER,(REVENUE), KERALA STATE ELECTRICITY BOARD, VYDHYUTHI BHAVAN, PATTOM THIRUVANANTHAPURAM.** **3. THE ASST. ENGINEER, KERALA STATE ELECTRICITY BOARD, ELECTRICAL SECTION, EDAYAR.** **4. THE DEPUTY TAHSILDAR, NORTH PARUR, ERNAKULAM DISTRICT.** **5. THE VILLAGE OFFICER,KADUNGALLOOR VILLAGE KADUNGALLOOR, ALWAYE.** ## **6. STATE OF KERALA,** - **REPRESENTED BY THE DISTRICT COLLECTOR, ERNAKULAM.** **R1 TO R3 BY ADVS. SRI.P.P.THAJUDEEN, SC, K.S.E.B SRI.P.SANTHALINGAM (SR.), SC. SRI.C.K.KARUNAKARAN, SC FOR KSEB SRI.S.SHARAN,SC,K.S.E.BOARD R4 TO R6 BY SENIOR GOVERNMENT PLEADER SRI. K.C. VINCENT** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-10-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).No. 10563 of 2009 (M)** ## **APPENDIX** ## **PETITIONERS' EXHIBITS** ## **-------------------------------------** **P1. TRUE COPY OF AGREEMENT DATED 24.1.2006 BETWEEN 1ST AND 2ND PETITIONERS** **P2. TRUE COPY RECEIPT DATED 29.6.2006 ISSUED BY THE DISTRICT INDUSTRIES OFFICE, ERNAKULAM** ## **P3. TRUE COPY OF PROCEEDINGS DATED 30.10.2006 ISSUED BY THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, ERNAKULAM** **P4. TRUE COPY OF LETTER DATED 1.12.2006 ISSUED BY THE 3RD RESPONDENT TO THE 1ST PETITIONER** **P5. TRUE COPY OF REPLY DATED 14.11.2006 ISSUED BY THE 1ST RESPONDENT** **P6. TRUE COPY OF RECEIPT ISSUED FROM THE OFFICE OF 1ST RESPONDENT DATED 15.1.2008** **P7. TRUE COPY OF LETTER DATED 16.1.2008 ISSUED BY THE 2ND RESPONDENT** **P8. TREU COPY OF RECEIPT DATED 17.1.2008 ISSUED FROM THE 1ST RESPONDENT'S OFFICE** **P9. TRUE COPY OF LETTER DATED 17.1.2008 ISSUED BY THE 2ND RESPONDENT** **P10. TRUE COPY OF COMMUNICATION ISSUED BY THE DISTRICT LABOUR OFFICER DATED 5.2.2008** **P11. TRUE COPY OF RECEIPT ISSUED BY THE VILLAGE OFFICER, KADUNGALLOOR DATED 25.2.2006** **P12. TRUE COPY OF COMMUNICATION ISSUED BY THE 2ND RESPONDENT DATED 8.10.2008** **P13. TRUE COPY OF DEMAND NOTICE DATED 25.10.2008 ISSUED BY THE 4TH RESPONDENT** **P14. TRUE COPY OF JUDGMENT IN W.P.(C) 19343/07 DATED 29.6.2007 PASSED BY THIS HON'BLE COURT** **P15. TRUE COPY OF THE REPRESENTATION DATED 13.3.2009 SUBMITTED BY THE PETITIONER BEFORE RESPONDENTS 1 AND 2** **RESPONDENTS' EXHIBITS** **---------------------------------------** **NIL** //True copy// P.A. TO JUDGE Shg/ ## **C.K. ABDUL REHIM, J.** **------------------------------------** W.P.(C).No. 10563 of 2009 **-----------------------------------** Dated this the 10[th] day of October, 2013 ## **J U D G M E N T** Question involved in this writ petition is whether the revenue recovery authorities are entitled to proceed against any defaulter for realisation of 'collection charges' contemplated under Rule 5 of the Kerala Revenue Recovery Rules, 1968, even after the amount due was settled and paid directly to the requisitioning authority. 2. Brief facts involved is that, the 2[nd] respondent had defaulted payment of certain amounts due to the 1[st] respondent Board, for which revenue recovery proceedings were initiated on the basis of the requisition forwarded by the 2[nd] respondent, on 15.06.2006. But through Ext.P5 the Board had permitted the petitioner to settle the dues under the “one time settlement scheme (OTS Scheme)”. Option was given to the petitioner under Ext.P5 to make payment of the amounts due with interest at the rate of 12% per annum in one lump or to avail installment facility to pay the amount in six installments with 18% interest. WP(C). 10563 /2009 2 It was made clear in Ext.P5 that if the petitioner remits the amount directly to the Board, he need not pay any collection charges to the Revenue Recovery Department. On the basis of Ext.P5 the matter was settled by effecting payment of a total sum of `82,00,000/-, which was paid directly to the 1[st] respondent, on 15.01.2008, as evident from Ext.P6 receipt. A subsequent demand for `46,693/-, being short remittance, was also paid by the petitioner on 17.01.2008, as per Ext.P8 receipt. Ext.P9 letter issued by the 1[st] respondent Board would indicate that the petitioner had cleared all the arrears under the one time settlement. 3. The 2[nd] respondent had issued Ext.P12 letter in October 2008 stating that, the revenue authorities have intimated that the withdrawal of requisition will be considered only on realisation of collection charges based on the amount remitted by the consumer towards settlement of the arrears. Therefore, the 2[nd] respondent was requested to remit the collection charges on a total amount of `82,46,693/-. There after the 4[th] respondent Tahasildar had issued Ext.P13 letter to the 2[nd] petitioner WP(C). 10563 /2009 3 demanding remittance of collection charges at 7.5%on the above said amount, alleging that the KSEB authorities has not paid the amount. By virtue of Ext.P3 it is threatened that, on failure to remit the amount as requested, revenue recovery steps will be initiated. 4. Liability with respect to payment of the collection charges provided under Rule 5 was the subject matter considered in various decisions of this Court. In _**Kadeeja Beevi v. Financial Corporation [1985 KLT 741]**_ , a Division Bench of this court held that question of realisation of collection charges would arise only when there is collection of the arrears under the provisions of the Kerala Revenue Recovery Act, on behalf of any institution notified under Section 71. If no such collection was made, Government would not be entitled to claim collection charges by virtue of Rule 5(1). In this regard, Sub Rule 2 of Rule 5 was referred to, which says that the collection charges shall be deducted from the amount recovered and the balance amount shall be payable to the institution. In _**Village I.D. Centre v. Khadi & Village I. Board [1996(2) KLT SN 44] (Case**_ WP(C). 10563 /2009 4 _**No.49)**_ this Court observed that Rule 5 refers to realisation of collection charges only from the arrears collected under the provisions of the Act. Only if the arrears is collected under the provisions of Act, the question of collection charges will arise. Mere issuance of demand notice would not enable the authority to take collection charges, if the amount was recovered not through the revenue recovery proceedings, but when the amount was directly paid to the requisitioning authority. In another decision of this Court in _**Bhaskaran v. Sub Registrar [2005 (3) KLT 150]**_ , the above position was reiterated. 5. In the decision in _**Cochin Port Trust v. State of Kerala and others [2008 (1) ILR (Kerala) 718]**_ this Court held that collection charges under Rule 5 cannot be levied when provisions of the Revenue of Recovery Act are invoked for the purpose of recovering amounts which are due to the Government by way of statutory levy. It is held that the collection charges can be levied only when amounts are sought to be recovered on behalf of institutions either notified under Section 71 or which are otherwise enabled or empowered through revenue recovery WP(C). 10563 /2009 5 proceedings. 6. Question whether there is any liability for payment of collection charges and service charges in case the defaulter pays arrears directly to the institution pursuant to any notice issued under Section 7 or Section 34 of the Act, was considered elaborately in the decision in **Malabar Organics Ltd. vs. State of Kerala (2009(4) KLT 328).** This court held that there is no liability to pay the collection charges or service charges in case the defaulters pay directly to the institution, pursuant only to a notice under Section 7 or 34. It is held that the liability to pay such charges arises only in cases where further steps towards attachment and sale are taken. This court held that item (viii) under Rule (4) as well as Rule 5(i) are unreasonable and discriminatory and ultravires of the parent Act and the Constitution of India. Referring to Rule 5(3) it was also held that there is no justification in realising service charges with respect to institutions which have there own machinery of recovery by utilising service of the officers on deputation from the Government. In a recent decision in **Sajimon vs. State of** WP(C). 10563 /2009 6 **Kerala (2012 (3) KLT 81)** this court held that once a settlement scheme is availed, not even collection charges under the Revenue Recovery Act is liable to be realised, because such scheme is intended to put the dispute to a finality, once and for all; enabling the defaulter to clear the liability in a phased manner. As such, after satisfaction of the liability in terms of the scheme, no further amount is liable to be paid by the defaulter and the liability comes to an end, even with respect to collection charges if any due. 7. In the counter affidavit filed by respondents 1 to 3 it is mentioned that the revenue recovery requisition was made to the District Collector on 19.4.2007. It is also mentioned that a revised requisition was submitted on 23.6.2007 to the District Collector. Thereafter in view of the direction contained in the judgment of this court WP(C) 19343/2007 ( Ext.P14) the request for one time settlement was considered by the Board and ultimately the settlement was arrived under the one time settlement scheme. It is mentioned that, on remittance of the amount due under the OTS, the District Collector had been WP(C). 10563 /2009 7 requested to intensify the revenue recovery action as per letter dt. 2.4.2008. However respondents 1 to 3 do not take any specific stand with respect to the liability of the petitioner for payment of collection charges. 8. In the counter affidavit filed by the 4[th] respondent the stand taken is that the requisitioning authority has not withdrawn the requisition and therefore the defaulter firm is bound to pay 7.5% of the OTS amount realised by the requisitioning authority. The 4[th] respondent relied on a Government circular, dt. 4.11.2005 to the effect that the requisitioning authority is bound to inform the District Collector in advance about the settlement and shall withdraw the requisition, otherwise the revenue authority shall realise the collection charges on the OTS amount. It is further mentioned that, in the case at hand, the settlement came before withdrawing the requisition and the revenue recovery proceedings is still in force. Therefore it is contended that the defaulted firm is liable to clear the dues with respect to the collection charges. 9. Realisation of collection charges contemplated under WP(C). 10563 /2009 8 Rule 5 in a case where the defaulter had remitted the dues directly to the requisitioning agency has already been held as invalid. Referring to the provisions contained in Rule 5(1) and (2) in **Malabar Organics' case.** (cited supra) this court held that the provisions contained in Rule 5(1) is ultravires of the parent Act and Constitution of India. In the case at hand there is no dispute for the respondents that no amount was collected through the revenue recovery steps. It is also not contended that any further steps after issuance of the notice under Rule 7 and 34 was taken. Admittedly the amount was settled payment directly to the 1[st] respondent Board on 15.1.2008 and on 17.1.2008, as evident from Exts.P6 and P8. Contention of respondents 1 to 3 is that revenue recovery requisition was withdrawn through letter dt. 2.4.2008. Whatever that be, Rule 5 (3) was introduced by virtue of SRO No. 459/2008 with effect from 24.4.2008. It provides that institutions except Government department accepting defaulted payment directly from the defaulter after initiating revenue recovery proceedings shall be liable to pay 1% of the amount so collected towards service WP(C). 10563 /2009 9 charges in initiation of revenue recovery proceedings against the defaulter. 10. Learned Government Pleader contended that this is not a case coming within the purview of Rule 5(3) because the amendment came subsequent to settlement and payment of the amount. But it is contended that the collection charges @ 7.5% is demanded only on the basis of Rule 5(1). As already held in various decisions cited above, in view of sub Rule (2) of Rule 5 the collection charges can be demanded only from the amount recovered through revenue recovery. Admittedly no amount was recovered through the revenue recovery proceedings. Hence no question arises with respect to payment of collection charges. Further it is evident that legal position remaining settled through **Malabar Organics'** case (cited supra) had strucked down the provisions contained in section 5(1). It is also held in various decisions referred above that when payment is made directly to the requisitioning authority, no collection charges or service charge can be levied. 11. Learned Government Pleader had pointed out that the WP(C). 10563 /2009 10 decision in **Malabar Organics' case** (cited supra) was challenged by the Government before the hon'ble Supreme Court in a Special Leave Petition (C-1107/10) and the operation of the judgment of this court was stayed on 22.1.2010. He had also pointed out that in the judgment of a Division Bench in WA.No.578/2012 and connected cases, dt. 22.2.2013 this court after noticing the interim stay of the hon'ble Supreme Court had dismissed the writ petition challenging refusal to return the mortgaged documents on the premise that collection charges is due. However on the facts of the case at hand it is evident that no amount was collected through revenue recovery and the demand for payment of collection charges cannot be sustained. More over going by Ext.P12 and P13 letters it is evident that the revenue authorities are making demand with the Board only for payment of collection charges at 7.5% from the amount settled in the OTS scheme and remitted before the 1[st] respondent Board. 12. Question remaining as to whether this court is bound to follow the decision of the Division Bench in **Malabar Organics' case** as a binding procedent. A Division Bench of this court in WP(C). 10563 /2009 11 ## **Abdu Rahiman vs. District Collector, Malappuram (2009(4)** **KLT 485)** held that even when a decision of a Division Bench of this court is stayed by the apex court, a Single Judge of this court is bound to follow such decision as it continues to be a binding precedent. The interim order of stay only relieves the concerned parties from obeying the judgment under appeal. But the law has to be clear, specific and consistent. When this court declares a law, many people will be relegating their affairs according to it. Unless there are compelling grounds, a precedent should not be upset so lightly. There should be someone who should say the last word and when the last word is said, the same should be followed by everyone in the lower tiers, is the observation. 13. On the facts of the case this court do not find any reason to permit the revenue authority or the authorities of the KSEB to proceed against the petitioner for realisation of the collection charges demanded under Exts.P12 and P13. Therefore this writ petition is allowed. Exts.P12 and P13 are hereby quashed. WP(C). 10563 /2009 12 14. However, liberty is reserved in favour of the respondents to initiate steps for realisation of collection charges as demanded from the petitioner, if ultimately it is held by the hon'ble Supreme Court that there is liability for payment of collection charges in such cases. C.K.ABDUL REHIM, JUDGE pmn/ WP(C). 10563 /2009 13