Boby Varghese v. Kerala Financial Corporation - Kerala High Court, 31 March 2022

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE N.NAGARESH THUR AY, THE 31ST DAY OF MARCH 2022/10TH CHAITHRA, 1944 WP(C) NO. 8756 OF 2022 PETITIONER: BOBY VARGHESE, AGED 69 YEARS S/O. LATE M U VARKEY, PARTNER, M/S. VEMBANAD WATER SPORTS, RESIDING AT 2 B, VEGALAND PETUNIA, SASTHA TEMPLE ROAD, KALOOR P.O., COCHIN 682 017. BY ADVS. K.K.JOHN ASISH K.JOHN RESPONDENTS: 1 KERALA FINANCIAL CORPORATION, REPRESENTED BY THE BRANCH MANAGER, BRANCH OFFICE ALAPPUZHA, KUMARANASSAN SAMARAKA MANDIRAM, COURT ROAD, ALAPPUZHA 688 001. 2 THE DEPUTY TAHSILDAR, REVENUE RECOVERY, KERALA FINANCIAL CORPORATION, K.F.C. ALLEPPEY, COURT ROAD, ALAPPUZHA 688 001. BY ADVS. M.R.VENUGOPAL DHANYA P.ASHOKAN S. MUHAMMAD ALIKHAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.03.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C) No.8756/2022 : 2 : N. NAGARESH, J. ````````````````````````````````````````````````````````````` W.P.(C) No.8756 of 2022 ````````````````````````````````````````````````````````````` Dated this the 31st day of March, 2022 J U D G M E N T ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner has approached this Court seeking to direct the respondents to return the original title deeds, prior deeds and other documents deposited by the petitioner in connection with loan No.010135310 of the Partnership Firm M/s. Vembanad Water Sports, with the first respondent- Corporation to the petitioner and to direct the second respondent to lift the attachment effected on the subject properties as well as the other personal properties of the petitioner. The petitioner further seeks to declare that the respondents are not entitled to demand revenue recovery collection charges at the rate of 7.5% in respect of the amounts recovered by the first respondent by sale conducted

W.P.(C) No.8756/2022 : 3 : by them under Section 29 of the State Financial Corporations Act in view of the provisions of Rule 5(3) of the Kerala Revenue Recovery Rules, 1968. 2. The petitioner's case in brief is as follows. The petitioner is a Partner of M/s. Vembanad Water Sports, which availed a loan of ₹50 lakhs from the first respondent–KFC on 02.07.1998. Revenue recovery proceedings were initiated by the respondents for realisation of outstanding dues from the petitioner. The first respondent- KFC took over two out of the four mortgaged properties of the petitioner. The first respondent-KFC sold the said two items of properties and recovered ₹40,57,896/- towards the debt.

Subsequently, the petitioner applied for One Time Settlement and made an upfront remittance of ₹5 lakhs. An amount of ₹22,50,000/- was made under One Time Settlement Scheme in the year 2021. The petitioner has thus paid the entire outstanding including ₹68,085/- towards revenue recovery collection charges at the rate of 1% of the

W.P.(C) No.8756/2022 : 4 : total amount deposited. However, when the petitioner submitted a request to the first respondent to return the documents of titles deposited by him, the petitioner was required by the first respondent to remit an additional amount of ₹2,96,264/- + GST towards collection charges at the rate of 7.5% for the earlier remittances.

The petitioner states that the demand of the first respondent made at the instance of the second respondent for revenue recovery collection charges at the rate of 7.5% for the earlier remittances, is illegal for the reason that none of the earlier collections were made by the revenue recovery authorities exercising their powers under the Revenue Recovery Act. Therefore, the petitioner is liable to pay only 1% towards collection charges as against the demand of 7.5%.

I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the respondents.

W.P.(C) No.8756/2022 : 5 :

The question whether the revenue recovery authorities are entitled to levy 7.5% collection charges when amounts were not collected under the revenue recovery action, was considered by this Court in Ashokan V.P. v. Tahsildar (RR), Vadakara, Kozhikode and others [2020 KHC 2172]. This Court held that when it is admitted that the entire amount was paid by the debtor directly to the requisitioning authority, the maximum amount that could have been collected towards the collection charges is 1% as is contemplated under Rule 5(3) of the Kerala Revenue Recovery Rules, 1968. 7. The issue is therefore squarely covered in favour of the petitioner. The petitioner has already remitted 1% revenue recovery collection charges due. In the circumstances, the writ petition is allowed following the judgment of this Court in Ashokan V.P. (supra). The respondents are directed to return the original title deeds, prior deeds and other documents deposited by the petitioner in connection with loan No.010135310 of the

W.P.(C) No.8756/2022 : 6 : Partnership Firm M/s. Vembanad Water Sports, Perumbalam with the first respondent-Corporation to the petitioner within two weeks. The second respondent shall lift the attachment effected on the properties of the petitioner immediately. N. NAGARESH, JUDGE aks/13.04.2022

W.P.(C) No.8756/2022 : 7 : APPENDIX OF WP(C) 8756/2022 PETITIONER EXHIBITS Exhibit P1 COPY OF THE DEMAND NOTICE ISSUED BY THE DISTRICT MANAGER, KERALA FINANCIAL CORPORATION DATED 03/04/2001. Exhibit P2 COPY OF THE DEMAND NOTICE ISSUED BY THE DEPUTY TAHSILDAR REVENUE RECOVERY K.F.C. ALLEPPEY DATED 16/11/2001. Exhibit P3 COPY OF THE NOTICE ISSUED BY THE BRANCH MANAGER, KFC ALAPPUZHA DATED 30/06/2006. Exhibit P4 COPY OF THE LETTER ISSUED BY THE BRANCH MANGER, KERALA FINANCIAL CORPORATION DATED 2/8/2006. Exhibit P5 COPY OF THE NOTICE ISSUED BY THE BRANCH MANAGER, KERALA FINANCIAL CORPORATION DATED 15.9.2008. Exhibit P6 COPY OF THE NOTICE ISSUED BY THE BRANCH MANAGER, KERALA FINANCIAL CORPORATION,

ALAPPUZHA

DATED 24/3/2011. Exhibit P7 COPY OF THE COUNTER AFFIDAVIT FILED BY THE BRANCH MANAGER KFC, ALAPPUZHA DATED 18/11/2013. Exhibit P8 COPY OF THE LETTER ISSUED BY THE CHIEF MANAGER, KERALA FINANCIAL CORPORATION, ALAPPUZHA DATED 25/10/2021. Exhibit P9 COPY OF THE CERTIFICATES ISSUED BY THE CHIEF MANAGER, KERALA FINANCIAL CORPORATION,

ALAPPUZHA

NO. KFC/ALP/498/2021-22 DATED 05.1.2022. Exhibit P10 COPY OF THE REPLY FROM THE CHIEF MANAGER KERALA FINANCIAL CORPORATION, ALAPPUZHA DATED 11/02/2022.