IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 25TH NOVEMBER 2010 / 4TH AGRAHAYANA 1932 WP(C).No. 34932 of 2010(N) --------------------------------------- PETITIONER(S): ----------------------- SURESH JAMES, AGED 45 YEARS, S/O. JAMES T. MALANA, RESIDING AT MALANA KUPPAYAKODE, ENGAPUZHA VILLAGE, KOZHIKODE - 673 580. BY ADV. SRI.MATHEW KURIAKOSE RESPONDENT(S): ------------------------- 1. THE KERALA FINANCIAL CORPORATION, HEAD OFFICE, VELLAYAMBALAM, THIRUVANANTHAPURAM - 33, REPRESENTED BY ITS MANAGING DIRECTOR. 2. THE BRANCH MANAGER, KERALA FINANCIAL CORPORATION, BRANCH OFFICE, IST FLOOR, TRIDENT ARCADE, PINANGODE ROAD, KALPETTA, WAYANAD - 673 121. 3. THE DEPUTY TAHSILDAR (RR), KERALA FINANCIAL CORPORATION, PAVAMANI ROAD, KOZHIKODE-1. R1 & R2 BY ADV. SRI. R.S.KALKURA,SC FOR KFC R3 BY GOVERNMENT PLEADER SRI. BIJOY CHANDRAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM, J --------------------------------------- W.P(C) No.34932 of 2010-N ---------------------------------------- Dated this the 25th day of November, 2010. J U D G M E N T Grievance voiced in this writ petition is that, the 3rd respondent is not issuing clearance certificate for closing of the loan account and for releasing of the title deeds with respect to the mortgaged properties, which were deposited by the petitioner with respondents 1 and 2. 2. The petitioner is the Managing Director of a Company, which availed loan from respondents 1 and 2, on the basis of mortgage created on immovable properties belonging to the petitioner, his family members, and the company itself. Consequent to default committed in repayment of the loan, recovery steps were initiated under the provisions of the Kerala Revenue Recovery Act. On the basis of settlement arrived with respondents 1 and 2, as evident from Ext.P5, the entire amounts due was settled payment and the respondents 1 and 2 had withdrawn the revenue recovery requisition, as evidenced from Ext.P6 W.P(C) No.34932 of 2010-N 2 letter. The 2nd respondent had issued Ext.P8 certificate to the effect that the company had closed the loan account under the one time settlement scheme. Ext.P9 is the request submitted to the 3rd respondent seeking to issue no- objection for release of the documents furnished as security. Ext.P10 reply was given stating that clearance certificate can be issued only on payment of collection charges at the rate of 7.5% on the total amount remitted, since revenue recovery steps were initiated on the basis of notices issued under Section 7 and 34 of the Kerala Revenue Recovery Act. 3. Contention of the petitioner is that since the amount was remitted directly to respondents 1 and 2, the petitioner is not liable for payment of collection charges. It is also contended that except issuing notice under Section 7 and 34 no coercive steps of recovery has been resorted to by the 3rd respondent. 4. The question regarding liability for payment of collection charges with respect to revenue recovery steps initiated now stands settled through a Division Bench W.P(C) No.34932 of 2010-N 3 decision of this Court in Malabar Organics Ltd. V State of Kerala (2009(4) KLT 328). It is held that, as far as recovery of the amounts due to institutions like that of Kerala Financial Corporation (KFC) and Kerala State Financial Enterprises (KSFE), realisation of collection charges is not justified and sustainable when the defaulters are paying the amounts directly to those institutions. But the learned Government Pleader pointed out that the above decision is under challenge before the Hon'ble Supreme Court and a Special Leave Petition filed by the State Government stands already admitted. It is further stated that the Hon'ble Supreme Court had stayed operation of the above said judgment. Under such circumstances, it is contended on behalf of the 3rd respondent that, the documents in question could not be released unless the petitioner makes payment of the collection charges due. 5. Having considered the facts and circumstances, I am of the view that the position of law now stands settled in favour of the petitioner. However the matter is pending W.P(C) No.34932 of 2010-N 4 consideration before the Hon'ble Supreme Court and the operation of the judgment of this Court is under stay granted by the Hon'ble Supreme Court. Learned counsel for the petitioner brings to my notice a Division Bench decision of this Court in Abdu Rahiman V. District Collector, Malappuram (2009(4) KLT 485), wherein it is held that even in cases where the operation of the judgment is stayed by the apex court, the dictum laid down by a Division Bench is binding on Single Judge. 6. However, I am of the opinion that the return of title deeds could not be held indefinitely, causing prejudice to the petitioner merely because the legal issue remains unsettled. The documents in question can be returned to the petitioner, subject to undertaking to be obtained from him to the effect that he will pay the collection charges if ultimately the Hon'ble Supreme Court reverses the judgment of the Division Bench cited above. 7. In the result, the writ petition is disposed of directing the respondents to return the title deeds and other W.P(C) No.34932 of 2010-N 5 documents pertaining to the immovable property mortgaged for securing the loan in question, subject to condition of the petitioner furnishing an undertaking in the form of an Indemnity Bond before the 3rd respondent, undertaking to pay the collection charges due as per law, if ultimately it is found by the Hon'ble Supreme Court that collection charges is leviable in similar circumstances. 8. The needful in this regard shall be done by the respondents without any delay, at any rate within a week from the date on which such Indemnity Bond is furnished. Sd/- C.K.ABDUL REHIM JUDGE //True Copy// P.A to Judge ab