A.P.Moosakutty vs Kerala Financial Corporation
2023 Latest Caselaw 1746 Ker

W.P.(C) No. 1205/2023             :1:




                IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT

                THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

     WEDNESDAY, THE 1ST DAY OF FEBRUARY 2023 / 12TH MAGHA, 1944

                         WP(C) NO. 1205 OF 2023

PETITIONER/S:

             A.P.MOOSAKUTTY
             AGED 61 YEARS
             S/O. A.P. KADAR HAJI, RESIDING AT AMBALAPOPARAMBIL,
             KUNNAMANGALAM, KOZHIKODE, PIN - 673 571.
             BY ADVS.
             V.V.SURENDRAN
             P.A.HARISH
             ASWATHI C.


RESPONDENT/S:

     1       KERALA FINANCIAL CORPORATION
             REPRESENTED BY ITS MANAGING DIRECTOR,
             THIRUVANANTHAPURAM - 695 001.
     2       THE CHIEF MANAGER
             KERALA FINANCIAL CORPORATION, KALPETTA, WAYANAD,
             PIN - 673 121.
     3       THE DEPUTY TAHSILDAR (RR),
             KERALA FINANCIAL CORPORATION, NORTH ZONE,
             KOZHIKODE, PIN - 673 001.
             BY ADVS.
             ADV. VENUGOPAL.M.R
             DHANYA P.ASHOKAN(K/001671/2000)

             R3 BY SRI. RAJEEV JYOTHISH GEORGE, GOVERNMENT PLEADER
             R1 & R2 BY SRI. M.R. VENUGOPAL, SC



         THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

      01.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.P.(C) No. 1205/2023                       :2:



                            SHAJI P. CHALY, J.
           ---------------------------------------------------------
                       W.P.(C). No. 1205 of 2023
           ---------------------------------------------------------
                  Dated this the 1st day of February, 2023.

                                          JUDGMENT

This writ petition is filed against the Kerala Financial

Corporation and its officials seeking a direction to refund the

revenue recovery charges collected from the petitioner within a time

period to be fixed by this Court and also for a direction to the

respondents to take a decision regarding the refund of

Rs.1,44,010/- recovered from the petitioner as RR collection

charges.

2. The case projected by the petitioner is that: as per notice

dated 12.02.2021, petitioner was intimated that if the loan account

is not closed on or before 28.02.2021, the first respondent

Corporation will take steps under the Kerala Revenue Recovery Act,

1968 ('Act, 1958' for short) to recover the amount or under Section

29 of the State Financial Corporation Act to take possession. It is

further submitted that the borrowers approached this Court by filing

W.P.(C) No. 6839 of 2021, in which an interim order was passed

directing the petitioner to remit an amount of Rs.10,00,000/- and

coercive action was stayed.

3. Later, the writ petition was disposed of as per Exhibit P2

judgment dated 09.04.2021 directing the Corporation and its

officials to permit the petitioner to pay off the outstanding amounts

in ten equal monthly instalments along with the regular instalments,

with a rider that if they are eligible for any benefit of restructuring,

that shall be considered. According to the petitioner, later the

petitioner received Ext. P3 revenue recovery notice issued by the

Deputy Tahsildar of the Corporation. Anyhow, it is submitted that

the petitioner paid the entire amount directly and the account was

closed.

4. But, when the petitioner approached the Corporation to

release the title deeds, petitioner was directed to remit the

collection charges at the rate of 7% and get NOC from the recovery

officer. According to the petitioner, the said action of the

respondent Corporation is illegal. However, in order to get the

documents, the petitioner paid the collection charges under protest

and documents were released. It is, thus, seeking to repay the

amount paid towards collection charges, the writ petition is filed.

5. I have heard the learned counsel for the petitioner Sri. P.

A. Harish, learned Standing Counsel for the respondent Corporation

Sri. M.R. Venugopal and the learned Senior Government Pleader Sri.

Rajeev Jyothish George, and perused the pleadings and material on

record.

6. The issue with respect to the eligibility of the respondent

Corporation to recover the collection charges is guided by Rules 4

and 5 of the Kerala Revenue Recovery Rules, 1968 ('Rules, 1968"

for short). Rule 4(viii) of the Rules, 1968 specifies that 5% of the

arrears to be collected, when the arrears does not exceed Rupees

Five lakhs and 7.5% of the arrears to be collected, when the arrears

exceed Rupees Five Lakhs. Rule 5 of Rules, 1968 guides the

manner in which the collection charges are to be imposed and

recovered, and it reads thus:

"[5. (1) [Collection charges at the rate of 5 percent of the arrears to be collected under the provisions of the Act on behalf of any institution notified under Section 71 or collected on behalf of any institution under Section 68 [when the arrears does not exceed Rupees Five Lakhs and at the rate of 7.5% when the arrears exceed Rupees Five Lakhs] shall be realised from the defaulters and accounted as arrears to such institutions.] (2) The collection charges shall be deducted from the amount recovered and the balance alone shall be payable to the institution.] [(3) Institutions except Government Departments accepting defaulted payments directly from the defaulter after initiating Revenue Recovery Proceedings under the Kerala Revenue Recovery Act, 1968 (15 of 1968) and filing the certificate by the District Collector under sub-section (3) of Section 69 of the said Act shall be liable to pay 1% of the amount so collected towards service charge for the initiation of Revenue Recovery Proceedings against the defaulter [and to intimate the fact] of such acceptance to the District Collector concerned at once.]"

7. Therefore, it can be seen that after the introduction of Rule

5(3) of the Rules, 1968 on and with effect from 06.05.2008, if the

amount is paid directly, the defaulter cannot be mulcted with the

collection charges, but 1% service charges towards the steps

taken by the Corporation under the Act, 1968 alone can be

imposed.

8. The said question was considered by this Court elaborately

in W.P.(C) No. 2547 of 2023 and has passed a judgment dated

31.01.2023, after taking note of the earlier judgments rendered by

this Court on the said aspect and held that when the amounts are

paid directly, collection charges cannot be recovered from the

defaulter.

9. In that view of the matter, I am of the view that the

petitioner is entitled to succeed. Accordingly, this writ petition will

stand allowed. Respondents are directed to refund the 7.5%

collection charges to the petitioner at the earliest, at any rate within

a month from the date of receipt of a copy of this judgment. The

proposition of law laid down, and the findings and observations

made by this Court in the said judgment would squarely apply to

the facts and circumstances of this case.

Writ petition is allowed as above.

sd/- SHAJI P. CHALY, JUDGE.

Rv

APPENDIX OF WP(C) 1205/2023

PETITIONER'S EXHIBITS:

Exhibit P1 A TRUE COPY OF THE DEMAND NOTICE DATED 01.03.2021 Exhibit P2 A TRUE COPY OF THE JUDGMENT OF THIS HONOURABLE COURT DATED 09.04.2021 IN W.P.(C). 6839/2021 Exhibit P3 A TRUE COPY OF THE RR NOTICE ISSUED BY THE 3RD RESPONDENT DATED 16.04.2021 Exhibit P4 A TRUE COPY OF THE SPECIAL LOAN SETTLEMENT NOTICE DATED 01.09.2021 Exhibit P5 A TRUE COPY OF THE APPLICATION DATED 10.09.2021 Exhibit P6 A TRUE COPY OF THE LETTER DATED 23.10.2021 ISSUED BY THE 2ND RESPONDENT Exhibit P7 A TRUE COPY OF THE LETTER DATED 02.02.2022 ISSUED BY THE 2ND RESPONDENT Exhibit P8 A TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT DATED 04.02.2022 Exhibit P9 A TRUE COPY OF THE LETTER DATED 25.02.2022 SUBMITTED BY PETITIONER Exhibit P10 A COPY OF THE LETTER INTIMATING REMITTANCE Exhibit P11 A COPY OF THE LETTER SUBMITTED BY THE PETITIONER

RESPONDENTS' EXHIBITS: NIL

True Copy

PS To Judge.

rv