Recovery charge from defaulting farmers like flogging dying man: HC

Last Updated: Tuesday, November 9, 2010 - 21:43

Allahabad: The Allahabad High Court today
strongly disapproved of Uttar Pradesh government`s policy of
realising 10 per cent recovery charges from farmers who
defaulted on agriculture loans saying it goes against the
principle of social justice and is like "flogging a dying
man".

Passing the order, Justice S U Khan said such a policy,
even if it were "perfectly in accordance with law", was
against the principle of social justice and to defend such a
measure, "the government will have to shed its facade of being
a welfare state".

The order came while disposing of a petition filed by
Jagdish Kumar Singh, a farmer based in Moradabad, who had
taken agriculture loan from the State Bank of India in
September 2007 for agricultural purposes.

Following his inability to pay the debt, the bank
informed the district administration which initiated
proceedings towards recovery of the loan amount along with
interest payable to the bank and an additional sum, equivalent
to 10 per cent of the loan amount, towards "recovery charges".

The recovery proceedings were challenged by the
petitioner.

"It is shocking to the conscience, though it may be
legal. It is like flogging a dying man", the court remarked
adding that imposing 10 per cent recovery charges on a debtor
who has not been able to pay the loan and the interest
thereof, was tantamount to "unabashed and uncontrolled
capitalism".

"If in the name of social justice, loans are advanced to
farmers on lower interest rates and are recoverable in small
instalments over a long period of time, then the same
philosophy demands that no recovery charges shall be realised
from them", the court added.

However, the court said it was leaving it for the state
government to take a "conscientious decision" in the matter
and directed that the court`s views be made known to the
state`s Chief Secretary and Cabinet Secretary.

-PTI



First Published: Tuesday, November 9, 2010 - 21:43

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