Research › Search › Judgment

Uttarakhand High Court · body

2020 DIGILAW 253 (UTT)

Jariph Alam v. District Magistrate Nainital

2020-06-20

SHARAD KUMAR SHARMA

body2020
JUDGMENT Sharad Kumar Sharma, J. - This Writ Petition is heard through Video Conferencing. 2. The brief facts, which indulges consideration in the present Writ Petition is that the petitioner claims himself to be a poor marginal farmer, who is the holder of Kisan Credit Card, as issued by respondent No. 4 in his favour, bearing Account No. 200. He has submitted in the Writ Petition that he is recorded in the revenue records as Shreni-3 khastadar, with an Assami rights in relation to the land recorded in Khata No. 47; for the fasli year 1426 to 1431, which he has extended for the mortgage of the property for advancement of financial assistance for agricultural purposes, as would be apparent from the entries made in the khatuni in the last column, that for the purposes of advancement of agricultural loan, from respondent Nos. 3 and 4 his agricultural property was mortagaged. 3. According to the Kishan Credit Card / Passbook, as issued by the respondent No. 4, which happens to be the primary Agricultural Cooperative Credit Society, is shown to have sanctioned and advanced a loan of Rs.2,30,400/- towards 'Khadyan Ansha (ka)' and Rs. 57,600/- was advanced towards 'khadyan Ansha (kha)', during the period of the validity of the Kishan Credit Card from 2012 to 2015. The petitioner has come up with the case, that the said 'land' , which has been registered in his name, he is recorded therein as cotenure holder with the others lies in Village Chausala, Tehsil Haldwani, District Nainital, he is exclusively utilizing the land for agricultural purposes. Here the consideration of word, 'land' which is referred too, would be necessary, because the land here would be read in accordance with the land as defined under Section 3 (14) of the U.P. Z.A. & L.R. Act which is quoted hereunder :- "(14) "Land" [except in Sections 109, 143 and 144 and Chapter VII] means land held or occupied for purposes connected with agriculture, horticulture or animal husbandry which includes pisciculture and poultry farming; 4. The petitioner had taken an agricultural loan from the respondent No. 3. Admittedly, as per the pleadings of the Writ Petition, after receiving the cash credit limit, as sanctioned to the petitioner, in the year 2012, for the total amount of Rs. 2,88,000/-, he had committed a default in remittance of EMI. The petitioner had taken an agricultural loan from the respondent No. 3. Admittedly, as per the pleadings of the Writ Petition, after receiving the cash credit limit, as sanctioned to the petitioner, in the year 2012, for the total amount of Rs. 2,88,000/-, he had committed a default in remittance of EMI. As the consequence thereto, the bank had initiated the proceeding for recovery of the amount due to be paid as arrears of land revenue, by invoking the provisions contained under Section 280 of the Zamindari Abolition Act, by issuing of the impugned recovery citation dated 13th February, 2018, whereby, the bank has raised a total demand of Rs. 6,46,728/-, as an amount due to be paid by the petitioner to respondent Bank. 5. Under the prevalent law, the financial institutions, extending the financial assistance to the farmers or to any other industrial units or establishments, since they do not have their own machinery to enforce the recovery proceedings, in an event of default committed by the borrower, they normally reserve their rights as per the terms of the loan agreement; to recover the same by resorting to the process of recovery as provided under the U.P.Z.A. & L.R. Act as arrears of land revenue. The provisions of the U.P. Z.A. & L.R. Act has been given a special legal status in view of Article 31 (B) of the Constitution of India, which in accordance with its 9 Schedule, Entry 11; refers to and includes the provisions of U.P. Z.A. & L.R. Act, 1950 :- "11. The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (Uttar Pradesh Act I of 1951)" 6. While resorting to the process of recovery by invoking the provisions contained under the U.P. Z.A. & L.R. Act, the same is to be governed by the Rules as framed under the Act, while exercising the Rule making powers under Section 294, which constitutes to be the part of Chapter X of the Act, in relation to the Land Revenue, under the Z.A. & L.R. Act, which deals with the processes of collection of land revenue and the process of recovery has to be initiated in accordance with the stages provided under Section 279 of the said Act. Section 279 in itself, which is quoted herein :- "279. Procedure for recovery of an arrear of land revenue. Section 279 in itself, which is quoted herein :- "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 processes : (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, movable or immovable of the defaulter.] [(2) the costs of any of the processes mentioned in subsection 91) shall be added to and be recoverable in the same manner as the arrear of land revenue.]" 7. While resorting to the processes of recovering an amount, due to be recovered, as arrears of Land Revenue, contemplates the different stages of recovery as provided in its Sub-Section (1) of Section 279, which in its stages under Clause (f) deals with the attachment and sale of the immovable property and Clause (a) deals with the process of recovering the defaulted amount, by serving a writ of demand or a citation to appear. In the instant case, the property, which was mortgaged as contained in Khata No. 47 for the advancement of the loan, the process resorted to herein, by the respondents for its recovery was only at the stage, which is being referred to in the Writ Petition, would be falling, under Section 279 (1) (a), and it would not fall to be a process under Section 279 (1) (f) for sale of movable attached property, in such a situation, where the stage of recovery falls to be under Section 279 (1) (a). Where a demand or citation to appear is only issued to the defaulter, the question would be as to whether the recovery charges could at all be levied and recovered from the defaulter ? In such an eventuality, to meet such arrangement, a reference may be had to Rule 284 (2). Where a demand or citation to appear is only issued to the defaulter, the question would be as to whether the recovery charges could at all be levied and recovered from the defaulter ? In such an eventuality, to meet such arrangement, a reference may be had to Rule 284 (2). Rule 284 as framed under the Act itself contemplates, that where the land is put for sale, a charge/cost shall be levied on account of cost incurred for every sale and such amount not exceeding beyond specified norms from the total sum due for recovery may be realized by the sale at the following rates. Rule 284 is quoted hereunder:- "284. (1) When the land is put up for sale a charge shall be levied on account of the costs of every sale, upon such amount not exceeding the total sum due for recovery as may be realised by the sale at the following rates; (i) Where such amount does not exceed 20b rupees at the rate of one rupee for every 100 rupees or portion of 100 rupees; (ii) Where such amount exceeds 200 rupees but does not exceed 1,000 rupees, 2 rupees for the first 200 rupees and at the rate of [50 naye paise] per every 100 rupees or portion of 100 rupees in excess of 200 rupees; (iii) Where such amount exceeds 1,000 rupees, six rupees, for the first 1,000 rupees and at the rate of one rupee for every 500 rupees or portion of 500 rupees in excess of 1,000 rupees. (2) When immovable property other than the land is put up for sale, a charge shall be levied upon such amount not exceeding the total sum due for recovery as may be realized by the sale at the rate of [three naye paise] per rupee of the sale proceeds, fractions of a rupee being excluded. (3) When the sale officer goes to any place to conduct a sale and no sale takes place, a charge shall be levied to meet the cost of his deputation according to the following scale : Rs. P. [(i) When the amount for recovery does not exceed Rs. 100 .. 1 50 (ii) When such amount exceeds Rs. 100 but does not exceed Rs. 1,000 .. 3 00 (iii) When such amount exceeds Rs. 1,000 .. 6 00] 8. P. [(i) When the amount for recovery does not exceed Rs. 100 .. 1 50 (ii) When such amount exceeds Rs. 100 but does not exceed Rs. 1,000 .. 3 00 (iii) When such amount exceeds Rs. 1,000 .. 6 00] 8. In the instant case, particularly, a reference is required to be made to Sub-rule (2) of Rule 284, which contemplates the sale of immovable property, for the purposes of levying of the charges under Sub-rule (1) of Rule 284. The Sub-rule (2) independently provides that the levying of charges would be only in the circumstances when the immovable property only is put to sale for recovery under Sections 279 and 280 of the U.P. Z.A. & L.R. Act. The exception, which has been carved out under Sub-rule (2) of Rule 284 framed under Chapter X of the Act, is that the recovery charges would be on the sale of an immovable property, "other than the land". Meaning thereby, where the land has been mortgaged for the advancement of the loan and if is to be put to sale then the recovery charges under Rule 284 (1), is exempted to be levied on sale of Land. Here, in the present case, the land as referred in Sub-rule (2) of Rule 284, as quoted above would be falling, to be a land as defined under Sub-section (14) of Section 3 of the Act, (which is quoted above in paragraph), which is being exclusively utilized by the borrower / defaulter, for the activities as covered under Section (14) of Section 3 of the Act. Admittedly, in the case at hand according to the revenue records, the land which is being recorded in Khatauni of 1426 to 1431 fasli, as against khata No. 47, is recorded in the name of the petitioner, it is being engaged and utilized in agricultural activities and hence would be the land, which would be falling, under Section 3 (14) of the Act, and if it is being mortgaged for advancement of the loan, in such an eventuality, the recovery of charges under Rule (1) of Rule 284; would be exempted to be recovered in view of exception carved out in Sub-rule (2) of Rule 284, where no recovery charges could be levied in relation to the sale of land as dealt with above, in case, if it is put to sale under Section 279 (1) (f). Resorting to the process of recovery as arrears of land revenue and the circumstances and process thereto has been already dealt above, under Section 279, in which, what is contemplated therein is the issuance of a writ of demand or citation to appear, which can be exercised by the recovering agency under Section 280 of the Act, which is quoted hereunder :- "280. Writ of demand and citation to appear. - (1) As soon as an arrear of land revenue has become due a writ of demand may be issued by the tahsildar on the defaulter calling upon him to pay the amount within a time to be specified. (2) In addition to or in lieu of a writ of demand the tahsildar may issue a citation against the defaulter to appear and deposit arrears due on a date to be specified." 9. Meaning thereby, it is a stage which will fall to be under Sub-clause (a) of Sub-section (1) of Section 279 and hence, in view of Rule 284, no amount could be recovered as a recovery charges, where only the steps has been resorted to for issuance of the citation for demand, as no attachment or sale of the immovable property has been undertaken by respondent Nos. 1 and 2, in the present, upto that stage. 10. The aforesaid contention could further be fortified for the reasons that the Rules, under Chapter X, itself, in its Section (E), which deals with the coercive process for recovery of the amount under Section 279, to be read with Section 280, in its Rule 255, which is part of Clause (D) of Section (E) of the Rule; it provides that the attachment and sale of immovable property for the realization of the revenue. Hence, it provides that under Rule 255 unless the Officer orders the attachment and unless otherwise proceeds to recover the amount by sale of the property as provided under Sub-clause (f) of Sub-section (1) of Section 279 is actually conducted by the recovering agency, the amount could not be recovered as a recovery charges under the pretext of mere issuance of citation under Sub-clause (a) of Sub-section (1) of Section 279. The impact of Rule 255, if it is to be read with Section 279, it is levying only which comes into place when the Sale Officer conducts the activities as provided under Rule 259. The impact of Rule 255, if it is to be read with Section 279, it is levying only which comes into place when the Sale Officer conducts the activities as provided under Rule 259. Rule 259 provides as under :- "259. When the sale officer goes to any place to conduct a sale and no sale takes place, the fees chargeable to meet the costs of his deputation shall be as provided thereunder." 11. This stage, in the instant case is yet to be arrived at for the reason that no further steps have been proceeded after the issuance of the recovery citation to appear under Section 279 (1) (a), hence, it could be said that no sale as contemplated under Rule 259 to be read with Rule 255, had arrived at, which could entail the imposition of the recovery charges as contemplated under Section (E) of Chapter X of the Rules, which deals with resorting to the steps of coercive process. 12. The petitioner contends that after the receipt of the recovery citation, thereafter, he has expressed his bona fide by remitting certain amount, which has been detailed in the pleadings of the Writ Petition itself, along with the receipt of deposit amount, which has been filed by the petitioner in the Writ Petition. He submits that on account of certain financial crisis and losses suffered by him in the agricultural activities, he was unable to pay the amount demanded by the respondent, as per the terms of loan agreement. Thus, the aspect of default stands admitted by the petitioner. 13. The another issue, which has been argued by the counsel for the petitioner, as well as also prayed for in the relief clause also, is that he may be exonerated from paying 10% of the recovery charges, which is due to be paid by him to respondent No. 1 and 2, as a consequence of the culmination of the recovery proceedings. He submits that the process of the recovery as contemplated under the Revenue Law, in its Chapter X of the Rules, under Z.A. and L.R. Act, is yet to begin and no effective auction proceedings or any steps, there too for selling the property attached towards the loan has been undertaken by the respondents. Hence, he summits that the respondent Nos. Hence, he summits that the respondent Nos. 1 and 2 would, not be entitled for 10% of the recovery charges in addition to the principle amount sought to be recovered, for the reason being that only recovery citation has been issued so far, which is under challenged in the present Writ Petition, hence if the respondent No. 1 and 2, would be entitled to receive it would only be the process fee of issuance of recovery citation. 14. The issue pertaining to the entitlement of the State Agency to recover 10% of the recovery charges had earlier come up for consideration before the Division Bench of Allahabad High Court in a case as reported in, M/s Asha Textiles Pvt. Ltd. Vs. State of U.P. and others,1998 33 AllLR 412 wherein, in para 5 and 6 of the said judgement which is quoted hereunder, the Division Bench of the Allahabad High Court, while placing reliance on yet another judgement of the Allahabad High Court dealing with the impact of Rule 255 and 259 of the Zamindari Abolition Rules; had opined that when only the recovery citation has been issued, 10% of the recovery charges cannot be demanded by the recovery agency, which would be in excess to the process charges for issuance of the recovery citation. Para 4 to 6 of the said judgment read as under :- "4. The contention of the learned counsel of the petitioners is that under the relevant Rules, namely. 255 and 259 of the U. P. Zamindari Abolition and Land Reforms Rules, 1952, collection charges can be recovered at the rate of Rs. 3.75 only, and not more than that. In support of his contention, the learned counsel cites the Division Bench decision of this Court dated 20th January, 1992, rendered in Civil Misc. Writ Petition No. 4307 of 1981. M/s. Chemopulp Tissues Limited v. State of U. P. and others. 5. Neither Shri A. K. Shukla, learned standing counsel nor Shri Krishna Murari, learned counsel of the respondent No. 5, disputes this position that in view of Rules 255 and 259 of the Rules and the decision of this Court in the case of M/s. Chemopulp Tissues Limited (supra), recovery charges cannot exceed more than Rs. 3.75 and the demand of the respondents in excess thereof is wholly untenable. 6. In the result, the petition succeeds and is allowed. 3.75 and the demand of the respondents in excess thereof is wholly untenable. 6. In the result, the petition succeeds and is allowed. The respondents are directed not to insist payment of collection charges more than Rs. 3.75 in respect of the recovery of the amount under the Citation dated 28th August. 1991, a photocopy whereof is. Annexure-'10' to the petition." 15. Hence, in view of para 4 to 6 of the said judgment of the Division Bench of Allahabad High Court, which is quoted above since the process of recovery by way of conducting the auction has not yet been taken and only citation has been issued, the respondent No. 1 and 2, would only be entitled, under law for recovering the process charges of issuing the citation and not the recovery charges. 16. There is yet another judgement of Allahabad High Court reported in , Vidya Devi Vs. Collector, Mohoba and others, 1999 90 RevDec 378 wherein, an identical issue crept in for consideration regarding levying of compound interest and the Court has been dealt with in para 12 and 13 of the said judgement, wherein it has been held that the State would not be entitled to recover, the recovery charges, in the procedure of recovery as contemplated under section 279 and 280 of the Zamindari Abolition Act. Para 12 and 13; is accordingly quoted hereunder. "12. In M/s. Maha Laxmi Sugar Mills Ltd. v. State of U. P. and others (supra), one of the questions raised was that the State Government is entitled to recover collection charges over and above the cost prescribed under the various provisions of U. P. Z. A. and L. R. Act and the Rules framed thereunder. It was observed that if the collection charge demanded from the defaulter is to compensate the State Government for the service rendered by Revenue Department which is used as agency under Section 275 of U. F. Z. A. and L- R. Act to recover such amount, there should be some co-relation with the amount demanded and the service rendered. In case only a citation is issued, there will be hardly any justification to demand ten percent of the amount mentioned in the recovery certificate as collection charges. In case only a citation is issued, there will be hardly any justification to demand ten percent of the amount mentioned in the recovery certificate as collection charges. The flat rate of ten per cent in all cases without any co-relationship the process employed will be hardly any justification for realising the amount at fiat rate in all the cases and in all the circumstances. This view was upheld on a reference made to the third Judge. The Recovery Officer/Authorities can recover only the cost of processes as provided under sub-section (2) of Section 279 of the U. P. Zamindari Abolition and Land Reforms Act. 1950 and the cost of recovery will be such as specified under various Rules of the Zamindari Abolition and Land Reforms Rules, 1952. 13. The last submission of learned counsel for the petitioner is that the respondent bank is not entitled to realise compound interest. The realisation of the interest depends upon the terms of the contract and the statutory provisions which empower the bank to fix the amount of the interes't. The matter was considered in detail in Corporation Bank v. D. S. Gowda and another, 1994 7 JT 87 (SC). wherein the Court after considering the various provisions of Banking Regulation Act, 1949 held that in the case of agricultural loans/advances, the bank is not entitled to charge compound interest with quarterly rest but if the interest is fixed at the annual res! coinciding with the time that the fanner is fluid and the fanner fails to pay the amount even thereafter, it would be open to compound the interest at the crop loan or instalment upon the term loans becoming overdue. This was based upon the interpretation of the circular issued under the Banking Regulation Act by the Reserve Bank of India. In case of a commercial transaction, the position will be different. The Court summarised as follows - "But if the Reserve Bank has fixed the maximum rate of interest in exercise of the powers conferred by Section 21/35A of the Banking Regulation Act, Section 21A would be attracted and the transaction would not be liable to be reopened on the ground that the rate of interest fixed is excessive even though not exceeding the ceiling determined by the Reserve Bank. In the case of agricultural loans/ advances the position has been made amply clear by the circulars referred to earlier which do not permit Banks to charge compound interest with quarterly rests. In such cases as observed earlier the interest can be fixed with annual rests coinciding with the time when the farmer is fluid and if thereafter the farmer fails to pay the interest it would be open to compound the interest on the crop loan or instalments upon the term loans becoming overdue." 17. The learned Single Judge of Allahabad High Court while laying down the aforesaid ratio as referred above in para 12 of the judgment pertaining to the right of levying of the recovery charges; has referred to yet another judgment of the Division Bench as reported in , Mahalakshmi Sugar Mills co. Ltd. Vs. State of U.P. and others, 1999 2 AWC 1201 . Para 11, 13, 14, 18 and 19 of the said judgment read as under :- "11. We have thoroughly considered the submissions of the learned counsel for the parties and in our opinion, the following questions are involved in these writ petitions which require determination by this Court: (1) Whether the present writ petitions are not legally maintainable as earlier writ petitions challenging the recovery of the amount of sugarcane prices were dismissed as withdrawn without liberty to file fresh writ petitions ; (2) Whether the respondent-State has authority in law to recover. 10% of the amount mentioned in the recovery certificate as collection charges : (3) Whether the action of respondents in recovering 10% amount in question as collection charges is arbitrary and in violation of Articles 14. 10% of the amount mentioned in the recovery certificate as collection charges : (3) Whether the action of respondents in recovering 10% amount in question as collection charges is arbitrary and in violation of Articles 14. 265 and 300A of the Constitution of India ; (4) Whether the State Government in exercise of the delegated authority under Rule 8 (c) of U. P. Revenue Recovery Rules, 1966, could legally fix 10% of the amount sought to be recovered as collection charges in all cases of recovery of the public dues as arrears of land revenue ; (5) Whether the demand of the amount in question equivalent to 10% of the amount of arrears due from petitioners as price of sugarcane is otherwise justified in the facts and circumstances of the case ; (6) Whether the State is not entitled for amount as collection charges as the entire recovery proceedings were bad in law in view of the judgment of this Court by which State advised price has been held to be illegal ; (7) Whether the State Government is liable to refund the amount which has already been recovered as collection charges ; and (8) To what relief, if any, petitioners are entitled in the facts and circumstances of the case. 13. There is no dispute about the legal position submitted by the learned Advocate General that once the writ petition is dismissed as withdrawn or otherwise without liberty to file a fresh writ petition, the second writ petition involving same controversy cannot be filed by the petitioners. For resolving this legal question, it has to be seen whether the controversy which is subject-matter of consideration in the present writ petition, was under consideration of this Court or Hon'ble Supreme Court. From perusal of the orders of the Hon'ble Supreme Court, it is clear that the respondents were restrained from selling the properties of the petitioners which were attached during recovery proceedings and petitioners were granted time to pay the amount due from them as shown in the recovery certificate. It is not disputed before us that the amount mentioned in the recovery certificate was paid by petitioners within the time allowed by Hon'ble Supreme Court. It is also not disputed that the recovery certificate issued against petitioners were withdrawn thereafter by the Sugarcane Commissioner and Special Leave Petitions were dismissed leaving legal questions undecided. It is not disputed before us that the amount mentioned in the recovery certificate was paid by petitioners within the time allowed by Hon'ble Supreme Court. It is also not disputed that the recovery certificate issued against petitioners were withdrawn thereafter by the Sugarcane Commissioner and Special Leave Petitions were dismissed leaving legal questions undecided. The collection charges have been demanded from petitioners thereafter. In our opinion, the impugned orders passed by Tahsildar requiring petitioners to pay the collection charges gave rise to a fresh cause of action to them to file present writ petition. In Writ Petition No. 17644 of 1993 a copy of the order dated 12th April. 1993 passed by Cane Commissioner. Uttar Pradesh, withdrawing recovery certificate has been filed as Annexure-6 and factual averments in this respect have been made in paragraph No. 18 of the writ petition. However, this fact has not been disputed in counteraffidavit filed on behalf of State. The effect of the order of the Hon'ble Supreme Court dated 11th June. 1992 was that no sale or auction of any property attached could be done, as the dues were paid within time allowed. The question is whether in these facts and circumstances petitioners can be saddled with the liability to pay 10% of the amount sought to be recovered from them as arrears of land revenue, as collection charges. It is altogether a new controversy which was not under consideration before this Court or the Apex Court. The question involved in these writ petitions is very important and of fundamental nature. For this reason also, in our opinion, the controversy raised in these writ petitions may be decided on merits in the interest of justice. There is yet another aspect which deserves to be taken into account. A Division Bench of this Court in case of Mirza Javed Murtaza v. U. P. Financial Corporation, Kanpur and another (supra), held that recovery certificate under Section 3 of U. P. Public Moneys (Recovery of Dues) Act, cannot include the collection charge as the costs of the collection proceedings could not be known. The relevant paragraph No. 16 of the judgment of the Division Bench is being reproduced hereunder : "Section 3 of the U. P. Public Moneys (Recovery of Dues) Act. 1972, enables recovery of certain dues as arrears of land revenue. The relevant paragraph No. 16 of the judgment of the Division Bench is being reproduced hereunder : "Section 3 of the U. P. Public Moneys (Recovery of Dues) Act. 1972, enables recovery of certain dues as arrears of land revenue. It provides inter alia that where any person is party to an agreement relating to a loan given to him by the Corporation by way of financial assistance the Managing Director of the Corporation may send a certificate to the Collector mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue. The Collector on receiving the certificate shall, proceed to recover the amount stated therein as an arrear of land revenue. Sub-section (3) of Section 3 of the said Act provides that no suit for the recovery of any sum due as aforesaid shall lie in the civil court against any person referred to in sub-section (1). Rule 284 of the U. P. Zamindari Abolition and Land Reforms Rules deals with the sale of land and other immovable property for recovery of dues as arrears of land revenue. Sub-rule (2) of Rule 284 reads as under : "(2) When immovable property other than the land is put up for sale, a charge shall be levied upon such amount not exceeding the total sum due for recovery as may be realised by the sale at the rate of three naye paise per rupee of the sale proceeds, fractions of a rupee being excluded." The costs of the collection proceedings obviously are not known when the certificate is sent to the Collector by the Managing Director of the Corporation asking the Collector to recover certain sum from the debtor as an arrears of land revenue. He can merely ask the Collector that the sum mentioned in the certificate be recovered together with costs of the proceedings. What would be the actual costs of the proceedings would naturally be ascertained when the costs are actually incurred. He can merely ask the Collector that the sum mentioned in the certificate be recovered together with costs of the proceedings. What would be the actual costs of the proceedings would naturally be ascertained when the costs are actually incurred. This is also clear from Rule 284 (2) of the U. P. Zamindari Abolition and Land Reforms Rules which says that a charge shall be levied for recovery upon such amount not exceeding the total sum due for recovery as may be realised by the sale at the rate of 3 naye paise per rupee of the sale proceeds. So the charge can be levied only when the sale of the property actually takes place. The amount of Rs. 19,127.17 as collection charges included in the sum of Rs. 2,10,398.94 as also the amount of Rs. 21,039.94 towards the collection charges mentioned in the notice (Annexure-14) could not, therefore, be legally claimed from the petitioner. The impugned notice (Annexure-14) is bad in law and is, therefore, liable to be quashed." 14. Thus, from the view expressed by the Division Bench of this Court in the above cases, it is clear that the collection charges could not be mentioned in the recovery certificate or in any other notice. They could be assessed only after the amount was recovered. In view of the above legal position, the cost of recovery proceedings or in other words collection charges may be demanded after recovery of the amount by sale or otherwise and not before. Thus, in view of the reasons stated above, the preliminary objection raised by the learned Advocate General cannot be accepted and writ petitions are being decided on merits. 18. The State of Uttar Pradesh framed Rules known as Uttar Pradesh Revenue Recovery Rules, 1966 under Section 11(1) of the Revenue Recovery Act, 1890. It contains 9 rules. Rules 3, 4, 5, 6 and 7 deal with the mode of remittance of Government dues, Maintenance or register for recovery certificates issued by Collector, Form of recovery certificate for recovery of arrears as arrears of land revenue. Procedure for sending the letter of request under Section 5A of the Act for recovery of arrears as arrears of land revenue and Maintenance of register of recovery certificate received by the Collector. Rule 8 provides for Procedure of remittance or Government dues and disposal of cost of processes used for their recovery. Procedure for sending the letter of request under Section 5A of the Act for recovery of arrears as arrears of land revenue and Maintenance of register of recovery certificate received by the Collector. Rule 8 provides for Procedure of remittance or Government dues and disposal of cost of processes used for their recovery. Rule 6 is very relevant for determining the question which is being reproduced below : Rule 8. Procedure of remittance of Government dues and disposal of cost of processes used for their recovery. -As soon as any amount is recovered it shall be deposited into the Government treasury or remitted to the authority concerned, as the case may be, in the manner required in the recovery certificate subject to the following provisions : (a) the commission on remittances by money order upto Rs. 25 or the commission, if any, on remittances by Bank Draft or Remittance Transfer Receipt shall be debited to the contract contingencies of the remitter ; (b) the cost recovered on account of any process used in the recovery of the amount of the certificate shall be deposited into the Government treasury under the relevant receipt head of the budget as if such cost has accrued in the district in which the recovery has been made, and (c) the collection, if any, required to be charged under any orders of Government shall, unless otherwise provided, be deducted from the amount recovered under the certificate and deposited into the Government treasury under the relevant receipt head of the budget. Rule 9 provides for sending of intimation about the amount deposited into Government treasury. 19. From perusal of Rule 8 (b) and (c) it is clear that it makes distinction between cost recovered on account of any process used in the recovery of the amount of the certificate and the collection charges, if any, required to be charged under any order of Government. The Government order dated 30th August, 1974 has been issued under clause (c) of Rule 8 fixing 10% as collection charges to be charged in recovering the amount from defaulter as arrears of land revenue. The Act is silent about the cost or collection charges. Even Sections 5, 5A and 11 which were substituted and inserted by U. P. Amendment Act in the Principal Act, do not contain any provision with regard to costs of recovery or the collection charges. The Act is silent about the cost or collection charges. Even Sections 5, 5A and 11 which were substituted and inserted by U. P. Amendment Act in the Principal Act, do not contain any provision with regard to costs of recovery or the collection charges. It cannot be denied that the recovery of the amount from the defaulter as arrears of land revenue shall incur some costs but it is difficult to trace authority on the part of the State Government to frame Rule 8 in nature of clauses (b) and (c) drawing distinction between costs of recovery and over and above that a collection charge to be recovered from the defaulter. The learned Advocate General in order to justify the imposition of 10% as collection charge, has invited our attention towards the maintenance of the revenue department and expenses borne by the State in maintaining such big establishment. It could not be disputed that for recovery of the amount from defaulter as arrears of land revenue some agency is required but the real question is whether the State Government could fix 10% of the amount shown in the recovery certificate as collection charges, over and above the costs of the processes issued. The collection charge at the rate of 10% of the amount is realised from the defaulter invariably once recovery certificate is received by Collector. Learned Advocate General did not dispute that the collection charges realised cannot be termed as tax and they are against the services rendered by the State while collecting the amount from the defaulter. The question is whether the State Government could legally fix a flat rate of 10% of the amount sought to be recovered as collection charges over and above the cost of processes issued without providing for any method or mode for determining the actual cost or expenses incurred in recovery of the amount? in our opinion, such kind of compulsory exaction of money from the defaulter cannot be Justified under any of the provisions of the Act. Under Section 11, the State Government could frame Rules for carrying out the purposes of the Act. We have examined above the purpose and object of the Act which is essentially to meet the situation whether the defaulter is or has property in a district, other than the district in which the arrears or dues have accrued against him. Under Section 11, the State Government could frame Rules for carrying out the purposes of the Act. We have examined above the purpose and object of the Act which is essentially to meet the situation whether the defaulter is or has property in a district, other than the district in which the arrears or dues have accrued against him. The provisions are basically enabling provisions to meet the aforesaid contingency. The State Government while framing Rules could provide incidental provisions for realisation of the costs actually incurred in recovery of the amount from the defaulter which could be Justified on basis of the steps taken and the amount of efforts made or labour spent. The most serious and objectionable aspect of the matter is that the respondents claim 10% of the amount shown in the certificate as collection charges merely on receipt of the recovery certificate as it is a tax or compulsory levy. It is claimed that this practice is prevalent in the State since long and it should not be disturbed. However, if an illegal practice, has no valid source of authority either under the Constitution or any other law, it cannot be allowed to continue by Court merely on the ground of its continuance since long. Ours is a welfare State and entire functioning is under Rule of Law and it cannot be permitted to impose such compulsory exaction of the money for the services rendered which has no corelation with the amount of labour spent or the efforts made. Such compulsory exaction of the money can only be in case of tax or levy imposed by or under authority of a Statutes and not by an executive order. Thus, in our considered opinion, Rule 8 (c) and the Government Order dated 30th August, 1974 are illegal and ultra vires of the authority of State Government." 18. The said judgement of Division Bench of Allahabad High Court, in its para 18, 19 and 20 has dealt with the procedure as contemplated under the revenue recovery Rules framed by the State, i.e. U.P. Revenue Recovery Rules, 1966, as well as that of the Revenue Recovery Act, 1890 and particularly the reference has been made to Rules 3, 4, 5, 6 and 7, which deals with the mode of remittance of the government dues and maintenance of register of recovery certificate, which is quoted hereunder :- "3. Mode of remittance of Government dues (Section 3 and 11 (1)]. - Where any certificate is required to be issued under Section 3 of the Principal Act, the Collector making it shall, - (i) in case the certificate is to be sent to any Collector in Uttar Pradesh and the amount thereof is to be credited in the account of Uttar Pradesh Government, mention the relevant budget head therein; (ii) in other cases requires remittance of the amount of the certificate by Remittance Transfer Receipt/Bank Draft or, if the amount is upto Rs.25, by postal money order. 4. Maintenance of register for recovery certificates issued by Collector (Section 3 and 11 (1)]. - All recovery certificates issued by the Collector under Section 3 of the principal Act or under Section 5-A of the Revenue Recovery Act, 1 of 1890, as amended by the Revenue Recovery (U.P. Amendment) Act, 1965 (U.P. Act No.11 of 1965), shall be entered in a register in R.R. Form I, separate volumes whereof may be maintained for different kinds of dues, if necessary. 5. Form of recovery certificate for recovery of arrears as arrears of land revenue (Section 5 (1)]. - The certificate required to be sent under sub-section (1) of Section 5 of the Act by a public officer or a local authority for recovery of sums recoverable as arrears of land revenue from any defaulter who is or has property in Uttar Pradesh shall be in R.R. Form II. 6. Procedure for sending the letter of request under Section 5-A of the Act for recovery of arrears as arrears of land revenue (Section 11 91)]. - Where the defaulter is or has property outside Uttar Pradesh, the pubic officer or the local authority, as the case may be, may send under his hand and seal to the collector of the district in which the office of the public officer or the local authority is situate, a letter of request with a list of defaulter showing therein their names, parentage, complete addresses and particulars of arrears with year-wise breakup and complete description and location of their property, if any, from which the recovery is likely to be made. On receipt of the letter and the list, the Collector will issue the recovery certificate in the form as nearly as may be of the Schedule of the Act. 7. On receipt of the letter and the list, the Collector will issue the recovery certificate in the form as nearly as may be of the Schedule of the Act. 7. Maintenance of register of recovery certificates received by the Collector (Section 11 (1)]. - All recovery certificate received by the Collector shall be caused to be entered in register in R.R. Form III. Separate volumes of this register may be maintained for different kinds of dues, if necessary." 19. Dealing with the provisions of the aforesaid two Acts, in para 19 of the judgment, of Mahalakshmi Sugar Mills Co. Ltd., the Division Bench had dealt with the parameters with regard to the recovery of 10% of the collection charges. 20. The aspect which has already been dealt with by this Court in Mahalakshmi Sugar Mills Co. Ltd. (Supra), in the above paragraph with regard to the interplay of Section 279 with Rule 285 and 284, as framed under the Act, para 20 of the said judgment, which is quoted hereunder deals with as to in what manner and what circumstances, the 10% of the recovery charges could be levied :- "20. The U. P. Zamindari Abolition and Land Reforms Act and the Rules framed thereunder contain exhaustive provisions for collection of the land revenue. Chapter X of the U. P. Zamindari Abolition and Land Reforms Act deals with the land revenue. Section 275 to 294 of Chapter X under the sub-heading "Collection of land revenue", contain provisions regarding collection. Section 275 of the Act says that the State Government may make such arrangements and employ such agency for the collection of land revenue as it may deem fit. Sections 276. 277 and 278 contained provisions for collection of land revenue through the Land Management Committee. Section 279 provides for various processes which could be issued for recovery of arrears of land revenue, under clauses (a) to (g). Section 280 provides that Tahsildar may issue a writ of demand and citation to appear. Section 281 provides for arrest and detention. Section 282 deals with the attachment and sale of movable property. Section 284 deals with the attachment, lease and sale of holding. Section 286 provides power to proceed against interest of defaulter in other immovable property. Section 286A provides for appointment of receiver. Section 287 provides recovery of arrears paid by a person appointed under Section 276. Section 282 deals with the attachment and sale of movable property. Section 284 deals with the attachment, lease and sale of holding. Section 286 provides power to proceed against interest of defaulter in other immovable property. Section 286A provides for appointment of receiver. Section 287 provides recovery of arrears paid by a person appointed under Section 276. Section 287A provides for payment under protest and filing a suit for challenging recovery. Section 288 provides for applying provisions of the Z. A. Act to the arrears due at the commencement of the Act. Section 292 provides for payment of rent or other dues in respect of attached land. Section 293 of the Act, applies the provisions contained in Chapters IX and X of U. P. Land Revenue Act, 1901 to the recovery proceedings. Section 294 of the Act empowers State Government to make rules for the purposes of carrying into effect the provisions of Chapter X. Clause lee) of Section 294 (2) of the Act provides for making Rules regarding costs to be recovered in respect of the processes mentioned in sub-section (1) of Section 279. Clause (ee) of Section 294 (2) reads as under : "the costs to be recovered in respect of the processes mentioned in sub-section (1) of Section 279." Sub-section (1) of Section 279 in Clauses (a) to (g) provide for various processes for recovery of the arrears of land revenue. Section 279 of the Act is being reproduced below : "279. Procedure for recovery of an arrear of land revenue.--(1) An arrear of land revenue may be recovered by any one or more of the following processes : (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 movable property including produce ; (d) by attachment of the holding in respect of which the arrears 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, movable or immovable of the defaulter. (2) The costs of any of the processes mentioned in subsection (1) shall be added to and be recoverable in the same manner as the arrear of land revenue." From Section 279 (2) and Clause (ee) of Section 294 of the Act it is clear that the State Government could make rules regarding costs incurred by the agency employed to recover the amount as arrears of land revenue. Chapter X of U. P. Z. A. and L. R. Rules, 1952, deals with the land revenue. Section 'D' of Chapter X of Rules of 1952 deals with the Collections. Section 'E' provides for coercive processes. Rule 243 provides that the fee charged for the issue of a writ of demand or citation to appear shall be rupees two. This fee shall be added to the arrears to which the writ of citation is issued and shall be included in the amount specified therein. Rule 248 provides that the fee levied for a warrant of arrest in Z. A. Forms 70 shall be rupees five. Rule 265 provides the fee of 75 naye paise to be levied for a warrant of attachment in case of movable property. Rule 258 provides for the costs of every sale of movable property at the rate of six naye paise in the rupee, calculated on the amount of the arrears, including the charge on account of the warrant of attachment, which may be realised by the sale. Rule 259 provides for levy of fee if the sale officer goes to any place to conduct a sale and no sale takes place, the fees chargeable to meet the costs of his deputation which is to be realised at the rate of 50 naye paise in case of amount of recovery does not exceed Rs. 50. One rupee when the amount does not exceed Rs. 1,000 and in case the amount exceeds Rs. 1,000 three rupees. Rules 261 to 277 deal with the recovery of the amount by taking custody of live-stock and other movable property. Rule 284 provides for costs in case of sale of immovable property. 50. One rupee when the amount does not exceed Rs. 1,000 and in case the amount exceeds Rs. 1,000 three rupees. Rules 261 to 277 deal with the recovery of the amount by taking custody of live-stock and other movable property. Rule 284 provides for costs in case of sale of immovable property. Sub-rule (2) provides when immovable property other than the land is put up for sale, a charge shall be levied upon such amount not exceeding the total sum due for recovery as may be realised by the sale at the rate of (three naye paise) per rupee of the sale proceeds. Sub-rule (3) of Rule 284 provides for the costs when the sale officer goes to any place to conduct a sate but no sale takes place. Rule 286-1 reads as under : "All processes shall be served or executed and sales conducted by the persons employed to do so for the recovery of arrears of land revenue payable to Government and suitable cost shall be levied from the defaulter or deducted from the proceeds of sales." Thus, from perusal of the provisions contained in U. P. Z, A. and L. R. Act and the Rules of 1952 it is clear that there is no provision to realise any amount as collection charge over and above the costs prescribed thereunder for various processes. Thus, huge amount demanded by the respondents from petitioner as collection charge could also not be justified under any of the provisions of the Z. A. Act or the Z.A. Rules. If the collection charge demanded from the defaulter is to compensate the State Government for the services rendered by revenue department which is used as agency under Section 275 of Z.A. Act to recover such amount, there should be some co-relation with the amount demanded and the service rendered. This amount demanded against a particular service cannot be based on assumption or imagination. Some method ought to have prescribed to assess the actual cost incurred. Thus the amount demanded as collection charges from petitioner cannot be justified either under the provisions of the Revenue Recovery Act, 1890 or U. P. Z. A. and L. R. Act. 1950. No other provision has been placed before us in this regard. Some method ought to have prescribed to assess the actual cost incurred. Thus the amount demanded as collection charges from petitioner cannot be justified either under the provisions of the Revenue Recovery Act, 1890 or U. P. Z. A. and L. R. Act. 1950. No other provision has been placed before us in this regard. The validity of the Government Order dated 3Oth'August, 1974 has already been examined by us and it could not stand scrutiny of its validity under the provisions of Revenue Recovery Act. 1890." 21. According to the Division Bench, which was dealing with the issue on reference of the question, had answered question No. 5, which has deprecated the recovery of collection of the recovery charges and the question No. 5, which has been answered is contained in para 23 of the said judgment, which is quoted hereunder :- "23. Learned Advocate General tried to justify the distinction between the costs of the process and collection charge as contemplated in clauses (b) and (c) of Rule 8 of U. P. Revenue Recovery Rules, 1966. A perusal of the Government Order dated 30th August. 1974 shows that for fixing 10% of the amount sought to be recovered as collection charges. State Government took into account the enhancement in pay scale of the government employees including dearness allowance and further revision of the pay scale and also increase in other allowances and the cost of the stationery. Thus, if the Government Order takes into account the salary of the staff as well as cost of the stationery for fixing 10% as collection charges. The alleged distinction becomes non-existent. There appears no justification to charge costs of process issued and collection charges separately. Thus, it is apparent on the face of it that the exercise on the part of the State Government in framing Rule 8 (c) of Rules of 1966 and in issuing Government Order dated 30th August, 1974 was illegal having no source of authority under the provision contained in the Act. Question No. 5 : Now lastly it has to be seen whether the demand made by the respondents from petitioner as collection charge can be otherwise justified in the facts and circumstances of the case. There is no factual dispute between petitioner and the respondents regarding process issued and steps taken. Question No. 5 : Now lastly it has to be seen whether the demand made by the respondents from petitioner as collection charge can be otherwise justified in the facts and circumstances of the case. There is no factual dispute between petitioner and the respondents regarding process issued and steps taken. As the facts on record disclosed, steps may have been taken by issuing writ of demand and citation to appear which followed issue of warrants of attachment for movable and immovable properties. In giving effect to the aforesaid two processes at various levels services of officers and officials may also have been employed. However, the respondents have not given any break up of the amount to justify the huge amount claimed by them from petitioner as collection charges. Even if one day salary of each officer and other employees for giving effect to the aforesaid process is taken into account, then also the amount demanded as collection charges cannot be Justified, Learned Advocate General tried to Justify the demand of collection charges on the ground that the basis of such demand is the default committed and coercive steps employed by the revenue department create a kind of compulsion against the defaulter to yield and to pay the amount due from him which belong to public at large. However, in our opinion, for realising huge amount as collection charge, there must be some corelation with the services rendered. In such cases no service is rendered to the defaulter. In fact service is rendered to the creditor which may be Bank, financial institution, semiGovernment Department or the local authority, which is saved from payment of Court fee and other expenses in pursuing a long drawn and time consuming litigation. This by itself is a very valuable service to the creditor. However, the defaulter cannot be made liable to pay huge amount like a cost of the suit which in effect amounts to imposition of penalty for which he is not given any opportunity of hearing. We do not find any justification for the amount demanded by the respondents from petitioner as collection charge otherwise also." 22. However, the defaulter cannot be made liable to pay huge amount like a cost of the suit which in effect amounts to imposition of penalty for which he is not given any opportunity of hearing. We do not find any justification for the amount demanded by the respondents from petitioner as collection charge otherwise also." 22. There is yet another judgment, though it is not reported, but it was rendered by the Division Bench of Allahabad High Court, in Writ Petition No. 17199 of 1987 in the matters of Tarai Paper Mills, where the Division Bench constituting of Hon'ble Justice A.N. Verma and Justice Palok Basu; vide its judgment dated 10.10.1987, has laid down the basic principles as to the circumstance under which, 10% of the recovery charges could be levied and in its wider principle, it could be only levied when the process has crossed over the stage of Sub-clause (a) of Sub-section (1) of Section 279 and has reached at the stage of sale of the property under Sub-clause (c) of Sub-section (1) of Section 279. But under any circumstances if Subrule (2) of Rule 284 is taken into consideration even then too the recovery charges would not be leviable where the sale is contemplated in relation to the mortgaged property which falls to be a land under Section 3 (14) of the Z.A. & L.R. Act. 23. Lastly, the Allahabad High Court in a judgement reported in , Mirza javed Murtaza Vs. U.P. Financial Corporation, Kanpur and another, 1983 AIR(All) 234 the Division Bench judgement yet once again considered the recovery proceeding resorted under U.P. Financial Corporation Act and in the said judgement in para 16, it has dealt with the issue as to what would be the impact of the recovery being made as arrears of land revenue, when actual sale of the property has not been undertaken. Para 16 of the said judgment is quoted hereunder :- "16. Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 enables recovery of certain dues as arrears of land revenue. Para 16 of the said judgment is quoted hereunder :- "16. Section 3 of the U.P. Public Moneys (Recovery of Dues) Act, 1972 enables recovery of certain dues as arrears of land revenue. It provides inter alia that where any person is party to an agreement relating to a loan given to him by the Corporation by way of financial assistance the Managing Director of the Corporation may send a certificate to the Collector mentioning the sum due from such person and requesting that such sum together with costs of the proceedings be recovered as if it were an arrear of land revenue. The Collector on receiving the certificate shall proceed to recover the amount stated therein as an arrear of land revenue. Subsection (3) of Section 3 of the said Act provides that no suit for the recovery of any sum due as aforesaid shall lie in the civil court against any person referred to in Sub-section (1). Rule 284 of the U. P. Zamindari Abolition and Land Reforms Rules deals with the sale of land and other immovable property for recovery of dues as arrears of land revenue. Sub-rule (2) of Rule 284 reads as under: "(2) When immovable property other than the land is put up for sale, a charge shall be levied upon such amount not exceeding the total sum due for recovery as may be realized by the sale at the rate of three naya paise per rupee of the sale proceeds, fractions of a rupee being excluded." The costs of the collection proceedings obviously are not known when the certificate is sent, to the Collector by the Managing Director of the Corporation asking the Collector to recover certain sum from the debtor as an arrear of land revenue. He can merely ask the Collector that the sum mentioned in the certificate be recovered together with costs of the proceedings. What would be the actual costs of the proceedings would naturally be ascertained when the costs are actually incurred. This is also clear from Rule 284(2) of the U.P. Zamindari Abolition and Land Reforms Rules which says that a charge shall be levied for recovery upon such amount not exceeding the total sum due for recovery as may be realized by the sale at the rate of 3 naya paise per rupee of the sale proceeds. This is also clear from Rule 284(2) of the U.P. Zamindari Abolition and Land Reforms Rules which says that a charge shall be levied for recovery upon such amount not exceeding the total sum due for recovery as may be realized by the sale at the rate of 3 naya paise per rupee of the sale proceeds. So, the charge can be levied only when the sale of the property actually takes place. The amount of Rs. 19,127.17 as collection charges included in the sum of Rs. 2,10,398.94 as also the amount of Rs. 21,039.89 towards the collection charges mentioned in the notice (Annexure 14) could not, therefore, be legally claimed from the Petitioner. The impugned notice (Annexure 14) is bad in law and is, therefore, liable to be quashed." 24. The Division Bench of Allahabad High Court yet again has reiterated the observation already dealt with above that the State would not be entitled to recover 10% of the collection charges, when the actual process of recovery by way of auctioning of the mortgaged property has not been resorted to by them by sale of the property mortgaged for advancement of the loan. 25. Taking a considerate view and considering the fact that petitioner is an aged marginal poor farmer, this Writ Petition is being disposed of with the following directions :- i. The petitioner would pay the total amount due to be paid as per impugned recovery citation in four quarterly instalments. The first instalment would be payable within one month from the date of receipt of certified copy of this judgment. ii. The remaining balance amount would be paid in three instalments which would be paid by the petitioner within three months i.e. quarterly rests. iii. In the last instalment due to be paid as directed above, whatsoever amount if any, the petitioner had deposited, that would be computed by the bank and bank would inform the petitioner about the actual amount due to be paid in the fourth instalment. He would remit the balance amount within two months from the date of information supplied for the balance amount by the Bank to the petitioner in the fourth instalment. iv. In case, if the petitioner complies the aforesaid conditions as given above for depositing the amount in instalments, the coercive action in pursuance to the recovery citation would be kept in abeyance. iv. In case, if the petitioner complies the aforesaid conditions as given above for depositing the amount in instalments, the coercive action in pursuance to the recovery citation would be kept in abeyance. However, it is made clear that if there is any dereliction on the part of the petitioner in depositing the amount as directed above, it will be open for the respondent Bank to resort to the recovery proceedings as permissible under law in pursuance to the impugned citation in question. 26. In view of the aforesaid, apart from the direction already issued for the payment of the total amount due to be paid to the bank, it is hereby directed that if the petitioner complies the aforesaid conditions, the recovery charges in the light of the judgements already referred above would not be levied on the petitioner. 27. Subject to the above observation, the Writ Petition stands disposed of.