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Reserved Judgment
Chief Justice's Court
Special Appeal No.1036 of 2010
Chinta Mani Vs. State of U.P. and others
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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
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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:-
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“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
4issued, 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
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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
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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
7not 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
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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:
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“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.10
The 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
11concerned, 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
12foundation 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