IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 28TH AUGUST 2009 / 6TH BHADRA 1931 WP(C).No. 5022 of 2007(W) ------------------------------------- PETITIONER(S): --------------------- 1. C. RAVUNNI NAIR, SANKARATHU VALIYA VEETIL, VARAVOOR VILLAGE, THALAPPILLY TALUK, THRISSUR DISTRICT. 2. KARTHIAYANI AMMA, KIZHAKKETHIL, EZHUTHASSAN VEETTIL, MANALADY, ATTOOR P.O., THALAPPILLY TALUK, THRISSUR DISTRICT. 3. NRAYANIKUTTY, W/O.RAVUNNI NAIR, KEZHAKEDIL HOUSE, ATTOOR P.O., VIA WADAKKANCHERY. BY ADV. MR.P.RADHAKRISHNAN MR.MADHU RADHAKRISHNAN. RESPONDENT(S): ------------------------ 1. KERALA STATE FINANCE ENTERPRISES, REPRESENTED BY ITS REGIONAL MANAGER, THRISSUR-20. 2. DEPUTY TAHSILDAR (R.R.) KERALA STATE FINANCIAL ENTERPRISE, THRISSUR. 3. KERALA STATE FINANCIAL ENTERPRISE MANNUTHY BRANCH, THRISSUR. 4. KERALA STATE FINANCIAL ENTERPRISE, PATTARAIKKAL BRANCH, THRISSUR. R2 BY GOVERNMENT PLEADER SMT.SMITHA SUKUMAR. R1, R3 & R4 BY ADV. MR.A.K.JOHN, ADDL.SC., KSFE LTD, MR.ASOK M.CHERIYAN, SC, K.S.F.E. LTD. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 5022 of 2007 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 28th August, 2009. J U D G M E N T The 1st petitioner is a subscriber of various chitties of the 1st respondent. The petitioner has also availed of a loan of Rs. 4 lakhs from the 3rd respondent. To repay the loan amount, the 1st petitioner joined two chitties and auctioned those chitties for which an amount of Rs. 7 lakhs was due to the petitioner. From that amount, an amount of Rs. 4 lakhs was adjusted towards the loan amount and the balance prize money was adjusted to the chitty instalments payable . But, without taking into account that adjustment, the 3rd respondent initiated recovery proceedings for recovery of the loan amount itself. The petitioner approached this Court by filing W.P(C) No. 24989/2005. In that writ petition, this court passed the following judgment: “Petitioners are challenging Ext. P2 recovery proceedings for recovery of loan arrears with interest. It is seen from Ext. P2 that the amount sought to be recovered is Rs. 4 lakhs towards loan availed and interest for non-payment until now. However, petitioners have produced the receipt received from KSFE Branch wherein it is seen that the loan amount has been adjusted against prize money payable to the petitioner under two chitties. In fact, the communication is dated 5-2-2001. After making the adjustments of loan and arrears of subscription upto 28, the balance was Rs. 822/- in one chitty and there was credit balance of Rs. 6,423/- in the petitioner's account in the other chitty. Therefore, the arrears payable by the petitioner will be only the arrears of subscription in prized chitty accounts after the 28th instalment. Counsel submitted that petitioner paid Rs. 50,000/- subsequently. Even though Sri. A.K. John, standing counsel for KSFE, submitted that prize money cannot be adjusted against loan as the petitioner has not furnished security, I do not think such an argument is tenable because KSFE itself made adjustments vide Ext. P1 and informed the petitioner about the adjustment. Moreover, this Court has consistently taken the view that the company cannot keep on charging interest in the loan account when there is a credit balance in the kuri account. Non-payment of additional security may disable the subscriber to receive the prize money. However, the same will not justify retention of prize money as a credit balance when the party is in debt in the loan W.P.C. No. 5022/2007 -: 2 :- account. As and when prize money is payable, KSFE is bound to adjust the same towards loan account and going by the said principle follow3d in many decisions Ext. P1 is correctly issued. If KSFE has reversed Ext. P1, it is without any justification. However, KSFE is entitled to recover the balance arrears of subscription with interest after crediting the amounts paid. The 3rd respondent is directed to give a statement as above by retaining the adjustments made in Ext. P1 within two weeks from today. Since petitioner has undertaken to clear the balance arrears in three months therefrom there will be direction to respondent to keep recovery proceedings in abeyance till 30-11-2005 within which time the petitioner will settle the liability as undertaken in court failing which KSFE will be free to move this court for contempt besides taking steps to recover the entire arrears. W.P. is disposed of as above.” However, the petitioner has again been served with Ext. P5 revenue recovery notice for recovery of the loan amount. The petitioners challenge Ext. P5 notice. 2. The contention of the respondents is that Ext. P5 has been issued not for realisation of the loan amount but for realisation of defaulted chitty instalments. 3. I have considered the rival contentions in detail. 4. I am not satisfied that Ext. P5 revenue recovery proceedings have been initiated for realisation of the instalments of chitty amount. Ext. P5 categorically states that the same is for realisation of a principal amount of Rs. 4 lakhs with 15% interest from 1-4-1998 plus 5% collection charges. The proposal therein is to realise the said amount by sale of 38.14 ares of land with residence and other improvements in sy no. 172/9 of Atoor village. The respondents have no case that that land was given as security for chitty instalments. On the other hand, that land was given as a security for the loan which has already been discharged. Further, admittedly, the instalments due is not Rs. 4 lakhs. That being so, clearly Ext. P5 has been issued for realisation of the loan amount, which has already been W.P.C. No. 5022/2007 -: 3 :- discharged as is evident from Ext. P3 judgment. Therefore, Ext. P5 revenue recovery proceedings are unsustainable. Accordingly, Ext. P5 is quashed. It is declared that the respondents cannot initiate revenue recovery proceedings for recovery of the loan amount in view of Ext. P3 judgment. However, if the respondents have any case that any chitty instalments are due from the petitioners, it is up to them to take appropriate steps for recovery of the same. The respondents shall also consider whether subsequent prize amount of chitty due to the petitioner can be adjusted against any amounts due by way of chitty instalment. The writ petition is disposed of as above. Sd/- S. Siri Jagan, Judge. Tds/