USHA MARY Vs. KERALA FINANCIAL CORPORATION

JUDGEMENT

(1.) WHETHER, the Government is entitled to realize collection charges in connection with the recovery of dues, under the provisions of the Kerala Revenue Recovery Act is the issue raised in all these cases. The learned Single Judge in the judgment under appeals held that there is no liability to pay collection charges in cases where amounts have been directly remitted by the parties before the requisitioning authority. Some of the writ petitions still pending before the Single Bench have been tagged along with writ appeals. WPC No. 23991/05 is referred to the Division Bench in view of divergent views taken by this Court on the liability to pay collection charges.

(2.) HEARD the learned Additional Advocate General appearing for the State and the learned counsel appearing for the parties. The main contention for the State is that in view of the proviso to Section 71 read with the power reserved to the Government to make rules for the purpose of implementing the provisions of the Act, and in view of the huge expenses incurred for the recovery, the levy is justified. The counsel for the parties, and writ petitioners submit that under Section 2(d) read with Sections 5 and 16 of the Act, there is no justification in or authority for the recovery officer to realize collection charges. It is contended that the Government being the rule making authority, so long as there is no express power conferred on the Government to levy collection charges in the plenary provisions of the parent Act, the rule making authority cannot levy such charges. What is permitted under the Act is only the recovery of the cost of process and other charges incurred for the recovery and nothing else. It is also contended inter alia that what is permissible is only, even assuming the rule is upheld, collection charges and not service charges as recently introduced under Rule 5(3).

(3.) THE tabled item viii under Rule 4 and Rule 5(1) have been challenged as ultra vires the Act. What is provided under Section 5 is only cost of process. But, as already noted by us, the cost would include other charges also. Such a view is also possible in terms of the wide power given to the Government under Section 86 to make rules to carry out all or any of the purposes of the Act. One of the purposes of the Act is to realize the collection charges from the defaulters. If so, the question is only whether the provision is unreasonable and discriminatory. When the defaulters remit the dues directly to the institutions on exhausting all the steps taken by the revenue recovery authorities, all that the institutions have to bear is only 1% of the amount collected from the defaulters. If that be so, the levy of 5% is certainly unreasonable when the amount is collected in the process of recovery by the revenue recovery authorities. After all such proceedings are initiated only in situations of distress. As observed by learned Single Judge of this Court in Baskaran v. Sub Registrar, 2005 (3) KLT 150 1. "Making the poor, poorer is not what is intended by the Revenue Recovery Act and the Rules thereunder". Even otherwise, cost of involvement of the Government machinery cannot depend on the amounts collected in the process of coercive steps taken under the Revenue Recovery Act. Whether it is ten thousand rupees or ten crores of rupees, the process is the same. THErefore the levy of collection charges for utilizing the Government machinery, apart from the interest and cost as permitted under Rule 4, proportionate to the amount collected is nothing but an extortion and thus unreasonable and not permitted or warranted under the statute or the Constitution. THE process of revenue recovery cannot be used as a source of revenue for the State. That is plainly beyond the legislative competence under the Constitution of India. THErefore, we hold that item viii under Rule 4 and Rule 5(1) are unreasonable and discriminatory and ultra vires the parent Act and the Constitution of India. THE duty of the Court normally is to leave the matter at that stage. But, that would certainly be against public interest. THE Court has also the duty in such circumstances to construct, if situation so warrants. This is a case warranting the exercise of such a duty. Since we have already held that collection of 1 % towards collection charges from institutions is permissible, we hold that in the process of recovery under the provisions of the Revenue Recovery Act by taking recourse to coercive steps, only 1 % of the amount in addition to the cost of process and other charges as permitted under Rule 4, is permissible as collection charges.