Allahabad High Court
Chinta Mani vs State Of U.P. & Ors. on 5 July, 2010
Equivalent citations: AIR 2010 (NOC) 1010 (ALL.), 2010 (4) ALJ 597
Author: A.P. Sahi
Bench: Ferdino Inacio Rebello, A.P. Sahi
1
Reserved Judgment
Chief Justice's Court
Special Appeal No.1036 of 2010
Chinta Mani Vs. State of U.P. and others
****
Hon'ble Ferdino Inacio Rebello, C.J.
Hon'ble A.P. Sahi, J The appellant is a borrower. He took a loan from the respondent - State Bank of India, Branch Dibai, to the tune of Rs. 2 Lacs for the purchase of a Tractor. The appellant admittedly defaulted in making repayment of the said agricultural loan that was disbursed in the year 2001. Consequently, recovery proceedings were initiated and a Citation of recovery was issued for recovery of the amount of loan as arrears of land revenue under the provisions of the U.P Zamindari Abolition & Land Reforms Act, 1950 read with the 1952 Rules.
The challenge in the writ petition giving rise to this appeal was to the Citation of recovery dated 3.4.2010 whereby a sum of Rs. 2,17,000/- was sought to be recovered together with 10% recovery charges. The learned single Judge upon the concession made by the appellant - petitioner that he is ready to pay the entire amount of loan with interest in easy installments, proceeded to pass an order on 25.5.2010 fixing the time period for the repayment and if the said schedule was adhered to, it was also provided in condition No. II that in case the installments are deposited in the Bank, then half of the collection charges only shall be recovered from the petitioner.
Learned counsel for the appellant contends that the grievance now only remains with regard to half of the recovery charges that are to be recovered from the appellant under the impugned judgment.
To substantiate his submissions, learned counsel has cited 5 decisions before us. The first decision is in the case of Ram Niwas Vs. State of U.P. and others, Special Appeal No.260 of 2010 decided on 22.3.2010; the second decision is in Bed Veer Singh Vs. State of U.P. and others, Writ Petition No.14518 of 2008 decided on 18.3.2008; the 2 third decision is in the case of Satish Vs. State of U.P. and others, Writ Petition No.9483 of 2002 decided on 6.3.2002; the fourth decision is in the case of Raj Kumar Vs. State of U.P. and others, Civil Misc. Writ Petition No.33704 of 2006 decided on 3.7.2006; and fifth decision relied on is in the case of Mirza Javed Murtaza Vs. U.P. Financial Corporation, AIR 1983 Allahabad 234 (Paragraph No.16).
On the strength of the said decisions, learned counsel contends that since no steps for actual recovery of the amount had been undertaken, the respondents are not entitled to realise any collection charges from the petitioner. He further submits that mere issuance of Citation by itself is of no consequence as it does not amount to an undertaking of actual steps for recovery.
Learned Standing Counsel Sri Pipersenia, on the other hand, contends that the recovery is made in view of the provisions of Section 279 of the U.P. Z.A. & L.R. Act read with the Rules framed thereunder. He submits that the contention advanced on behalf of the petitioner and the decisions relied on do not consider the impact of the provisions of sub-section (2) of Section 279 of 1950 Act. He contends that the legal position cannot be diluted and the decisions that have been relied upon by the learned counsel for the petitioner are founded on concessions extended by this Court in the exercise of extraordinary jurisdiction under Article 226 of the Constitution which cannot be said to be laying down a law for waiving recovery charges after the issuance of a Citation by the Collector. He, therefore, submits that the said decisions are clearly distinguishable and hence the appeal deserves to be dismissed.
Before proceeding to consider the impact of the judgments relied upon by the learned counsel for the appellant, it deserves to be mentioned that the recovery in the present matter arises out of a Citation issued by the Collector of the district for recovering the defaulted amount of loan from the appellant as arrears of land revenue. The said recovery is being made under Section 279 of the U.P.Z.A. & L.R. Act 1950 which is quoted below:-
3"279. Procedure for recovery of an arrear of land revenue.- [1] An arrear of land revenue may be recovered by anyone or more of the following process:
(a) by serving a writ of demand or a citation to appear on any defaulter;
(b) by arrest and detention of his person;
(c) by attachment and sale of his moveable property including produce;
(d) by attachment of the holding in respect of which the arrear is due;
(e) [by lease or sale] of the holding in respect of which the arrear is due;
(f) by attachment and sale of other immovable property of the defaulter, [and] [(g) by appointing a receiver of any property, moveable or immovable of the defaulter.] [(2) The costs of any of the processes mentioned in sub-section (1) shall be added to and be recoverable in the same manner as the arrear of land revenue.]"
The Citation, which has been appended along with the writ petition is in Form 69 as provided for in Rule 236 of the U.P. Zamindari Abolition & Land Reforms Rules, 1952, which is quoted below:-
"236. Writs, citations, warrants of arrest and warrants of attachment of movable property shall be in the Z.A. Form 68, 69, 70 and 71. They shall be signed by the issuing officer and sealed with his official seal."
The writ or the Citation has to be issued under orders of the Collector under the provision of Section 280 of the Act read with Rule 241 of the Rules. Rule 242 of the 1952 Rules sounds a caution that before proceeding to take any other coercive process like arrest, detention or attachment, the Citation to appear should be issued as a primary step ordinarily. The question, which has been raised by the learned counsel for the appellant, is with regard to the extent of charges to be realized by way of collection at the stage of issuance of a citation. For this, a reference may be had to Rule 243 of the 1952 Rules, which is quoted below:-
"[243. The fee charged for the issue of a writ of citation to appear shall be rupees two. This fee shall be added to the arrears to which the writ or citation is 4 issued, and shall be included in the amount specified therein.]"
If the defaulter does not respond to the said citation, then further coercive steps as provided for can be taken. A perusal of Rule 243 would indicate that there is a specific fee of Rs. 2/- that is authorized to be included along with the amount as a fee for the memo of citation. The question to be examined is as to whether the costs of recovery as collection charges can be further imposed saddling the borrower with a liability of 10% collection charges upon issuance of a citation.
There is a notable aspect of the manner of serving the citation. It has to be done as per Rule 246 quoted below:-
"246. (1) Service of the writ or citation shall, if possible be made on the defaulter personally, but if service cannot be made on the defaulter it may be made on his agent. If the defaulter or his agent cannot be found or if there is more than one defaulter against whom a writ or citation has issued a copy of the writ or citation may be fixed at a prominent place on or adjacent to the defaulter's residence.
(2) Personal service shall be made by delivery to the defaulter or his agent of the foil of the writ of citation. The other portion shall be brought back to the tahsil by the process-server and attached to the counterfoil. When returning this portion, the process-server shall report to the officer whom the tahsildar may appoint for served and if it was not served on the defaulter personally, the reason why it was not served. The official receiving the report shall note the particulars on the process, if this has not been done already.
(3) With the sanction of the Collector, writs of demand may also be served by registered post. In such cases the post office receipt shall be attached to the counterfoil."
The Rule, therefore, requires the service through a process server. It can be done through the Collection Amin or Collection peon of the department. They are employed and paid from the State Exchequer. It, therefore, cannot be said that no actual expenses have been incurred for serving a citation which is also one of the modes of recovery. It is for this reason that costs have been separately provided for apart from the 5 fee of the memo of citation under Rule 243 of 1952 Rules. The mode of service through registered post is provided for with the permission of the Collector additionally. The amount of actual expenses are a different issue which can be calculated under the Act and Rules subject to the maximum of 10% of the principal amount but the power to levy is traceable to the provisions indicated above.
The legislative background that authorises the Collector to proceed to realise such collection charges has been dealt with in a controversy that came to be considered by a Division Bench of our Court in the case of Mahalakshmi Sugar Mills Co. Ltd. Vs. State of U.P. and others, reported in 1999 (2) AWC 1201. The said decision took notice of another Division Bench judgment of this Court, which has been relied upon by the learned counsel for the petitioner in the case of Mirza Javed Murtaza (supra).
The matter was proceeded with and the learned Judges of the Division Bench differed in their opinions in relation to the issues involved particularly relating to the question of recovery of 10% collection charges under the garb of the Government Order dated 30.8.1974. This difference of opinion was referred to a third Hon'ble Judge and the majority opinion ruled that such recovery on the mere issuance of a citation was not leviable. The opinion of the Hon'ble third Judge is reported in 1999 (2) AWC 1218 delivered on 13.11.1998. Accordingly, the final judgment was delivered on 20.11.1998 which is reported in 1999 (2) AWC 1220 holding that the recovery could not include the amount of collection charges on mere issuance of a citation. The judgment was given a prospective effect.
At this juncture, it would be relevant to point out that in respect of recovery under the U.P. Agricultural Credit Act, 1973 read with Agricultural Credit Rules 1975, there is a specific provision in Rule 29 of the U.P. Agricultural Credit Rules authorizing recovery of 10% of expenses of recovery once the process has started.
The aforesaid Division Bench was noticed by a learned single 6 Judge of this Court in the decision of Smt. Vidya Devi Vs. Collector, Mahoba and others, 1999 (3) AWC 1885, wherein the learned single Judge in paragraph no.5 ruled as follows:-
"5. Sub-section (2) of Section 279 provides that the cost of any of the processes mentioned in sub-section (1) shall be added to be recoverable in the same manner as the arrears of land revenue. Sub-section (2) was added by U.P. Act No.12 of 1965 with retrospective effect. It is clear from this provision that the costs of process can be recovered even if the sale had not taken place if the realisation of the amount has been made as arrears of land revenue by any of the modes prescribed under Section 279 of the Act."
The Court further went on to consider the impact of the Division Bench judgment and held that the recovery of cost in each of the different processes are different. The conclusions drawn are in paragraph Nos. 8 to 10 of the said judgment.
Faced with the aforesaid legal position pronounced by this Court, the State Government in order to justify such collections enacted U.P. Act No.37 of 2001 titled as Revenue Recovery (U.P. Amendment) Act 2001 giving it a retrospective effect from 30.8.1974. This was obviously enacted to overcome the ratio of the decision in Mahalakshmi Sugar Mill's case (supra). The provision that was brought forth clearly indicates the reason for the same as stated in objects and reasons quoted below:-
"STATEMENT OF OBJECTS AND REASONS The Revenue Recovery Act, 1890 inter alia, provides for the procedure for recovery of an arrear of land revenue or a sum recoverable as an arrear of land-revenue. The State Government has, vide G.O. No.285/11-69 (II-876)- Revenue-7, dated August 26, 1974, directed for recovery of collection charge equal to ten per cent of the amount stated in the recovery certificate, in addition to the amount stated in the recovery certificate. The High Court of Judicature at Allahabad has, vide its order dated November 20, 1998 in Writ Petition No.29612 of 1992, M/s. Mahalaxmi Sugar Mills Ltd. V. State of U.P. and others, quashed the said Government Order mainly on the ground that the said Act as also the Uttar Pradesh Revenue Recovery Rules, 1966 do 7 not provide for recovery of collection charge in addition to the amount stated in the recovery certificate. The State Government filed Special leave Petition No.6192 of 1999 against the said order of the High Court. The Supreme Court while granting the leave applied for, did not stay the operation of the said order of the High Court. It has, therefore, been decided to withdraw the said Special Leave Petition and to amend the said Act to provide for the recovery of collection charge also at the rate not exceeding ten per cent of the amount stated in the recovery certificate and to validate the recoveries already made in pursuance of the said Government Order.
The Revenue Recovery (Uttar Pradesh Amendment) Bill, 2001 is introduced accordingly."
The amendments that have been incorporated for authorising the realisation of costs to the maximum of 10% would be evident from the same which is quoted below:-
"THE REVENUE RECOVERY (UTTAR PRADESH AMENDMENT) ACT, 2001 (U.P. Act No.37 of 2001) (As passed by the Uttar Pradesh Legislature) AN ACT Further to amend the Revenue Recovery Act, 1890 in its application to Uttar Pradesh.
It is hereby enacted in the Fifty-second Year of the Republic of India as follow:
1. Short title, extent and commencement.-- (1) This Act may be called the Revenue Recovery (Uttar Pradesh Amendment) Act, 2001.
(2)It shall extend to the whole of Uttar Pradesh.
(3)It shall be deemed to have come into force on August 30, 1974.
2. Amendment of Section 3 of Act No.1 of 1890.-- In Section 3 of Revenue Recovery Act, 1890, hereinafter referred to as the principal Act, for sub-section (3) the following sub-sections shall be substituted, namely:
"(3) The Collector of the other district shall, on receiving the certificate, proceed to recovery the amount stated therein, together with the costs of the recovery, as if it were an arrear of land revenue which had accrued in his own district.
(3-a)The costs of the recovery under sub-section (3) shall be such as may be specified by the State Government by notification but the amount of such costs shall not exceed 8 ten per cent of the amount stated in the certificate."
3. Amendment of Section 4.-- In Section 4 of the principal Act,--
(a) in sub section (1)--
(i) for the words "pays the same" the words "pays the same together with the costs referred to in sub-section (3a) of the said section" shall be substituted;
(ii) for the words "repayment of the amount" the words "repayment of the amount stated in the certificate" shall be substituted;
(b) after sub-section (4) the following sub-section shall be inserted, namely:
"(5) where a suit instituted under sub-section (2) is decreed, wholly or partly, the Court shall also direct that the defaulter shall be repaid the proportionate costs paid by him under sub-section (1)."
4. Amendment of Section 5.-- In Section 5 of the principal Act, for sub-section (3) the following sub-sections shall be substituted, namely:
"(3) The Collector shall, on receipt of the certificate under sub-section (1), proceed to recover the amount stated therein, together with the costs of the recovery as if the amount stated in the certificate were payable to himself and such costs were also an arrear of land revenue.
(3a) The costs of the recovery under sub-section (3) shall be such as may be specified by the State Government by notification but the amount of such costs shall not exceed ten per cent of the amount stated in the certificate."
5. Amendment of Section 6.-- In Section 6 of the principal Act, --
(a) in sub-section (2) for the words "in the certificate" the words "in the certificate together with the costs of the recovery" shall be substituted;
(b) In sub-section (3) for the words "in the certificate" the words "in the certificate or the costs of such recovery" shall be substituted;
(c) in sub-section (4) for the words "in a certificate" the words "in a certificate or the costs of such recovery" shall be substituted;
6. Amendment of Section 10.-- For Section 10 of the principal Act, the following section shall be substituted, namely:
9"10. Duty of Collectors to remit moneys collected in certain cases.-- Where a Collector receives a certificate under this Act from the Collector of another district or from any other public officer or from any local authority he shall remit the sum recovered by him by virtue of that certificate to the Collector or the other public officer or the local authority after deducting the sum recovered as costs of the recovery."
7. Validation and Consequential provisions.--
Notwithstanding any judgment, decree or order of any Court, the costs of a recovery recovered over and above the amount stated in the certificate referred to in Section 3 or Section 5 of the principal Act from a defaulter under an order of the State Government, shall be deemed to have been validly recovered under the principal Act as amended by this Act and no defaulter shall be entitled for refund of such costs, and if such costs have not been so recovered the same shall be recoverable from the defaulter under the corresponding provisions of the principal Act as amended by this Act as if the provisions of the principal Act as amended by this Act were in force at all material times."
A perusal of sub-section 2 of Section 279 of the 1950 Act empowers the Collector to add the cost of any of the processes mentioned in sub-section (1) in the Recovery Citation and the same has been made recoverable in the same manner as arrears of land revenue. The aforesaid provision, therefore, being the charging section , clearly empowers the recovery of costs of processes mentioned in sub-section (1). Clause (a) of sub-section 1 is also one of the processes provided for making recovery of an arrears of land revenue. The said sub-section recites that the recovery can be made by serving a writ of demand or a citation to appear on any defaulter. Thus, the provision itself indicates the service of a writ of demand or a Citation as one of the processes by which the recovery can be made. The other processes thereafter follow namely arrest, detention, adjustment and sale or lease including movable and immovable property. In the instant case, we are only concerned with the issuance of a Citation as according to the appellant, the other processes of arrest, detention, adjustment and sale have not been undertaken and it is at the stage of issuance of the Citation that the appellant had filed the writ petition.
10The contention on behalf of the appellant that no such collection charges can be realised, to our mind, does not appear to be correct inasmuch as sub-section (2) also empowers the Collector to realise costs of recovery even where the processes adopted is by serving a writ of demand or a Citation to appear. Sub-section 2 of Section 279 does not contemplate that some other actual process apart from the issuance of Citation should be undertaken for raising a liability of recovery charges. Sub-section 2 would apply independently to clause (a) of sub- section 1. The provisions of the Revenue Recovery Act 1890 and the Rules framed thereunder as noted above supplement the aforesaid procedure for realising collection charges as well.
The impact of the said provisions have not been noticed in any of the other cases that have been relied upon by the learned counsel for the petitioner. The judgment in detail with regard to realisation of collection charges which has been referred to in para 16 of the decision in the case of Mirza Javed Murtaza (supra) is in relation to the processes of sale of immovable property under Rule 284 of the U.P. Z.A. & L.R. Rules. The Division Bench observed that the loan that was sought to be recovered therein was extended by the U.P. Financial Corporation and the Managing Director of the Corporation can only ask the Collector to recover the amount as arrears of land revenue. The Court further went on to observe that what would be the actual cost of the proceeding would naturally be ascertained when the costs are actually incurred. The said observations were made in relation to Rule 284 of the U.P. Zamindari Abolition and Land Reforms Rules which are in relation to sale of immovable property. The ratio of the said decision would not be attracted hereunder inasmuch as that was a case where a process of distress by sale of immovable property had been undertaken. The said decision has nowhere considered the impact of sub-section 2 of Section 279 of the U.P. Zamindari Abolition & Land Reforms Act as referred to herein above. In view of the said position as also the subsequent amendments as noticed above, the ratio of the said decision would, therefore, not apply on the facts that have emerged in the present case.
Accordingly, we are of the opinion that so far as the law is 11 concerned, the provisions of sub-section 2 of Section 279 do not contain any provision for an absolute waiver of recovery charges where a Citation has been issued under sub-section 1 of the said provision. The charging section itself empowers the Collector to raise such demand subject to the rules and the provisions of the Revenue Recovery Act (U.P. Act No.37 of 2007) referred to herein above.
There are no provisions introduced in the U.P. Zamindari Abolition and Land Reforms Act 1950 for the levy of 10% collection charges but the Revenue Recovery Act 1890 has been amended as noted above. There is no challenge to the vires of the amendments introduced through U.P. Act No.37 of 2007. Accordingly, we do not propose to examine the issue any further.
It is something different that the High Court in the exercise of its extra ordinary jurisdiction under Article 226 of the Constitution of India proceeds to make certain observations or grant concessions on the peculiar facts of individual cases. The same, in our opinion, would not amount to laying down an absolute proposition that the recovery charges cannot be realized even where only a Citation has been issued. The Court in it's discretion may pass orders but that would not amount to dilute the impact of the provisions of sub-section 2 of Section 279 of the 1950 Act. The contention, therefore, raised by the learned counsel for the appellant that the decision relied upon by him mandate complete waiver of collection charges cannot be accepted.
The appellant has not raised any challenge to the procedure adopted by the respondents and there is no foundation for the same. He has agreed to the repayment in easy installments. There is no pleading or material to demonstrate as to why and how the amount of 10% collection charges now reduced to half under the impugned judgment is excessive or miscalculated. The statute as quoted above provides for an outer limit of recovery of 10% of the principal amount as collection charges. It, therefore, can be a matter of contest before the competent authority if the collection charges are in violation of any procedure or are being imposed excessively. In the absence of any material or 12 foundation to that effect in the writ petition, this issue cannot be made the basis for interference with the discretion exercised by the learned single Judge.
So far as the grant of concession is concerned, we have examined the judgment of the learned single Judge and we find that the learned single Judge has, taking a compassionate view of the matter, waived off 50% of the recovery charges.
In such an event and in view of the reasons given herein above, we are not inclined to exercise our jurisdiction to interfere with the impugned order. The appeal, accordingly, fails and is hereby dismissed.
Dt. 5.7.2010 Irshad