Allahabad High Court
Sbec Sugar Limited vs State Of U.P. & 7 Others on 12 November, 2014
Bench: Tarun Agarwala, Shri Narayan Shukla
HIGH COURT OF JUDICATURE AT ALLAHABAD
AFR
Court No.39
Civil Misc. Writ Petition No. 55554 of 2014
SBEC Sugar Limited
Vs.
State of U.P. and others
***
Hon'ble Tarun Agarwala,J.
Hon'ble Shri Narayan Shukla,J.
(Per: Tarun Agarwala,J.)
The petitioner is a Company incorporated under the Companies Act, 1956 and is engaged in the business of manufacture of crystal sugar by vacuum pan process. The basic raw material for the petitioner's product is sugar cane, which it purchases from the farmers through the Cane Cooperative Societies. For the crushing season 2012-13, the petitioner could not pay the cane price as well as society commission, as a result of which a recovery certificate dated 21.2.2014 for a sum of Rs.112.87 Crores was issued towards the cane price, society commission and interest accrued thereon. Subsequently a citation dated 24.2.2014 was issued by the Tehsildar. In furtherance of the recovery, the revenue authority issued an attachment order dated 8.5.2014 seizing two lac quintals of sugar. The same was put to auction, but, however, no sale could be made as the minimum reserve price was not given by any bidder.
However, between the period 24.2.2014 to 16.6.2014, the petitioner alleges that it had paid the cane price and society commission directly to the Cane Cooperative Society. Inspite of this payment, it transpires that the Sub Divisional Magistrate issued a notice on 18.6.2014 for attachment of the three bank accounts of the petitioner in Punjab National Bank and in pursuance thereto, an amount of Rs.84,80,000/- was withdrawn on 24.6.2014. The petitioner made a representation dated 19.9.2014 to the District Magistrate praying that the amount so recovered from the bank account should be transferred to the Cane Cooperative Society towards the payment of the cane price for the crushing season 2013-14 as, in their opinion, the cane price for the crushing season 2012-13 had already been paid. To their utter surprise the petitioner was informed that the amount so recovered has been adjusted towards 10% collection charges pursuant to the recovery certificate dated 21.2.2014. The petitioner, being aggrieved by the action of the respondent, has filed the present writ petition praying that the recovery of 10% charges pursuant to the recovery certificate dated 21.2.2014 should be quashed and a mandamus should be issued directing the Sub Divisional Magistrate, Baraut, Baghpat, respondent No.4, to transfer the amount of Rs.84,80,000/- to the Cane Cooperative Society for payment of the cane price for the crushing season 2013-14.
The State authorities has filed a counter affidavit. In paragraph 4 of the counter affidavit, the respondents admit that the amount realised from the bank account of the petitioner has been adjusted towards the collection charges. In paragraphs 10 and 16 of the counter affidavit, the respondents admit that no amount could be recovered pursuant to the recovery certificate and the sugar so attached could not be sold but the amount recovered from the bank account has been adjusted towards the collection charges. The respondents have justified the adjustment, on the ground, that the recovery certificate has been issued and the efforts were made by them to recover the amount.
The Cane Cooperative Societies, respondent Nos.6 and 8 have filed a short counter affidavit contending that the State authorities had directed the Cane Cooperative Society to publish an advertisement for sale of the sugar pursuant to which they have spent a sum of Rs. 6 lacs on the publication of the notices, which amount is liable to be given to them either by the State authorities or by the petitioner. The respondents have also submitted that interest on cane price and societies commission has also not been paid in full.
We have heard Sri Navin Sinha, the learned senior counsel assisted by Sri Diptiman Singh for the petitioner , the learned standing counsel for the State authorities and Sri Ravindra Singh, the learned counsel for the Cane Cooperative Societies.
A Full Bench of this Court in Mahrajwa and others vs. State of U.P. and others, 2013(1)ADJ 426(FB) has held, that if the authorities have not been able to recover the amount of arrears through coercive process undertaken by them, then the question of realising the collection charges does not arise, and that, the State authorities, at best, could recover the expenses and the fee prescribed for various purposes undertaken by them. For facility, paragraphs 28 and 38 of the said judgment is extracted hereunder:
"28. From the scheme of 1890 Act, 1950 Act and 1973 Act as also 1952 Rules and 1975 Rules one thing is amply clear that while Sections 3 and 5 of 1890 Act and Rule 29 of 1975 Rules speak of the cost of recovery to be realised along with the arrears it is necessarily to be understood and restricted to where the arrears have been recovered by the concerned authorities. If the authorities have not been able to recover the amount of arrears through coercive process undertaken by them, then there is no question of realising the cost of recovery from the defaulter. The issuance of recovery certificate is a ministerial job. If no concrete further steps have been taken and the arrears have not been realised by them and instead the defaulter pays the amount of arrears directly to the creditor or to the person to whom it is due then it cannot be said by any stretch of imagination that the State authorities have recovered the amount of arrears. In that event, there is no question of realising the cost of recovery/recovery charges from the defaulter either under the 1890 Act or under the 1975 Act. The provisions of Section 3 of the 1890 Act and Rule 29 of 1975 Rules have to be read accordingly.
38.From the aforesaid decisions, it is absolutely clear that it has to be seen as to under what Act the recovery has been initiated. Whether it is under 1890 Act, 1950 Act or 1973 Act. If the recovery proceedings have been initiated under 1890 Act then in that event if the recovery is being made under Section 3 of the Act then cost of recovery would be 10% of the amount stated in the certificate. However, if recovery certificate has been issued but no recovery had been made by the State authorities, who had issued the recovery certificate as for example the defaulter directly deposits the amount or the recovery certificate is withdrawn or cancelled for any reason whatsoever then in that event there is no question of charging any costs of recovery. At best the fee for the process mentioned in 1952 Rules can be levied. However, if the recovery certificate has been issued under Section 5 of 1890 Act then there is no question of any cost of recovery being realised as the State Government has not yet issued any notification specifying any rate. If the recovery has been issued under 1973 Act then in that case realisation of recovery charges by the State authorities can be made from the defaulter only where the entire amount had been recovered by the authorities of the State. If the recovery as arrears of land revenue is being made by invoking the provisions of 1950 Act then in that event the fee prescribed under 1952 Rules for various process for realisation of arrears of land revenue while selling movable and immovable properties and also where properties are not sold alone is payable. It appears that this aspect of the matter was not brought to the notice of the Hon'ble Judges who decided the case of Chinta Mani(supra). We are, therefore, in respectful agreement with the view taken by this Court in the case of Mange Ram & Anr.(supra) and hold that the decision in the case of Chinta Mani(supra) does not lay down the correct law."
The State authorities admit that the petitioner has paid the cane price and the societies commission directly to the Cane Grower Society. Consequently, we are of the opinion, that in view of the decision of the Full Bench of this Court in Mahrajwa (supra), the State authorities were not entitled to adjust the entire amount of Rs.84,80,000/- towards the collection charges.
We are further of the opinion, that when an amount is recovered by the State agencies pursuant to the recovery certificate, it is the onerous duty of the State authorities to remit the amount to the person who has issued the recovery certificate after deducting 10% of the charges. The State authorities are not entitled to adjust the amount towards collection charges first and then remit the balance amount to the person who has issued the recovery certificate.
In the instant case, the justification given by the State authorities is that 10% of the total recovery amount was much more than what has been recovered by them, which is patently erroneous, arbitrary and without jurisdiction.
We also find that the petitioner has not paid the entire amount as per the recovery certificate. Admittedly, the interest on cane price and society commission has not been paid by the petitioner. The justification for not making the payment is, that the petitioner have represented to the State Government for waiver of the interest.
Be that as it may. We are of the opinion, that so long as the amount has not been waived by the State authorities, the petitioner is liable to pay this amount. As and when the waiver application is allowed, if any, it would be open at that stage for the petitioner to apply for refund or for adjustment of the account towards cane price for the subsequent year.
Consequently, the prayer made by the petitioner that the amount recovered by the State authorities should be adjusted towards the cane price for the crushing season 2013-14 is not tenable. Since certain amount, as per the recovery certificate is still to be paid by the petitioner, we direct the State Government to remit the amount so recovered by them to the Cane Cooperative Societies towards clearance of the balance amount as per the recovery certificate after retaining 10% towards recovery collection charges.
We, accordingly, dispose of the writ petition by issuing a writ of mandamus directing the District Magistrate, Baghpat, respondent No.3 to remit an amount of Rs.84,80,000/- less 10% towards collection charges to the Cane Cooperative Society towards clearance of the balance amount as per the recovery certificate dated 21.2.2014 within three weeks from the date of the production of a certified copy of this order.
In the circumstances of the case parties shall bear their own cost.
Order Date :- 12.11.2014
AKJ
(Shri Narayan Shukla,J.) (Tarun Agarwala,J.)
