Vijaya Builders and others v Kerala Financial Corporation and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI THURSDAY, THE 6TH MARCH 2008 / 16TH PHALGUNA 1929 WP(C).No. 25369 of 2006(T) -------------------------- PETITIONERS: ------------ 1. VIJAYA BUILDERS, 6C, SURYAKANTHI APARTMENTS, IYYATTIL JUNCTION, CHITTOOR ROAD, ERNAKULAM, REPRESENTED BY ITS PARTNER BABY JOSEPH. 2. BABY JOSEPH, 6C, SURYAKANTHI APARTMENTS, IYYATTIL JUNCTION, CHITTOOR ROAD, ERNAKULAM. 3. ANITA PAUL, W/O.BABY JOSEPH, - 6C, SURYAKANTHI APARTMENTS, IYYATTIL JUNCTION, CHITTOOR ROAD, ERNAKULAM. BY ADV. SRI.V.M.KURIAN SRI.MATHEW B. KURIAN SRI.K.T.THOMAS RESPONDENTS: - ------------- 1. THE KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, THIRUVANANTHAPURAM - 695 033, REPRESENTED BY ITS MANAGING DIRECTOR. 2. THE KERALA FINANCIAL CORPORATION, DISTRICT OFFICE, ERNAKULAM, KALOOR, KOCHI - 682017, REPRESENTED BY ITS CHIEF MANAGER. 3. THE DEPUTY TAHSILDAR (RR), KERALA FINANCIAL CORPORATION, ERNAKULAM, KALOOR, KOCHI-682 017. - ADDL. R4. STATE OF KERALA REPRESENTED BY SECRETARY TO GOVT., FINANCE DEPT., SECRETARIAT, THIRUVANANTHAPURAM. (ADDL. R4 IMPLEADED AS PER ORDER DATED 19.6.07 IN IA NO.7713/07) BY ADV. SRI.M.M.SAYED MUHAMMED, SC, KFC GOVERNMENT PLEADER, SRI.MATHEW GEORGE VADAKKEL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.25369/2006/T ## APPENDIX PETITIONER'S EXHIBITS: EXT. P1: COPY OF THE NOTICE DATED 18.01.2001 ISSUED BY THE CORPORTION. EXT. P2: COPY OF THE NOTICE DATED 11.09.2003 ISSUED BY THE 3RD RESPONDENT. EXT. P3: COPY OF JUDGMENT DATED 30.03.2004 IN W.P.(C) NO.10396/2004 (K). EXT. P4: COPY OF THE LETTER DATED 23.07.2001 ISSUED BY CORPORATION GRANTING ONE TIME SETTLEMENT FACILITY. EXT. P5: COPY OF REPRESENTATION FILED BY THE PETITIONERS BEFORE THE CORPORATION ON 17.10.2005. EXT. P6: COPY OF THE LETTER DATED 05.08.2005 ISSUED BY THE CORPORATION EXTENDING THE TIME FOR PAYMENT UNDER OTS SCHEME TILL 30.10.2005. EXT. P7: COPY OF NOTICE OF SALE OF IMMOVABLE PROPERTY DATED NIL FOR SALE ON 13.1.2005 ISSUED BY THE DEPUTY TAHSILDAR, KERALA FINANCIAL CORPORATION, KOTTAYAM. - EXT. P8: COPY OF THE NOTICE DATED 08.12.2005 PUBLISHED IN THE NEWSPAPER FOR SALE ON 13.1.2006. - EXT. P9: COPY OF THE RECEIPT NO.0015 DATED 20.02.2006 FOR RS.30,00,000/-. EXT. P10: COPY OF THE RECEIPT NO.0028 DATED 24.02.2006 FOR RS.20,35,601. EXT. P11: COPY OF THE RECEIPT NO.0006 DATED 28.02.2006 FOR RS.10,00,000/-. EXT. P12: COPY OF THE RECEIPT NO.0008 DATED 28.02.2006 FOR RS.30,00,000/-. EXT. P13: COPY OF THE RECEIPT NO.0010 DATED 28.02.2006 FOR RS.30,00,000/-. - EXT. P14: COPY OF THE RECEIPT NO.0010 DATED 03.03.2006 FOR RS.2,02,886/EXT. P15: COPY OF RECEIPT NO.421 DATED 25.02.06 ISSUED BY THE 3RD RESPONDENT FOR RS.9,02,670/-. - EXT. P16: COPY OF THE LETTER DATED 02.03.2006 ISSUED BY THE 3RD RESPONDENT TO THE SUB REGISTRY OFFICE, DEVIKULAM. - EXT. P17: COPY OF THE LETTER DATED 06.07.2006 SENT TO THE 3RD RESPONDENT. W.P.(C) NO.25369/2006/T RESPONDENT'S EXHIBITS: ANNEXURE 3(A): TRUE COPY OF THE RECOMMENDATION DATED 12.03.2007 SUBMITTED BY THE LAND REVENUE COMMISSIONER TO THE GOVERNMENT. /TRUE COPY/ P.S.TO JUDGE JP ## **V.GIRI, J.** ## **-------------------------** ## **W.P.(C).No.25369 of 2006 ------------------------Dated this the 6[th ] day of March, 2008.** ## **JUDGMENT** An issue regarding collection charges under the Revenue Recovery Act sought to be compulsorily recovered from the petitioners arises for consideration herein. The petitioners had availed a loan from the Kerala Financial Corporation and there was default in repayment of the same. Action was initially taken under Section 29 of the Debts due to Banks and Financial Institutions Act and thereafter proceedings under the Revenue Recovery Act was initiated in respect of 33.30 acres of land. Ext.P2 is a notice issued under Section 36 of the Revenue Recovery Act. Apparently, the petitioners approached this court with a prayer that if a statement of account was given, the defaulter would pay the entire amount and thus avert the Revenue Recovery proceedings. The petitioners approached the Kerala Financial Corporation. They were granted time to make the payment under one time settlement scheme. **W.P.(C).NO.25369/06** **:: 2 ::** They sought for extension of time and extension was also granted as evidenced by Ext.P6. Apparently, there was further default. Ext.P6 notice of sale was issued for recovery of Rs.1,26,59,350/-. Ext.P8 is the notice of sale dated 8.12.2005 issued by the Deputy Tahsildar, (RR), KFC. The petitioners paid the entire amount as demanded by the KFC under 'one time settlement scheme'. Apparently, when the petitioners sought for release of the documents mortgaged, the 3[rd] respondent insisted on payment of collection charges and the petitioners were asked to deposit an amount of Rs.9,02,670/-. The petitioners paid this amount under protest and thereafter, they filed this writ petition. 2. The Kerala Financial Corporation filed a counter affidavit, inter alia, affirming that the loan account was closed on payment of Rs.1,22,38,457/-. The 3[rd] respondent insisted on collection charges. The petitioners paid the amount without protest and the title deeds were released. There is dispute as to whether the petitioners protested the payment of collection charges. ## **W.P.(C).NO.25369/06** **:: 3 ::** 3. Heard learned counsel for the petitioners, learned standing counsel for the Financial Corporation and the learned Senior Government Pleader. 4. The question is whether the levy of collection charges, in circumstances where the defaulter had paid the entire amount due to the mortgagee, the Kerala Financial Corporation, is correct or not. 5. Rule 5 of the Revenue Recovery Rules contemplates payment of collection charges. The same has been considered by this court on more than one occasion. In **Bhaskaran v. Sub Registrar {2005(3) KLT 150}** , though the learned single Judge held that when amounts are paid directly to the requisitioning authority under the Revenue Recovery Act, there is no question of levy of collection charges. There was a statutory amendment, subsequent to **Bhaskaran,** by way of a proviso to Section 71 and that was also taken into account in W.A.No.2502/07. Essentially the principle in **Bhaskaran** has been upheld. **W.P.(C).NO.25369/06** **:: 4 ::** 6. It is not disputed, in the present case, that amount due to the mortgagee had been remitted directly and not through the recovery officer. If that be so, going by the dictum in **Bhaskaran** , 3[rd] respondent is not entitled to recover collection charges, at the rate of 5%. 7. Learned Senior Government Pleader Mr.Mathew Vadakkel submits that even in **Bhaskaran** , the court had taken note of the fact that expenses could be incurred by the recovery officials in several cases where there is a requisition by an appropriate authority for proceeding under the RR Act. Such expenses should not, therefore, become a burden on the public exchequer, he contends. I agree with the submission made by the learned Senior Government Pleader. The actual charges incurred by the Recovery Officer is liable to be reimbursed by the defaulter. For eg. If sale notices are issued or if proclamation notices are issued by publication in the newspapers, obviously, expenses would have been incurred. If Revenue Officials concerned had visited the property and measured the same, then again expenses **W.P.(C).NO.25369/06** **:: 5 ::** would have been incurred. Obviously any amount spent by the State will have to be reimbursed and in such circumstances, the State would be entitled to recover as collection charges, only such amount as are actually incurred by it as expenditure. The expenses would cover the stage from which requisition is received at the office of the Tahsildar till the stage at which the requisitioning authority intimates that the defaulter has made the payment and thereby seeks withdrawal of recovery proceedings. I agree with the submission made by the learned Senior Government Pleader that if expenses are incurred by the recovery officials, then settlement of accounts by the defaulter with the requisitioning authority should not, per se, result in the recovery officials, finding it difficult to reimburse themselves of the actual expenses incurred. Of course, it would be open to them to recover it from the requisitioning authority. But obviously the expenses incurred in this regard by the recovery officials would be part of the ultimate liability of the defaulter and it is, of course, a matter between the defaulter and the **W.P.(C).NO.25369/06** **:: 6 ::** requisitioning authority to include the actual expenses in that regard as part of the settlement of accounts. But nevertheless, the facility given by institutions like the 1[st] respondent for one time settlement and the defaulter availing such facility after the process under the RR Act had been triggered into motion should not result in State and its machinery being compelled to write off the expenditure incurred qua any particular defaulter as such. I make it clear that what I have kept in my mind when I use ' **expenditure** ' is the “ _**actual expenditure**_ ” involved and not a flat percentage of the total amount requisitioned to be recovered, as is normally done in these cases. For all these reasons, the writ petition is allowed. The 3[rd] respondent shall compute the “ _**actual expenditure**_ ” incurred by it in connection with the proceedings taken under the Revenue Recovery Act, pursuant to the requisition made by the 1[st] respondent for recovery of amounts from the petitioners. The break up of the amounts may also be given and it may be ## **W.P.(C).NO.25369/06** **:: 7 ::** intimated to the petitioners within a period of two months from the date of receipt of a copy of this judgment. Since the petitioners has already paid an amount of Rs.9,02,670/- by way of collection charges, the said amount less the amount to be determined as the “ _**actual expenditure**_ ” shall be refunded to the petitioners, along with the intimation to be so sent by the 3[rd] respondent in the manner aforementioned. Sd/- **(V.GIRI) JUDGE** sk/ ## **//true copy//**