Allahabad High Court

Allahabad High Court

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Equivalent citations:1999(3)AWC1885

Bench:S Narain

Smt. VidyaDevivsCollector,MahobaAndOtherson 23/4/1999

JUDGMENT

Sudhir Narain, J.

1. The petitioner seeks writ of certiorari quashing the citation notice dated 18.1.1999demanding sum of Rs. 12,277 plus interest and other charges.

2. The petitioner took loan for a pumping set, from Allahabad Bank, respondent No.3. As the petitioner failed to pay the amount, recovery certificate was sent and respondent No. 2 issued a citation for recovery of Rs. 12.277.

3. The contention of learned counsel for the petitioner is that respondent No. 2 is demanding collection charges at ten per cent of the amount mentioned in the recovery certificate. It is contended that the property has yet not been auctioned and unless the auction takes place, the petitioner is not liable to pay any collection charges. He has placed reliance upon the decision of the Division Bench in Mirza Javed v. U. P. Financial Corporation, Kanpur and another, AIR 1983 Alt 234, wherein it was held that where the State Financial Corporation sent a certificate under Section3of U. P. Public Moneys (Recovery of Dues) Act to theCollectorfor recovery of the loan advanced by it as arrears of land revenue, it cannot include the collection charges in the certificate in view of Rule 284 of U. P. Zamindari Abolition and Land Reforms Rules. The recovery proceedings start only if the recovery certificate is received by theCollectorand thereafter he proceeds to realise the amount from the person against whom the recovery certificate has been issued. At the stage of preparation of the recovery certificate, the question of collection of recovery charges does not arise and in that context the Court observed :

"What would be the actual cost of the proceedings would be naturally ascertained when the costs are actually incurred. This is also clear from Rule 284 (2) of the U. P. Zamindari Abolition and Land Reforms Rules which says that charge shall be levied for recovery upon such amount not exceeding the total sum due for recovery as may be realised by the sale at the rate of3n.p. per rupee of the sale proceeds. So the charge can be levied only when the sale of the property actually takes place."

4. Once the recovery certificate is received by theCollector, he car take proceedings for recovery by various processes as provided under Section 279 of U. P. Zamindari Abolition and Land Reforms Act. 1950 which reads as under :

"279. Procedure for recovery of an arrear of land revenue,--(1) An arrear of land revenue may be recovered by any one or more of the following processes :

(a) by serving a writ of demand or a citation to appear on any defaulter.

!b) by arrest and detention of his person,

tc) by attachment and sale of his movable property including produce.

(d) by attachment of the holding in respect of which the arrears 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, movable or immovable of the defaulter.

(2) The costs of any of the processes mentioned in sub-section (I) shall be added to and be recoverable in the same manner as the arrears of land revenue,"

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.

6. The next question is as to what should be the amount of collection charges. The matter was considered by a Division Bench consisting of Hon'ble Mr. Justice R. R. K. Trivedl and Hon'ble Mr. Justice R. K. Singh inM/s. Maha Laxmi Sugar Mills Company Ltd. v. State of U. P. andothers. Civil Misc. Writ Petition No. 29612 of 1992. On behalf of the State Government, it was urged that the State Government is entitled to realise 10 per cent of the amount mentioned in the recovery certificate as collection charges. It relied upon Rule 8 (b) and (c) of U. P. Revenue Recovery Rules, 1966 framed in the exercise of power conferred under sub-section (1) of Section 11 of the Revenue Recovery Act. 1890 which reads as under :

"8. Section 11 (1)--Procedure of remittance of Government dues and disposal of cost of processes used for their recovery,--As soon as any amount is recovered it shall be deposited into the Government treasury or remitted to the authority concerned, as the case may be. in the manner required in the recovery certificate subject to the following provisions :

(a) .....

(b) the cost recovered on account of any process used in the recovery of the amount of the certificate shall be deposited into the Government treasury under the relevant receipt head of the budget as if such cost has accrued in the district in which the recovery has been made, and

ic) the collection charges, if any, required to be charged under any orders of Government shall, unless otherwise provided, be deducted from the amount recovered under the certificate and deposited into the Government treasury under the relevant receipt head of the budget."

The Slate Government issued Government Order dated 30.8.1974 which provided that it can recover ten per cent of the amount mentioned in the recovery certificate as collection charges. Hon'ble Trivedi, J.. relying upon the decision of the Hon'ble Supreme Court inAhmedabad Urban Development Authority v. Sharad Kumar Jayanti Kumar Pasawalla andothers, AIR 1992 SC 2083, held that in a fiscal matter in absence of express provision, a delegated authority cannot impose tax or fee. Such power of Imposition of tax and/or fee by a delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. The Government Order dated 30.8.1974 was held invalid.

Hon'ble R. K. Singh. J., delivered a dissenting judgment and construing the provisions of Section 11 of Revenue Recovery Act, 1890 and Rule 8 (b) and (c) of U. P. Revenue Recovery Rules. 1966, held that the Government Order dated 30.8.1974 was valldly framed and it should be given effect to. The matter was referred to a third Judge and Hon'ble Mr. Justice Palok Basu agreed with the decision of Hon'ble R. R. K. Trivedi, J. in view of this decision, the Government Order providing for collection of ten per cent of the amount mentioned in the recovery certificate as collection charges cannot be recovered from the defaulter for realisation of the amount as arrears of land revenue.

7. The Court further examined the provisions of U. P. Zamindari Abolition and Land Reforms Act, 1950 and the various Rules framed under the U. P. Zamindari Abolition and Land Reforms Rules providing the modes for realisation of the land revenue and the cost incurred in such recovery. It was found that it only mentions the recovery cost but does not provide separately for the collection charges. The distinction between the cost of recovery on account of any process used in recovery of the amount of the certificate and the collection charges as contemplated under Rule 8 (b) and (c) of the U. P. Revenue Recovery Rules, 1966 was taken Into consideration. There are various processes mentioned under Section 279 of U. P. Z. A. and L. R. Act for recovery of the arrears of land revenue. The recovery cost in each of the different processes are different.

8. Rule 243 provides that the fee charged for the issue of a writ of citation shall be Rs. 2 and this fee shall be added to the arrears to which the writ of citation is issued and shall be included in the amount specified therein. Rule 248 provides the fee levied for a warrant of arrest in Z.A. Form 70 shall be Rs. 5. Rule 253 provides that if the defaulter is detained in Civil Jail, the charge for his subsistence shall be according to the scale laid down in the Rules framed by the State Government under Section 57 of the Code of Civil Procedure, 1908. Such charge, if certified by the Jailor to have remained unsatisfied on the release of the defaulter, shall be recovered by him by the officer who ordered the detention. Sub-rule (2) provides that if the defaulter is detained in the lockup at the Tehsil, he shall be permitted to furnish and cook his own food. If he is not willing or able to do so, he shall either be provided with food and charge for subsistence or be given advance of diet money by the Tehsildar. The cost in either case shall be in the scale laid down in sub-rule (1) and shall be similarly recovered. Rule 255 relates to attachment and sale of moveable property and the fee for a warrant of attachment shall be 75 Naya False. Rule 258 provides that the cost of sale of moveable property shall be met by levying a sum of Rs. 6 Naya False in the rupee. Rule 259 relates to the cost of detention charges when the sale has not taken place. Rule 284 provides that when the land is put up for sale a charge shall be levied on account of cost of every sale upon such amount not exceeding the total sum due for the recovery as may be realised by the sale at the rates mentioned under Rule 284. From the various rules noted above it is clear that for each of the different processes adopted by the revenue authorities for realising the amount as arrears of land revenue the cost of recovery has been provided therein.

9. Hon'ble R. R. K. Trivedi. J. in M/s. Maha Laxmi Sugar Mills Ltd. (supra), considering the various provisions of the U, P. Zamindarl Abolition and Land Reforms Act, found that none of the provisions of U. P. Z. A. and L. R. Act, 1950 provides for collection of ten percent of the amount of recovery certificate as collection charges and there was no justification to charge cost of process Issued and collection charges separately, A Division Bench of this Court inM/s. Asha Textiles (P.) Ltd. andothersv. State of U. P. andothers, 1998 RD

438. relying upon Rules 255 and 259 of U. P. Zamindari Abolition and Land Reforms Rules, held that the cost of recovery shall be at the rate of Rs,3,70 paise only as provided under those Rules, From the above discussion, it will be noted that the cost of recovery on account of any process used in the recovery of the amount of the certificate shall be in accordance with the provisions of U. P. Z. A. and L. R. Rules. The recovery cost differs in each of the different processes used by the Revenue Authorities.

10.In M/s. Maha Laxmi Sugar Mills Ltd. v. State of U. P. andothers(supra), one of the questions raised was that the State Government is entitled to recover collection charges over and above the cost prescribed under the various provisions of U. P. Z. A. and L. R. Act and the Rules framed thereunder. It was observed that if the collection charge demanded from the defaulter is to compensate the State Government for the service rendered by Revenue Department which is used as agency under Section 275 of U. F. Z. A. and L- R. Act to recover such amount, there should be some co-relation with the amount demanded and the service rendered. In case only a citation is issued, there will be hardly any justification to demand ten percent of the amount mentioned in the recovery certificate as collection charges. The flat rate of ten per cent in all cases without any co-relationship the process employed will be hardly any justification for realising the amount at fiat rate in all the cases and in all the circumstances. This view was upheld on a reference made to the third Judge. The Recovery Officer/Authorities can recover only the cost of processes as provided under sub-section (2) of Section 279 of the U. P. Zamindari Abolition and Land Reforms Act. 1950 and the cost of recovery will be such as specified under various Rules of the Zamindari Abolition and Land Reforms Rules, 1952.

11. The last submission of learned counsel for the petitioner is that the respondent bank is not entitled to realise compound interest. The realisation of the interest depends upon the terms of the contract and the statutory provisions which empower the bank to fix the amount of the interes't. The matter was considered in detail inCorporation Bank v. D. S. Gowda andanother, JT 1994 (7) SC 87. wherein the Court after considering the various provisions of Banking Regulation Act, 1949 held that in the case of agricultural loans/advances, the bank is not entitled to charge compound interest with quarterly rest but if the interest is fixed at the annual res! coinciding with the time that the fanner is fluid and the fanner fails to pay the amount even thereafter, it would be open to compound the interest at the crop loan or instalment upon the term loans becoming overdue. This was based upon the interpretation of the circular issued under the Banking Regulation Act by the Reserve Bank of India. In case of a commercial transaction, the position will be different. The Court summarised as follows :

"But if the Reserve Bank has fixed the maximum rate of interest in exercise of the powers conferred by Section 21/35A of the Banking Regulation Act, Section 21A would be attracted and the transaction would not be liable to be reopened on the ground that the rate of interest fixed is excessive even though not exceeding the ceiling determined by the Reserve Bank. In the case of agricultural loans/ advances the position has been made amply clear by the circulars referred to earlier which do not permit Banks to charge compound interest with quarterly rests. In such cases as observed earlier the interest can be fixed with annual rests coinciding with the time when the farmer is fluid and if thereafter the farmer fails to pay the interest it would be open to compound the interest on the crop loan or instalments upon the term loans becoming overdue."