JUDGMENT K.S. Radhakrishnan, J. 1. The question involved in this case is as to whether respondents 2 to 4 arelegally entitled to recover commission or collection charges on initiation ofrevenue recovery proceedings, eventhough no amount was recovered throughthe proceedings initiated under S.71 of the Revenue Recovery Act, 1968. 2. Petitioner is a registered society, set up and developed at the instance ofthe Kerala Khadi and Village Industries Board for the purpose ofmanufacturing and supplying 7-Spindle Muslin Charkhas. Petitioner hadavailed of a loan from the respondent Board. Total amount advanced by theBoard was Rs. 17,85,871. Petitioner could not repay the amount due tovarious financial difficulties. Board then initiated action for recovery of theamount. Total amount due to the Board as on 31.3.1985 was Rs.23,50,303.67. There was some litigation between the petitioner and therespondent Board. However, no amount was recovered from the petitionerthrough revenue recovery proceedings. 3. In order to amicably settle the matter, petitioner sent a latter dated17.11.1994 putting forward certain suggestions/proposals to the Board.Respondent Board vide their letter dated 21.1.1995 informed the petitionerthat it was prepared to settle the accounts as suggested by petitioner,provided petitioner was prepared to accept the conditions mentioned in thatletter. However, with regard to condition No.3, petitioner informed the Boardthat petitioner would remit collection charges at the rate of 5% if demanded bythe revenue department. Petitioner subsequently by letter dated 2.3.1995informed the Board that claim for collection charges was illegal and requestedthe Board not to include the amount towards collection charges in the finalpayment to the Board. Board by letter dated 21.3.1995 requested thepetitioner to remit the outstanding amount of Rs. 23,50,303.67 and Rs.35,255/- towards contingency charges. Board also requested the petitioner toremit an amount of Rs. 1,17,515/- towards collection charges stating that itwould be refunded if the revenue department did not make any claim for it. 4. Petitioner complied with all the conditions mentioned in Ext. P2 letter andremitted the entire amount of Rs.25,03,073.67 on 24.3.1995. Pursuant to this,Board vide letter dated 7.4.1995 informed the District Collector the factum ofremittance of the entire amount by the petitioner and requested him to returnthe RRC. It is evident from the said communication, Ext. P5, that respondentBoard had stated that no amount was realised through revenue recoveryproceeding. Petitioner later made repeated representations for refund of theamount of Rs. 1,17,515/- paid towards collection charges. However, no actionhas been taken by the Board. It is evident from the said communication, Ext. P5, that respondentBoard had stated that no amount was realised through revenue recoveryproceeding. Petitioner later made repeated representations for refund of theamount of Rs. 1,17,515/- paid towards collection charges. However, no actionhas been taken by the Board. Petitioner then issued a lawyer notice to therespondent dated 7.6.1995 directing the Board to pay the amount with 18%interest. Since no action has been taken, petitioner has approached this Courtfor a declaration that petitioner is not liable to pay any amount as collectioncharges as arrears were not collected/realised under the provisions of theRevenue Recovery Act. Petitioner also is seeking a direction to the Board torefund the amount of Rs. 1,17,515/- with interest at 18% from 24.3.1995 tilldate of actual payment/ realisation. 5. Counsel for the respondent Board submitted that revenue recovery chargeshas to be remitted in the office of the District Collector, since they haveinitiated proceedings. It was pointed out by counsel for the Board thateventhough the amount was not realised through revenue recoveryproceedings, as per S.7 of the R.R. Act and other Governments orders, ademand notice was served on the petitioner on 4.8.1987. As per the Act 5% oftotal dues should be paid to revenue authorities as collection charges, whichaccording to Board, is a mandatory provision. They relied on Circular dated13.10.1992 which says that collection charges shall be deducted from theamount recovered and the balance alone shall be payable to the institutionsnotified under S.71 of the R.R. Act, or a statutory body. It is also pointed outwhile revenue recovery proceedings are in force, the institutions or statutorybodies which have given advice for recovery of arrears due to them, are notpermitted to receive the amount directly from the defaulters under the statute. 6. I heard counsel for the petitioner and learned counsel appearing for therespondents. S.71 of the R.R. Act enables the Government to declare thatRevenue Recovery Act is applicable to any institutions in public interest forrecovery of amounts due from any person or class of persons. On suchdeclaration all the provisions of the Act shall be applicable for recovery of thesaid amount. It is admitted case that Revenue Recovery Act is madeapplicable to the first respondent Board. Accordingly a requisition was madeby Board to the second respondent under S.69(2) of the Act for realisation ofRs. 25,00,966.32 from the petitioner. 7. On suchdeclaration all the provisions of the Act shall be applicable for recovery of thesaid amount. It is admitted case that Revenue Recovery Act is madeapplicable to the first respondent Board. Accordingly a requisition was madeby Board to the second respondent under S.69(2) of the Act for realisation ofRs. 25,00,966.32 from the petitioner. 7. Accordingly a demand notice under S.7 of the Act was issued from theoffice of the Tahsildar, Neyyattinkkara to the petitioner on 25.6.1987. It is seenthat after initiation of revenue recovery proceedings by the Tahsildar, anagreement was reached between the petitioner and first respondent in thematter of repayment of amount. On the basis of the said agreement, theamount was repaid. It is admitted fact that amount was realised not throughinvoking the provisions of the Act. The question is whether petitioner is boundto pay collection charges on the mere initiation of revenue recoveryproceedings by issuing a demand notice by the Tahsildar under the Act. 8. Section 7 is intended only to give an opportunity to the defaulter to remit theamount demanded, as held by this court in K.T.Thomas v. Tahsildar, 1983 KLT 710 . In other words, coercive steps will be taken under the Act only if theamount is not paid, after receipt of the demand notice under S.7. In a casewhere coercive steps have not been taken under the Act, whether thedefaulter is bound to pay collection charges for recovery of the amount to therevenue recovery authorities. R.5(1) of the Revenue Recovery Rules dealswith collection of charges at the rate of 5% on the arrears collected under theprovisions of the Act on behalf of any institution notified under S.71. EvidentlyR.5 refers to realisation of collection charges only from the arrears collectedunder the provisions of the Act. In other words, if the arrears are collectedunder the provisions of the Act, then only the question of collection chargeswill arise. In the instant case it is evident that amount was not collectedthrough revenue recovery proceedings, but the defaulter straightaway paid theamount to the requisitioning authority. It is evident from R.5(2) that collectioncharges shall be deducted from the amount recovered and the balance aloneshall be payable to the institution. In other words, applicability of R.5 arisesonly in a case where amount has been recovered through the proceedingsinitiated under the R.R. Act. It is evident from R.5(2) that collectioncharges shall be deducted from the amount recovered and the balance aloneshall be payable to the institution. In other words, applicability of R.5 arisesonly in a case where amount has been recovered through the proceedingsinitiated under the R.R. Act. Identical question came up for considerationbefore a Division Bench of this Court in Kadeeja Beevi v. Kerala FinancialCorporation, 1985 KLT 741 , wherein a Division Bench of this Court took theview that question of revenue recovery commission or collection charges couldand would arise only where there is collection of arrears under the provisionsof the Act on behalf of any institution notified under S.71 of the Act. In view ofthe above mentioned authoritative pronouncement of this Court, I am inclinedto take the same view in the instant case. Admittedly the amount was notrecovered through the proceedings initiated under the R.R. Act, eventhough ademand notice was issued by the Tahsildar. Mere initiation of demand noticewould not enable the authority to take collection charges at the rate of 5% onthe amount recovered. Amount was recovered, as already stated, not throughrevenue recovery proceedings, but the amount was directly paid by thedefaulter to the requisitioning authority. In other words, revenue recoveryauthorities have not collected any amount. In view of the above mentioned circumstances, I allow this Writ Petition anddirect respondents to refund the amount of Rs. 1,17,515/- with interest at 6%per annum to the petitioner from 24.3.1995 till date of actual payment.