KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

APPEAL No.483/2015

JUDGEMENT DATED: 21.11.2023

(Against the Order in C.C.No.139/2013 of CDRF, Wayanad, Kalpetta)

PRESENT:

APPELLANTS:

(by Adv. R. Ram Mohan)

Vs.

RESPONDENTS:

(by Adv. R. T. Anoop)

JUDGEMENT

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN : PRESIDENT

          The opposite parties 1 and 2 in C.C.No.139/2013 of the Consumer Disputes Redressal Forum, Wayanad, Kalpetta (the District Forum for short) challenge in this appeal an order dated 18.05.2015, partly allowing the complaint.  The complainant is the 1^st respondent and the 3^rd opposite party in the complaint is the 2^nd respondent herein.  As per the order appealed against, the District Forum has disallowed the claim of the appellants that they were entitled to recover 5% collection charges towards the Revenue Recovery proceedings initiated against the complainant and has reduced the same to 2.5%.  The case of the appellants is that, recovery of 5% is statutorily fixed and cannot be interfered with by the District Forum under the provisions of the Consumer Protection Act, 1986. 

          2.       The 1^st respondent/complainant had approached the District Forum complaining that the appellants and the 1^st respondent had initiated Revenue Recovery proceedings against him for recovery of the amount payable to them.  But, such proceedings were dropped since the recovery proceedings were not completed, it was alleged that recovery of the entire 5% as charges was therefore, unjustified. 

          3.       The entire dispute arose in the following facts and circumstances:

The 1^st respondent/complainant was the sole proprietor of the business concern by name M/s Sahira Furniture and Industries, Kambalakkad.  He had availed financial facility form the Kerala State Financial Corporation for his business purposes offering security and agreeing to repay the amount in instalments in accordance with the terms and conditions of the agreement entered into between them.  According to the complainant, due to unforeseen circumstances he could not make repayments as per the schedule stipulated.  Therefore, recovery steps were initiated against him and his business concern.  Thereupon, he approached the Hon’ble High Court of Kerala with W.P.(C)No.10012/2011(B).  His petition was considered by the High Court and he was directed to remit the dues in instalments within a specified period.  In the meantime, the appellants had initiated Revenue Recovery proceedings for the recovery of the amounts remaining in default.  The 2^nd respondent who initiated the recovery proceedings on behalf of the Revenue Department had levied an amount of Rs.40,886/-(Rupees Forty Thousand Eight Hundred and Eighty Six) as Revenue Recovery charges which was debited to the account of the complainant.  Apart from the above, an amount of Rs.12,500/-(Rupees Twelve Thousand Five Hundred) incurred as legal charges was also debited to his account.

          4.       The case of the complainant is that, he had paid the entire amount in compliance with the directions of the Hon’ble Hight Court.  Therefore, the Revenue Recovery proceedings were dropped.  In view of the above, levy of full charges on him was without any justification.  According to him, though an order of attachment of his property was made on 01.03.2013 the attachment was released on the same day itself.  Therefore, he contended that the appellants were not entitled to recover the Revenue Recovery charges or legal charges that the High Court had not directed him to pay.

          5.       On receipt of notice from the District Forum, the appellants appeared and filed their version.  According to them, the complainant had availed a term loan of Rs.2,00,000/-(Rupees Two Lakhs) and a working capital loan of Rs.2,13,000/-(Rupees Two Lakhs Thirteen Thousand) in the month of February 2000 for setting up a wood-based industry by name M/s Sahira Furniture.  He had executed a loan agreement with the Corporation on 24.04.2000 and had created an equitable mortgage by deposit of title deeds on 28.02.2000 for securing the loans.

          6.       As per the terms of the agreement, the term loan was to be repaid within a period of seven years in seventy three monthly instalments and the working capital loan was to be repaid within a period of seven years in sixty one monthly instalments together with interest @15.5% per annum with 2% penal interest for the defaulted amount.

          7.       The complainant committed default in repayment, compelling the Corporation to initiate Revenue Recovery proceedings against him after issue of notice under Section 29 of the State Financial Corporation Act on 16.12.2003.  Complainant immediately approached the Hon’ble High Court of Kerala by filing W.P.(C)No.5959/2004 seeking to quash the notice and other recovery proceedings.  As per judgement dated 23.03.2004 the Hon’ble High Court directed the complainant to remit a sum of Rs.1,00,000/-(Rupees One Lakh) within three weeks from the date of judgement and to submit a representation within the said period seeking instalment facilities.

          8.       On his representation the Corporation rescheduled the loan account, extended the loan period by three years and funded the interest portion by opening two new accounts and also reduced the interest of the term loan to the then prevailing rate of 12.5% and the capital loan to 15%.  In spite of the above facilities provided, the complainant failed and neglected to clear the instalments and as a result, the arrears in the account mounted.  Instead of settling the loan accounts, he approached the Taluk Legal Service Committee seeking the benefit of a one time settlement.

          9.       The Corporation entered appearance and filed counter statement opposing the prayer.  Complainant thereupon filed W.P.(C)No.10012/11 seeking to quash the Revenue Recovery proceedings.  The Hon’ble High Court of Kerala by Judgement dated 07.03.2012 disposed of the Writ Petition permitting the complainant to pay off the balance amount in six equal monthly instalments.  That was also not complied with by the complainant.  Though the complainant submitted representations before the 1^st appellant and also the Finance Minister of Kerala for dropping the Revenue Recovery proceedings initiated against him, he could not obtain any relief.  Therefore, he finally paid the entire amount and closed the account on 05.02.2013.

          10.     The appellants had to incur amounts towards the Advocate’s fees in the Writ Petitions before the High Court.  A total amount of Rs.12,000/-(Rupees Twelve Thousand) had to be paid as Advocate’s fees.  The said amount was also debited to the account of the complainant.  The charges incurred in pursuing the Revenue Recovery proceedings and the Advocate’s fees incurred in contesting the proceedings before the Hon’ble High Court are part of the amounts due from the complainant.  Therefore, there was no deficiency in service or unfair trade practice on the part of the appellants.  However, the District Forum has taken the view that the appellants were not entitled to collect the 5% collection charges with respect to the Revenue Recovery proceedings in full.  Therefore, the Revenue Recovery proceedings charges have been reduced to 2.5% by the District Forum. 

          11.     According to the counsel for the appellant, the District Forum has exceeded its jurisdiction by reducing the statutory amounts payable by the complainant.  Though the Hon’ble High Court had granted a facility to the complainant, to pay off the defaulted amounts in instalments, he did not avail the opportunity but again defaulted payments.  Therefore, the Revenue Recovery action had to be continued.  It was long thereafter that the dues were paid by the complainant.  It is worth noticing that the loans had been granted in the year 2000 and ought to have been paid off by 2007.  They were actually paid off only in the year 2013.  The Revenue Recovery charges are statutorily fixed as 5% and therefore it is for the said reason that the 2^nd respondent had demanded the same.  Levy and recovery of statutory charges cannot be considered as unfair trade practice or deficiency in service.  Therefore, the counsel seeks interference with the order of the District Forum and setting aside the same.  Though the 2^nd respondent had entered appearance in the appeal through his lawyer, there was no representation for him when appeal was taken up for final hearing.  Therefore, we have heard the counsel for the appellants and the 1^st respondent.  We have also carefully perused the pleadings of the parties and the Lower Court Records called for and produced before us.  We have anxiously considered the contentions advanced before us.

          12.     This is a case in which the District Forum has interfered with the rates and charges levied for pursuing the Revenue Recovery proceedings.  Revenue Recovery proceedings are initiated under the provisions of the Kerala Revenue Recovery Act, 1968.  The enactment is intended to facilitate recovery of arrears due to the Government and Government establishments by following the procedure prescribed for recovery of arrears of public revenue.  Dues to the Kerala State Financial Corporation are also authorised and permitted to be recovered as arrears of public revenue by invoking the provisions of the Revenue Recovery Act.  It is for the said reason that the appellants had taken recourse to the said provisions for recovery of amounts due from the 1^st respondent.  Admittedly, the 1^st respondent was a defaulter, not having paid off the loan amount within the stipulated time as per the initial agreement.  The appellants therefore had no other option but to take recourse to the provisions of the Revenue Recovery Act.  It is accordingly that the 2^nd respondent had initiated Revenue Recovery proceedings.  It cannot be said that the action initiated by the appellants was unjustified, in the circumstances. 

          13.     The 1^st respondent challenged the Revenue Recovery proceedings before the Hon’ble High Court of Kerala initially by filing W.P.(C)No.5759/2004 and subsequently in W.P.(C)No.10012/2011.  In both the Writ Petitions though the 1^st respondent had challenged the Revenue Recovery proceedings, the Hon’ble High Court did not quash the proceedings initiated.  Therefore, the proceedings initiated in 2004 was pending till the year 2013.  It was only in 2013 that the 1^st respondent had paid off the entire dues.  It cannot be said that in initiating Revenue Recovery proceedings against a defaulter, either the 3^rd respondent or the appellants were in the position of a service provider.  Therefore, 1^st respondent who was the defaulter cannot by any stretch of imagination answer the definition of a consumer under the provisions of the Consumer Protection Act, 1986.  In view of the above, the District Forum erred in entertaining the complaint of the 1^st respondent and granting relief.

          14.     The District Forum also failed to take note of Rule 5 of the Kerala Revenue Recovery Rules, 1968.  Rule 5 reads as under:

“5. (1) [Collection charges at the rate of 5 percent of the arrears to be collected under the provisions of the Act on behalf of any institution notified under Section 71 or collected on behalf of any institution under Section 68 [when the arrears does not exceed Rupees Five Lakhs and at the rate of 7.5% when the arrears exceed Rupees Five Lakhs] shall be realised from the defaulters and accounted as arrears to such institutions.

(2) The collection charges shall be deducted from the amount recovered and the balance alone shall be payable to the institution”.

The above provisions mandate recovery of 5% of the arrears collected as collection charges and only the balance amount is liable to be paid to the institution, in this case the Kerala State Financial Corporation.  Therefore, the collection charges have not been appropriated by the appellants but by the State.  Since the amount has been collected in accordance with the mandate of the statutory provision, it cannot be said that such collection was unreasonable in any manner.  The District Forum erred in interfering with the same and reducing the collection charges to 2.5%.  Recovery of 5% collection charges was in accordance with the statutory mandate and therefore it cannot be construed as either deficiency in service or unfair trade practice.  Therefore, the appellants are entitled to succeed.  On facts also, the 1^st respondent does not deserve any sympathy for the reason that he was a defaulter in repayment of the loans availed by him.  He had resisted the recovery proceedings by approaching the Hon’ble High Court and the proceedings dragged on from 2004 to 2013.  For the above reasons, the order of the District Forum cannot be sustained and is liable to be set aside.

          In the result, this appeal is allowed and the order dated 18.05.2015 of the Consumer Disputes Redressal Forum, Wayanad, Kalpetta in C.C.No.139/2013 is set aside and the complaint is dismissed.  No costs.

SL