The Allahabad High Court has held that when there is no contribution in the loan collection, tehsil authorities cannot recover the 10 percent recovery charge.
The Division Bench of Justice Sunita Agarwal and Justice Jyotsna Sharma heard the petition filed by Shiv Mohan Sharma.
The petition has been filed with the following reliefs:
“1. issue a writ, order or direction in the nature of mandamus commanding the respondents not to recover any collection charges much less 10% Collection Charges from the petitioner on the basis of the recovery citation 4.8.2011.
2. issue a writ, order or direction in the nature of mandamus commanding the respondents to refund the amount realized as 10% Collection charges in pursuance to the letter dated 4.8.2011.”
A categorical statement has been made in the writ petition that pursuant to the demand raised by the PICUP, the company who had granted loan to the petitioner, a recovery citation dated 20.04.2002 was issued by the tehsil authority to recover an amount of Rs 2,71,49,546.93.
It is then stated that after issuance of the recovery citation, in a one-time settlement scheme floated by the PICUP, a settlement had been arrived between the petitioner and the company and an amount of Rs 1,09,77,000 was paid in full and final settlement in liquidation of the entire loan.
It is stated in the writ petition that the said amount settled under OTS deposited on 31.3.2003 through a Draft and there has been no dispute about the said payment made by the petitioner.
The State respondents, however, pursued the recovery for realisation of the recovery charges against the petitioner. In an earlier round of litigation, the petitioner herein had challenged the recovery citation dated 13.5.2002 whereby the State authorities sought to recover the collection charges to the extent of 10% of the amount mentioned in the recovery citation.
An interim order dated 26.08.2002 was passed therein. The said writ petition, however, has been dismissed for want of prosecution.
Be that as it may, the issue in the petition is about the recovery of 10 % as recovery charges by the State Agency without conducting any recovery proceeding and only on the issuance of the recovery citation at the instance of the company, namely PICUP.
It has been brought on record that after dismissal of the writ petition filed earlier, on 07.09.2010, a fresh recovery citation dated 4.8.2011 has been issued seeking for recovery of Rs 10,97,700, 10 % of the total OTS amount of Rs 1,09,77,000.
It is further stated in the writ petition that by putting pressure, the tehsil authorities took a cheque of Rs 8,00,000 and Rs 2,97,700 in cash on 04.11.2011 from the petitioner. Soon thereafter the petitioner made a representation on 04.05.2011 to the District Magistrate as also the Tehsildar and ADM (Finance) requesting them not to encash the cheque and refund the amount realized by the petitioner towards collection charges.
It is submitted by the counsel for the petitioner that in any case, no recovery charge could have been realised by the State respondent/ Tehsil Authorities, once proceeding had been undertaken pursuant to the recovery citation dated 20.04.2002 as the outstanding dues were settled between the petitioner and the company in a one-time settlement arrived between them.
To contradict the submissions made by the petitioner in the writ petition, a counter-affidavit has been filed on behalf of the State respondents wherein it is stated that the petitioner had procured a loan from the PICUP. A recovery certificate was forwarded by the PICUP to the Collector, Ghaziabad that the petitioner had defaulted in repayment for loan.
After the recovery proceedings were initiated against the petitioner, he had entered into a settlement with PICUP. The contention in the counter affidavit, thus, is that the petitioner is liable to pay collection charges to the answering respondents.
In reply to the categorical statement of the petitioner in the writ petition that a cheque of Rs 8,00,000 and cash Rs 2,97,700 was forcibly released from the petitioner under threat, no reply has been given in the counter affidavit.
It is further stated in the counter affidavit that the petitioner herein is liable to pay collection charges, since recovery proceedings have been initiated against him by the answering respondents whether or not he had entered into a settlement with PICUP.
It is also stated in the counter affidavit that once recovery proceedings have been initiated collection charges are bound to be paid even if the petitioner had entered into an agreement with PICUP for repayment of his loan. It is admitted in the counter affidavit that no further proceedings pursuant to Rule 284 had been undertaken; no auction proceeding was initiated. It is, however, stated that in the facts and circumstances of the case, no auction proceedings were initiated fully justifying the levy of collection charges.
The Court observed,
Having gone through the averments made in the petition and the counter affidavit filed on behalf of the State, it is more than evident that the Tehsil Authorities had illegally realized recovery charges from the petitioner without any proceeding undertaken for recovery of the outstanding loan. It was a case where on the recovery citation forwarded by PICUP, it was issued and served by the Tehsil authority upon the petitioner on 20.04.2002. However, on the one time settlement arrived between the petitioner and the PICUP, and deposit of the entire outstanding dues in the year 2003, the recovery citation dated 20.04.2002 was rendered infructuous.
The Tehsil authorities had committed illegality in pressing the demand of collection charges merely because of issuance of recovery citation dated 13.5.2002 which was challenged by the petitioner in the previous round of litigation before the Court.
After dismissal of the previous writ petition in default, vacation of the interim order, fresh recovery citation was issued on 04.08.2011 without dealing with the contention of the petitioner that since only recovery citation was issued and no recovery proceeding had been conducted by the Tehsil authorities they could not have been realised the collection charges.
It is admitted in the counter affidavit that a cheque of Rs 8,00,000 plus Rs 2,97,700 in cash were illegally taken from the petitioner under pressure by the Tehsil authority on 04.11.2011. The statements in this regard made in the writ petition are admitted in view of the bald denial made by the respondent in the counter affidavit.
“In any case, the collection charges are recoverable only in case recovery proceedings are undertaken by the Tehsil authorities. In view of the admission in the counter affidavit that no recovery proceedings were initiated, no auction was held, in absence of any steps having been taken by the Tehsil authorities pursuant to the recovery citation, the collection charges to the tune of Rs 10,97,700 realised by the Tehsil authorities was an illegal exercise of power,” the Court further observed while allowing the petition.
“Having noted the above, we issue a writ of mandamus to the Collector, Ghaziabad to refund the amount of Rs 10,97,700 deposited by the petitioner on 04.11.2011 by a cheque of Rs 8,00,000 plus Rs 2,97,700 in cash, positively within a period of three weeks from the date of receipt of the copy of the order.
We direct the Collector, Ghaziabad to issue a note of caution to the Tehsil authorities not to indulge in any kind of this act in future and also warn about disciplinary action in case of any such action of any authority found in future,” the order reads.