HON’BLE SRI JUSTICE GHULAM MOHAMMED AND HON’BLE SRI JUSTICE K.G. SHANKAR W.P. No. 20416 of 2011 DATED: 22.07.2011 Between:- B.Mahaveer Vaishnav and another .. Petitioners A N D Corporation Bank .. Respondent O R D E R: (Per Hon’ble Sri Justice Ghulam Mohammed) It is asserted that the petitioners and the son of the 1st petitioner borrowed an amount of Rs.6.00 lakhs from the respondent-Corporation Bank towards housing loan vide Loan Account No. CHOME/01/2001, by mortgaging the house bearing No.100, Mudfort, Secunderabad, and thereafter they repaid most part of the loan. While so, the respondent- Corporation Bank issued Possession Notice dated 26.05.2011 indicating that they would take possession of the property belonging to the petitioners in case of default in repayment of a sum of Rs.3,17,161/- within sixty days from the date of receipt of the notice. Challenging the Notice dated 26.05.2011, the petitioners filed W.P. No. 16829 of 2011, and this Court, by order dated 22.06.2011, disposed of the writ petition with certain directions. In pursuance of the directions, the petitioners paid a sum of Rs.2,50,000/- and also made a representation dated 05.07.2011 to the respondent-Bank to waive interest for the remaining amount, but the respondent gave a reply dated 08.07.2011 to the representation demanding the petitioners to pay a sum of Rs.85,019/- including other overhead expenses and also issued Notice of Sale dated 21.06.2011 proposing to conduct auction of the property in question on 29.07.2011. Now, the petitioners’ grievance is that even though they repaid a sum of Rs.2,50,000/-, the respondent is demanding them to pay a sum of Rs.85,019/- by including other overhead expenses which do not cover under the loan. Hence, the petitioners have filed the present writ petition seeking appropriate directions. The learned counsel for the petitioners has submitted that the respondent-Bank has furnished a statement of account relating to their loan transaction which indicates inclusion of various charges such as advocate fees, demand draft issued in favour of Kalyan advertisements, paper advertisement of sale notice and interest from 01.03.2011 to 30.06.2011, and contends that the respondent ought not to have included these charges in the outstanding loan, as such, the action of the respondent in demanding the petitioners to pay a sum of Rs.85,019/- together with interest from 01.07.2011 is illegal and arbitrary. The learned counsel for the respondent-bank submits that as far as the waiver of interest is concerned they will consider waiver of overdue interest at 2% from the date of NPA, but as per Security Interest (Enforcement) Rules (for short “the Rules”), the publication charges and advocate fees are the expenses recoverable by the Bank, hence, the petitioners are liable to pay Rs.85,019/-. Heard the learned counsel for both the parties and perused the material placed on record. This Court, while disposing of the W.P. No. 16829 of 2011 observed as follows: “In that view of the matter, the writ petition is disposed of, directing that the petitioners shall pay a sum of Rs.2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) within a period of two weeks from today and with regard to the remaining amount payable by them, they shall make an appropriate application before the respondent-bank, who shall consider the same and pass appropriate orders, in accordance with law. It is needless to note that in default, the respondent-bank is at liberty to proceed further in accordance with law.” In support of the contentions put forth by the learned counsel for the petitioners, he has relied on a decision reported in Badugu Vijayalakshmi vs. Authorised Officer and Chief Manager[1] wherein it is held as follows: “The grant of exorbitant amount of commission to the recovery agents and enforcement agents at a minimum rate of 10%, is, in our considered opinion, too excessive and disproportionate to the nature of work liable to be performed by them. Payment of commission/fee to the agents, at exorbitant rates or percentages, amounts to exploitation of the weak or helpless situation of the borrower. Exploitation, in any form, is incompatible to fairness in action. Plainly, that would not have been the intent of the Legislature. The learned Advocate who prosecute the cases of their clients, are regulated very carefully in the matter of their professional fee. Rules have been framed regulating it and such fee structure is periodically updated also. The fee chargeable gets decreased with the increase in the value of the claim of the client. In other words, a carefully structured and graded scale is put in place. It never contained as high a flat rate of 10% of the claim. A similar exercise is required to be carried out, even in the mater of payment of commission to these Agents. Otherwise, the respondent banks would outsource the services of recovery agents and enforcement agents without in any manner seeking to effect the recoveries from the borrowers on their own. The respondent- bank cannot draw comfort from the umbrella provided by sub- section (7) of Section 13. To our mind, the statute makers have advisedly ensured that properly incurred expenses along to be recovered from the borrowers. Otherwise, the banks and financial institutions would be patronizing a set of favoured few, calling them as recovery agents/enforcement agents, so that the commission paid to them can be conveniently booked to the account of the borrower. A borrower cannot be subjected to an unduly harsh expenditure and hence the expression “properly incurred expense” has got to be understood in that context. It will not be very difficult to imagine a situation where, the leading newspapers in the country would be adopting very steep advertisement charges, for those that are published on their front and back pages. Until and unless the security asset is considered that it may not attract potentially large number of purchasers, like in the case of specialized industries or trading houses, in all other cases, perhaps an advertisement in any of the interior pages of the newspapers can be reasonably assumed to attract the attention of the prospective purchasers. Therefore, if an unnecessary attempt has been made by a bank or financial institution by getting the notice under sub-section (4) of Section 13 published in the front or the back pages of the newspapers drawing inspiration from the fact that such an expenditure can be booked to the account of the borrower, it would be a case of taxing the borrower rather than charging him appropriately. Such measures can hardly pass the test of properly incurred expenses. We there, hold that the claim of the respondent bank that a sum of Rs.1,90,000/- as payable to M/s.Sisir and Associates, Chartered Accountants and Enforcement agents, Visakhapatnam as exorbitant and unreasonable. This is the reason why we directed a sum of Rs.15,000/- to be paid by the writ petitioner towards the proper expenses in this regard, apart from what has already been found booked to his account, as noticed supra. That is the reason why, apart from the balance outstanding of Rs.1,96,000/- the writ petitioner has paid a sum of Rs.2,11,000/- to the respondent – Bank. We therefore, hold that the respondent-Bank is not justified in proposing to charge the writ petitioner a further sum of Rs.1,90,000/- in terms of sub- section (7) of Section 13. We hope and trust that the respondent-bank, would focus its attention to what has been pointed out by us and take appropriate measures for remedying the situation, if necessary, in consultation with the Reserve Bank of India.” It is not disputed that the petitioners availed loan from the respondent-Bank and repaid most part of it including Rs.2,50,000/- as directed by this Court in W.P. No.16829 of 2011, dated 22.06.2011, but with regard to repayment of outstanding amount, the respondent-Bank, as claimed by the petitioners, has already extended the benefit of waiving the overdue interest at the rate of 2% from the date of N.P.A. and the petitioners are liable to pay overhead charges, publication charges and advocate fees as per the Rules, and they cannot, in contravention of the Rules, plea for exemption of such liability. Further, a careful perusal of the the above referred judgment relied upon by the learned counsel for the petitioners, discloses the context under which there is controversy with regard to payment of commission to the recovery and enforcement agents, as such, the facts of that case cannot be made applicable to those of the instant case. For the foregoing reasons, we do not see any ground to interfere with the action of the respondent-Corporation Bank in issuing reply dated 08.07.2011 demanding the petitioners to pay a sum of Rs.85,019/- together with interest from 01.07.2011 towards discharge of the loan as per the Security Interest (Enforcement) Rules. Hence, the writ petition is devoid of merits and the same is accordingly dismissed. No order as to costs. _____________________ GHULAM MOHAMMED, J 22.07.2011 _______________ K.G. SHANKAR, J bcj [1] 2010(2) ALT 164 (D.B)