J U D G M E N T
~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner, who is a farmer in possession of
123.52 Ares of agricultural land in Chittur Taluk of Palakkad District, is challenging Ext.P10 order passed by the Debts Recovery Tribunal-I, Ernakulam in I.A. No.1633/2023. The IA was one filed seeking appointment of Advocate Commissioner to inspect the secured asset covered by Exts.P2 Sale Notice and report the lie and nature of the property and to report the nature of cultivation carried out in the property.
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2. The petitioner states that he applied for an agricultural loan from the 1strespondent Bank. The Bank sanctioned ₹25,50,000/-. Unprecedented floods in 2018 caused heavy loss to agriculture and the EMIs were defaulted. The floods were followed with Covid-19 pandemic. The Bank filed Ext.P1 OA. No.200/2022 in the DRT seeking to realise ₹34,63,312.49. Ext.P2 e-auction notice was published thereafter on 10.04.2023, for recovery of ₹37,16,813/-.
3. The petitioner states that it is evident from Ext.P1 OA that the loan sanctioned to the petitioner was agricultural loan intended for benefitting the farmers. No proceedings can be initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 against an agricultural property. By Exts.P3 and P4, the Village Officer and the Agricultural Officer have certified that the secured asset is an agricultural land. Ext.P5 photographs would also establish this fact.
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4. The petitioner therefore challenged Ext.P2 Sale Notice, filing SA No.242/2023 in the DRT. IA No.1633/2023 was filed praying for appointment of an Advocate Commissioner for local inspection of the secured asset. As the sale did not take place as notified, the Bank published Ext.P8 sale notice dated 17.07.2023. The petitioner challenged Ext.P8 sale notice amending the SA. The Tribunal considered Ext.P6 commission application and dismissed the IA, without appreciation of facts, contends the petitioner.
5. The counsel for the petitioner argued that it is evident from Ext.P1 OA filed by the Bank that the loans extended to the petitioner were agricultural loans. The loans were availed for improving agricultural activities in the land. The security created was mortgaging the agricultural land. By dismissing the IA for Advocate Commission, the Tribunal denied the petitioner to bring on record credible evidence regarding agricultural nature of the secured asset.
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6. Relying on Order XXVI Rule 9 of the Code of Civil Procedure, 1908, the counsel for the petitioner argued that the purpose of appointing Commission for local inspection is for elucidating any matter in dispute. The matter in dispute here is the nature of the secured asset. It can be decided only by appointing an Advocate Commissioner. The Tribunal made a major error in making a rowing enquiry while deciding on the application for appointment of Commission.
7. The respondents entered appearance through Standing Counsel and resisted the OP(DRT). The respondents contended that the petitioner has not produced any evidence to show that the secured assets were an agricultural land at the time of creating the mortgage. There is no material placed on record to show that any agricultural operations were being done in the secured land at the time of creating the mortgage. Since the crucial aspect to be considered for claiming exemption under Section 31(1) of the Securitisation Application is whether the secured properties in question were actually put to use as agricultural land at the
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time when security interest was created. No agricultural operations were carried out and no agricultural income whatsoever was derived from the property at the time of creating the mortgage. No useful purpose would be served by deputing an Advocate Commissioner at this stage especially when the mortgage was created in the year 2015.
8. The Debts Recovery Tribunal has considered all the relevant inputs and the settled positions of law while passing Ext.P10 order. As on date, an amount of ₹42,21,081/- is due from the petitioner. The attempt of the petitioner is only to protract and delay the recovery proceedings initiated by the Bank for recovering public money in the hands of the petitioner.
9. The respondents further urged that the Tribunal has exercised the jurisdiction vested in it under Section 17 of the SARFAESI Act. It is settled law that the power under Article 227 of the Constitution of India can be exercised, when there is grave injustice or failure of justice, or when the court below has assumed a jurisdiction which it does not
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have or has failed to exercise jurisdiction which it does have. Ext.P10 order passed by the Tribunal does not suffer from any of the above infirmities.
10. It is also settled law that the High Court exercising supervisory jurisdiction does not act as a court of first appeal to reappreciate or reweigh the evidence or the facts upon which the determination under challenge is based. It is trite that whenever the Tribunal has considered the matter in its proper perspective and where the impugned order shows the application of mind of the Tribunal, this Court will not entertain a petition under Article 227 merely because another view could have been taken, contended the Standing Counsel.
11. I have heard the learned counsel for the petitioner and the learned Standing Counsel representing the respondents.
12. The petitioner is aggrieved by Ext.P10 order of the Tribunal in IA No.1633/2023 in SA No.242/2023 by which the Tribunal has rejected the application filed by the petitioner
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seeking to appoint an Advocate Commissioner to inspect the secured asset covered by Exts.P2 and P8 sale notices. The specific case of the petitioner is that the secured asset is an agricultural land and is exempted from the provisions of the Securitisation Act, 2002.
13. Section 31 of the Securitisation Act reads as follows:
31. Provisions of this Act not to apply in certain cases -
The provisions of this Act shall not apply to —
(a) a lien on any goods, money or security given by or under the Indian Contract Act, 1872 (9 of 1872) or the Sale of Goods Act, 1930 (3 of 1930) or any other law for the time being in force;
(b) a pledge of movables within the meaning of section 172 of the Indian Contract Act, 1872 (9 of 1872);
(c) creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft Act, 1934 (24 of 1934);
(d) creation of security interest in any vessel as defined in clause (55) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958); [* * * * * ]
(f) any rights of unpaid seller under section 47 of the Sale of Goods Act, 1930 (3 of 1930);
(g) [any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act)]or sale under the first proviso to sub-section (1) of section 60 of
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the Code of Civil Procedure, 1908 (5 of 1908);
(h) any security interest for securing repayment of any financial asset not exceeding one lakh rupees;
(i) any security interest created in agricultural land
(j) any case in which the amount due is less than twenty per cent. of the principal amount and interest thereon.
It is evident therefore that any security interest created in agricultural land is exempted from the provisions of the Act in view of sub-section (i) of Section 31.
14. The petitioner has produced Ext.P3 certificate issued by the Village Officer which states that the secured asset is presently used as agricultural land. Ext.P4 certificate issued by the Agricultural Officer certifies that the petitioner is a farmer and the secured asset is cultivated with coconut trees and fodder grass. The petitioner has also produced Ext.P5 photographs showing coconut trees and fodder grass being cultivated in the land.
15. To avail the exemption under Section 31(i), apart from Exts.P3 to P5, the petitioner will have to establish that the land was agricultural land at the time of mortgage of the
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property to the respondent-Bank. The petitioner filed IA No.1633/2023 seeking appointment of a Commission for local investigation, to inspect the property covered by the sale notice published by the Bank and to report the lie and nature of the property.
16. The Tribunal while rejecting the application for appointment of Advocate Commissioner, held that the petitioner has not filed any material before the Tribunal to prove his claim that the secured asset was agricultural property on the date of creation of security interest over the property as laid down by the Hon'ble Apex Court. The Tribunal relied on the judgment of the Apex Court in Indian Bank and another v. K. Pappireddiyar and another [AIR 2018 SC 3540], wherein the Apex Court has held that the classification of land in the revenue records as agricultural is not dispositive or conclusive of the question whether the SARFAESI Act does or does not apply. Whether a parcel of land is agricultural must be deduced as a matter of fact from the nature of the land, the use to which it was being put on
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the date of the creation of the security interest and the purpose for which it was set apart.
17. The Tribunal held that in Annexure-A3 photographs, cultivation of coconut trees and fodder grass is seen. No supporting documents have been filed to show that Annexure-A3 photograph is pertaining to the secured asset. The Tribunal further held that Annexure-A3 also will not be an authentic proof to show that the secured asset was agricultural property on the date of creation of security interest.
18. The afore findings of the Tribunal must necessarily be held as misconceived and misdirected. The petitioner has produced certificates issued by the Village Officer and Agricultural Officer to show that the land is put to use for agricultural purposes. Those certificates cannot be treated as revenue records. Those certificates have been issued on the basis of enquiry and inspection. The finding of the Tribunal that the petitioner has not filed any material to prove his claim is therefore unsustainable.
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19. It is true that Exts.P3 and P4 alone may not be sufficient for the petitioner to claim exemption under Section 31(i) of the Act, 2002. To avail the exemption, the petitioner may have to further establish that the land in question was put to agricultural purposes at the time of creation of mortgage. This can be established by the petitioner by causing a local inspection. Such inspection can bring in credible evidence as to the age of the coconut trees and the status of the land as an agricultural land at the time of creation of the mortgage.
20. The Standing Counsel relied on a judgment of this Court in OP(DRT) No.216/2023 to contend that the petitioner has not produced any evidence to substantiate the contention that the secured asset was an agricultural land as on the date of creation of security interest. The facts of the present OP(DRT) are different from the facts in OP(DRT) No.216/2023. In the case of the petitioner herein, the loans sanctioned by the Bank itself are agricultural loans extendable to farmers. The loan was taken for improving
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agriculture in the land provided as security interest. The petitioner has produced prima facie materials to show that the land is an agricultural land in which coconut trees planted long ago are standing. The petitioner possibly can establish the status of the land as agricultural land at the time of mortgage by causing a local inspection. Rejection of the application submitted by the petitioner for local inspection in the circumstances would amount to shutting out the best evidence in the case in the form of report on local inspection.
21. In the facts of the case, I find that Ext.P10 order is illegal and unsustainable. Ext.P10 is set aside. The Tribunal is directed to reconsider IA No.1633/2023 and pass orders afresh expeditiously. Further proceedings pursuant to Exts.P2 and P8 sale notices and any coercive proceedings against the secured asset in question, shall stand deferred till the Tribunal passes orders afresh as directed above. The OP(DRT) is disposed of as above.
Sd/-
N. NAGARESH, JUDGE
aks/11.12.2023