Kerala Revenue Recovery Act - All You Need To Know

The Kerala Revenue Recovery Act, 1968 (‘Act’) provides a mechanism to recover arrears of public revenue due on a property. It provides the recovery process of public dues from the defaulter owed to the government and other institutions like banks, local bodies, and PSUs on immovable or movable property.

Recently, the Kerala Government proposed amendments to the Kerala Revenue Recovery Act, 1968, to provide relief to the defaulters and help them get back their attached property under this Act. Read on to find out what is the Revenue Recovery Act in Kerala, Kerala Revenue Recovery Act applicability, Kerala Revenue Recovery Act penalties, Benefits of Kerala Revenue Recovery Act and the proposed amendment to the Act.

What is Revenue Recovery Act in Kerala?

The Kerala Revenue Recovery Act grants powers to the District Collectors to recover the government dues on a property from the defaulter residing in the district. The provisions of the Revenue Recovery Act lays down the modes of recovering public revenue arrears owed on movable and immovable land. The various modes of recovery of government dues on land include attachment and sale of the movable and immovable property, appointing an agent to manage the immovable property, and arresting the defaulter. 

However, the District Collector must fulfil certain conditions as prescribed under the Act for the recovery method to be valid and legal, such as issuing a demand notice to the defaulter for paying the arrears of public revenue due on land, publishing the sale of land, and executing the deed of sale.

Importance and purpose of the Revenue Recovery Act

The primary purpose of introducing the Kerala Revenue Recovery Act is to provide a process for the speedy recovery of government dues or arrears of public revenue due on land. It lays down the recovery process of the amounts due to the government and also loans provided by any bank, statutory body, or Public Sector Undertaking (PSU). 

Thus, the Act provides for speedy recovery of public revenue as well as revenue of public interest such as certain kinds of loans. It also provides for the recovery of interest imposed on the arrears of public revenue due and the cost of the recovery process, such as attachment and sale of the property, demand notice fee, publication charges, transport charges, etc.

The Act prescribes a structured and enforced process for recovering public revenue arrears. It prevents the loss of public funds and ensures that dues are recovered fairly and transparently.

Revenue Recovery Act applicability

The Kerala Revenue Recovery Act applies to all lands or property where the arrear of public revenue is due and is located in the State of Kerala. 

Arrear of public revenue is due on land when the whole or any portion of any revenue instalment or kist is not paid on the day it falls due according to any engagement or kistbandy or usage. Public revenue means the land revenue charges on land, including all other fees, taxes, and all cesses or other dues payable to the government for the water used for irrigation purposes.

Provisions of Revenue Recovery Act

The Kerala Revenue Recovery Act primarily provides for the recovery of arrears of public revenue due on any land from the land owner, including the legal representatives, by the Collector.

All land owners must pay the kist or instalment of revenue on the land to the District Collector or any other officer authorised by the Collector on this behalf, on or before the day on which it falls due. Upon payment of the revenue on land, the Collector or such officer will issue a signed receipt to the land owner. 

When the land owner fails to pay the revenue on land or the arrear of public revenue is due on land, then such arrear with interest and cost of the process can be recovered by the Collector in any one or more of the following modes:

• By attachment and sale of the defaulter’s movable property
• By attachment and sale of the defaulter’s immovable property
• By appointing an agent to manage the defaulter’s immovable property 
• By arrest and detention in prison of the defaulter

The interest rate on the arrears of public revenue due on land is 12% per annum or at such other rate as per notification issued by the government from time to time in the Official Gazette.

Recovery process

Below is the recovery process of the arrears of public revenue due on land as per the Kerala Revenue Recovery Act.

Attachment and sale of movable property

1. Notice 

When there is a default in the payment of arrears of public revenue on movable land, the Collector or the authorised officer will give a signed demand in writing to the person employed to make the attachment. The demand in writing will contain the defaulter’s name, the amount of the arrear of public revenue due on land, the due date of paying the arrear, and such other particulars. 

The persons employed to make the attachment of movable property will issue the demand in writing to the defaulter. If the defaulter fails to remit the arrear amount along with the interest and the cost of the process immediately, the person employed to make the attachment can attach the property. 

2. Attachment of movable property 

The attachment of the movable property can be made by actual seizure of the property. The officer employed to make the attachment must deliver a copy of the demand in writing to the defaulter, along with the list of properties attached and the place where it is kept after making the attachment. 

The copy of the demand must state that the property will be sold immediately if the arrear amount, interest, and the process cost are not paid. The attachment should be made in the presence of two persons from the locality who will also attest to the list of the attached property. 

3. Sale of movable property

When the defaulter does not pay the amount due after receiving the demand, the officer who made the attachment will proceed to sell the property to discharge the arrears of the public revenue due on land, with interest and the cost of the process. 

The property attached can also be sold at a public auction. The copy of the list of the property to be sold and the notice with the signature of the Collector or the authorised officer stating the day, hour and place hour at which the property will be sold, the person who will sell the property will be sent to the defaulter. 

The copy of the list of the property and a copy of the notice will also be published. The date of sale must be after fifteen days of the service of the notice on the defaulter. 

4. Payment of arrear before sale 

Where a defaulter pays the arrear after the property has been attached but before the sale, along with the interest and the cost of the process, the officer who attached the property should receive the amount, give a receipt for the same immediately and release the property. 

Attachment and sale of the immovable property

1. Notice for payment of arrear

The Collector or the authorised officer must issue a written demand to the defaulter containing the defaulter’s name, the amount of the arrear of public revenue due on land, the due date of paying the arrear, interest on the arrear, the amount of batta due, the time allowed for the payment (not less than seven days from the service of notice) and such other particulars before attaching the immovable property.

When the defaulter objects to the arrears claim, the Collector or the authorised officer can inquire about the objection and record a decision before attaching the immovable property.

2. Attachment 

When the defaulter does not pay the amount due as per the written demand, the Collector or the authorised officer will proceed to recover the arrear by attaching and selling the defaulter’s immovable property. 

The immovable property will be attached after affixing a notice at some conspicuous part of the immovable property and by serving its copy to the defaulter. The notice of attachment will also be published. 

The notice must specify the defaulter’s name, the amount of arrear of public revenue due on land, the due date of paying the arrear, interest on the arrear, and such other particulars as may be prescribed, and the date within which the arrears, interest and cost are to be paid. 

3. Management of immovable property

The Collector will appoint an agent to manage the property. The agent will collect the rent and profits due on the property. The agent must keep accounts of all the receipts and disbursements and submit them to the Collector, along with paying the balance to the Collector or the authorised officer. 

All amounts received from the property attached after paying the costs and expenses of managing the property will be in credit of the defaulter in the discharge of the arrears due, interest and cost of attachment and expenses of management. Once the arrears, interest and costs are recovered, the attachment will be withdrawn. The order of withdrawal of attachment will be affixed to the property and published. 

4. Sale of immovable property 

Immovable property attached under this Act can be sold as follows: 

• The sale can be by public auction to the highest bidder. 
• The place and time of sale will be fixed by the Collector or the authorised officer having jurisdiction over the village where the property is situated.
• Before the sale, the Collector or the authorised officer must issue a notice in English and Malayalam containing the defaulter’s name, the extent of the land and location, the amount of revenue assessed on the land, the amount for the recovery, the proportion of the public revenue due during the current financial year, and time, place and conditions of sale. 
• The notice must be duly published and served at least thirty days before the sale date.
• After the confirmation of the sale (when there is no application to set aside the sale), the Collector registers the immovable property sold in the purchaser’s name and grants a certificate of sale bearing his/her signature and seal. 

5. Payment of arrear before sale

If a defaulter provides security before the commencement of the sale of immovable property, the Collector or the authorised officer can accept it and postpone the sale on such conditions until such time as he/she may appoint.

The defaulter, or any person acting on his/her behalf or claiming any interest in the immovable property, can pay the full amount of the arrears of public revenue due on land, interest and cost of the process to the Collector or the authorised officer. After making such payment, the defaulter can apply in writing along with the receipt in payment token to the officer conducting the sale for staying the sale proceedings. Upon such application, the sale will be stayed.

6. Setting aside the sale

The defaulter or any person claiming an interest in the immovable property attached and sold can deposit the following amount in the treasury of the taluk in which the immovable property is situated within thirty days from the date of the sale: 

• A sum equal to 5% of the purchase amount
• A sum equal to the arrears of public revenue due on land for which the immovable property was sold, interest and cost of process

After depositing the amount, the defaulter can apply to the Collector to set aside the sale. 

If the defaulter makes such a deposit and application within thirty days from the sale date, the Collector will pass an order setting aside the sale. The Collector will also repay the purchase money to the purchaser along with the 5% deposited by the defaulter. 

Kerala Revenue Recovery Act penalties

The Kerala Revenue Recovery Act provides a penalty only when a defaulter fraudulently transfers property or takes away the property to prevent attachment. When a defaulter fraudulently transfers the property on which arrears of public revenue are due to prevent attachment, such defaulter will be punished with imprisonment for six months or a fine of a maximum of Rs.500, or both, upon conviction before a Magistrate.

Further, a defaulter can also be arrested in certain situations when the arrears of public revenue due on land, interest and cost of the process are not paid after the service of the written demand. The District Collector can issue a warrant for the arrest of the defaulter when he/she is satisfied of the following:

• The defaulter or his surety is willfully withholding the payment of the arrears. 
• The defaulter has dishonestly transferred a part of his property. 
• The defaulter has been guilty of fraudulent conduct in evading payment. 
• The defaulter has the means to pay the arrears or substantial part but refuses or neglects to pay the same. 
• The proceeds of the attachment and sale of the property of the defaulter and his surety are not sufficient to pay the arrears with interest and cost of process. 

However, such an arrest warrant will be issued only after serving a notice upon the defaulter asking him to appear before the District Collector at the place and time specified in the notice and to show cause why he/she should not be detained in the civil prison. 

The District Collector will hear and consider the arguments of the defaulter and such other evidence produced by him/her. Upon the conclusion of the enquiry, the District Collector can make an order for the detention of the defaulter in the civil prison when he/she is convinced that the detention in the civil prison is required. 

Benefits of Kerala Revenue Recovery Act

• The Act outlines the process for speedy recovery of public dues on land/ property in Kerala.
• It provides a streamlined process for recovering public dues, taxes, cesses, and other charges due on property to the government.
• With the recovery of government dues, the state government can utilise them to support infrastructure and development projects.
• It empowers the District Collector to take the necessary action to recover dues, including attaching and selling the defaulter’s property, thus ensuring public money is not lost.
• The Act ensures that only the public arrears due on land is recovered and not any excess amount. Any excess amount recovered from the sale of immovable property is returned to the defaulter. 
• The Act protects the financial interests of the state by providing a speedy process for collecting and recovering all public dues on land.
• The Act promotes accountability and transparency in the process of recovery of arrears of public revenue due on land. 
• It also protects the defaulters by providing a chance to get back their property by paying the arrears of public revenue due on land before the sale of the land or within thirty days of the sale of the land. 

Recent amendments and updates

The Kerala Assembly has tabled the amendment to the Kerala Revenue Recovery Act, 1968, or the Kerala Revenue Recovery (Amendment) Bill, 2024 (‘Bill’). The amendment aims to provide substantial relief to borrowers and ensure that their attached land is not lost forever. 

The amendments provide a compassionate approach to revenue recovery in Kerala, especially for small farmers, debt-ridden borrowers, and people facing financial hardships due to the COVID-19 pandemic and recurring floods in the state. They strike a balance between the defaulter’s hardships and the government or financial institutions that start recovery proceedings to cover the arrears due. 

The following are some of the major amendments introduced in the amendment Bill.

Reduction in interest rates

The Bill reduces the interest rates on the arrears of public revenue due on land from 12% to 9%. This eases the financial burden of defaulters in the repayment of the arrears due along with the interest on it.

Introduction of e-auction

The Bill introduces the concept of e-aution for the sale of attached property through public auction. The notice of e-auction will be published in the local newspapers as well as the website of the concerned District Administration. This will bring about better transparency and efficiency in the public auction process, ensuring many people have access to the auction and reducing the chances of manipulation in the sale proceedings.

Attachment of property proportionate to arrears due amount

The Bill provides that the attachment of the property will be proportionate to the arrear due amount. This protects the interest of borrowers and prevents excessive attachment of property, which has been a major issue in the past.

Defaulters can sell the attached property

Now, defaulters can make an agreement to sell the attached property wholly or in part after getting the District Collector’s permission by submitting an application jointly with the purchaser. The purchaser must remit the revenue recovery dues, interest and other charges before executing the sale deed to the village office or the treasury through challan.

Concept of Bought-in-land

The Bill introduces the concept of ‘Bought-in land’. Bought-in-land means the properties that are taken over by the government after they remain unsold during auctions. It also provides for the reconveyance of Bought-in-land. When the defaulter applies for reconveyance of bought-in-land within a period of 5 years of the sale date, the defaulter can reclaim the property by paying the outstanding arrears and interest. 

Upon payment of the arrears due and interest, the government or the institution will reconvey (transfer back) the land to the defaulter. This prevents the immediate loss of land and gives time for the defaulter of the bought-in-land to get back his/her land within 5 years of reconveyance application.

Postponement of attachment and payment of arrears in installments

The Bill provides power to the government to postpone the attachment and sale of land for a period of one year upon an application filed by the defaulter to pay the arrears in installments after service of the demand notice.

The Kerala Revenue Recovery Act, 1968, provides for the recovery of arrears of public revenue due on the land. It empowers the District Collector to issue a demand notice for the payment of dues and to proceed with the attachment and sale of the land to recover the arrears due.

However, the Kerala Revenue Recovery (Amendment) Bill, 2024, provides amendments to protect the defaulter’s interests. It marks a significant shift towards a balanced and compassionate approach to revenue recovery in Kerala and relieves borrowers struggling with financial distress.

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