Collection charges under the Revenue Recovery Act can be demanded even when only notices are issued, as clarified by the Supreme Court.

JUDGMENT

The above writ petition is filed challenging Exts.P2,P3 and P5 and for a consequential direction to the respondents not to recover any collection charges form the petitioner for amounts collected outside the ambit of Revenue Recovery Act 1968 and Rules thereunder.

2. It is averred that the petitioner is a banking company and in relation to the recovery dues from one Joseph Kurian and Shibu Thomas towards the loan availed by them the petitioner moved for revenue recovery proceedings against the defaulters since petitioner is a notified institution as per the Revenue Recovery Act , 1968. Later the Apex Court in Unique Butyl tube Industries Pvt Ltd vs. U.P Financial Corporation (2003 (2) SCC 455) held that only proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 alone could be resorted for recovery of dues from defaulters exceeding Rs.20 lakhs. In view of the above said declaration of law petitioner found it impossible to recover the dues above Rs.20 lakhs through revenue recovery proceedings and accordingly revenue recovery proceedings was closed. It is submitted that no amount was recovered as per the provisions of the . It is submitted that as per Rule 5 of the Revenue Recovery Rules collection charges could also be recovered from the defaulter, but since no recovery proceedings were not proceeded the said recovery could also not been done from the defaulter. While so Ext.P2 letter was issued calling upon the petitioner to pay 1% of the loan amount recovered by the bank along with other charges to the tune of Rs.65,180/-, Exts.P3 and P4 letters were also issued in this regard and finally Ext.P5 notice was issued intimating that if amount is not paid revenue recovery proceedings will be initiated.

3. A detailed counter affidavit has been filed by the 1^st respondent contending that the petitioner is liable to pay the said amount demanded. It is further contended that the petitioner approached the revenue recovery authorities in an application under Form No.24 to initiate revenue recovery proceedings against the defaulters. As per the requisition notice submitted by the petitioner, the 3^rd respondent as per Form-25 issued RRC notice to the 1^st respondent. Following this the 1^st respondent Tahsildar, Thodupuzha as per Sections 7 & 34 of the Revenue Recovery Act issued demand notices to the defaulters and it was served on the defaulters through the Village Officer. When the revenue recovery proceedings was going on, the bank and the defaulters made mutual agreement and settled the entire amount and later Ext.R1(a) letter was issued to stop revenue recovery proceedings as the entire amount was settled by the defaulters. It is contended that going by Sections 4 and 5 of the Kerala collection charges has to be collected at the rate of 5% of the collected amount if the amount falls below 5 lakh, 7.5% of the collected amount if the amount is above 5 lakhs and at the rate of 1% if the amount is settled as per One Time Settlement. Though a letter was issued in this regard the petitioner failed to remit the collection charge and therefore, revenue recovery proceedings were initiated for recovery of the amount. It is in the said circumstance, Ext.P2 communication was issued directing to remit 1% of the collection charge as the matter has been settled between the parties after initiation of the Revenue Recovery proceedings.

4. The learned counsel appearing for the petitioner relying on the Division Bench judgment of this Court in Usha Mary v. Kerala Financial Corporation and Others (2009 (4) KHC 254) contended that the liability to pay any collection charge arise only in cases where further steps towards attachment or sale is initiated by the revenue recovery authorities and that the cases in which only notice under Section 7 or 34 has been issued the petitioner cannot be made liable to pay any collection charges. But it is to be seen that the judgment in Usha Mary's case cited supra, was