Naseeruddin Khan vs U.P. Financial Corporation & Ors.

Cause list revised. None appeared on behalf of the respondents.

Sri Mohd. Arif Khan, learned counsel for the petitioner submits that under one time settlement entire amount has already been deposited by the petitioner but now the respondents are compelling the petitioner to deposit the recovery charges to the tune of Rs.46,500/.

The question involved in the present writ petition is as to whether when the entire amount has already been paid under one time settlement the authorities have got right to ask for recovery charges more so when they have not done anything.

In brief; the opposite parties had sanctioned a sum of Rs.2,75,000/ as loan to the petitioner to run the factory with regard to battery, battery plates etc. It appears that on account of default of payment of dues, U.P. Financial Corporation (in short ''Corporation'') had referred the matter to the revenue authorities to recover the dues as arrears of land revenue. However, on 2182002, a letter was issued by the opposite party No.2 with regard to one time settlement in response to which the petitioner had deposited the entire dues. After deposition of the entire dues, a letter dated 18102002 was issued by the corporation to the revenue authorities for not proceeding with the recovery proceedings, a copy of which has been filed as Annexure No.4 to the writ petition.

The submission of the learned counsel for the petitioner is that since the petitioner has already deposited the entire amount/dues, it is not open for the respondent to press for payment of recovery charges.

Learned counsel for the petitioner has relied upon the judgments of this Court reported in AIR 1983 All. 234; Mirza Javed Murtaza v. U.P. Financial Corporation, Kanpur and another and R.D. 2002 Page 689; Vijai Singh v. State of U.P. and others.

In the case of Mirza Javed Murtaza (supra), a Division Bench of this Court had observed that recovery charges may be levied only when the actual sale of the property takes place. (Para16)

In the case of Vijai Singh (supra), Hon''ble single Judge had again reiterated the aforesaid proposition of law and observed as under:

"5. The petitioner earlier filed Writ Petition No.12913 of 2002, Vijay Singh v. State of Uttar Pradesh and others, which was decided by this Court by judgment and order dated 342002. In the said writ petition it was held that the recovery charges can be realized from the petitioner if the same is permissible in accordance with the law laid down by this Court in Mirza Javed Murtaza v. U.P. Financial Corporation, Kanpur and another. In the said case while interpreting Rule 284 of the Rules framed under the U.P. Zamindari Abolition and Land Reforms Act, it has been held that the recovery charges can be realized only if the sale of the properties, either attached or not, of the debtor takes place and not otherwise. In case, it was felt that the properties of the petitioner were not sold in recovery proceedings and the petitioner was not liable to pay recovery charges, the petitioner should have objection before respondent No.2. No such objection, as stated above, has been filed. It is, however, observed that the petitioner, if so advised, may still file an objection before respondent No.2 within a period of two weeks from today. If such objection is filed, the same shall be decided after taking into consideration, the judgment passed in Writ Petition No.12913 of 2002 and the decision in Mirza Javed Murtaza case (supra), within a period of one month from the date the objection is filed, after affording opportunities of hearing to the parties concerned, till the objection has decided, the recovery charges shall not be realized from the petitioner."

Thus, the purpose of recovery charges is to recover the amount which is incurred to execute the reference of recovery from the borrower or guarantor. In case nothing has been done by the revenue authorities and the amount is paid to the bank or the corporation then charging of recovery dues shall be unjust and improper. Moreover, in the present case the borrower entered into one time settlement with the respondent corporation. One time settlement is a form of an agreement entered into between the parties for payment of dues. The borrower or guarantor shall not be liable to pay any amount which has not been mentioned as a condition in one time settlement.

In view of settled proposition of law since the petitioner has already paid the entire dues under one time settlement, there appears to be no good ground to levy the recovery charges. The recovery charges are levied by the revenue authorities to recover the dues through auction and sale of the property and to meet out such expenditure. In the present case, nothing has been done by the revenue authorities with regard to recovery of dues in question as the amount has already been paid under one time settlement.

Accordingly, the writ petition is allowed. A writ in the nature of certiorari is issued quashing the orders dated 18102002 and 2112002, copies of which have been filed as Annexure Nos.4 and 5 to the writ petition, to the extent they relate to payment of recovery charges.

The writ petition is allowed accordingly. No order as to costs.