The Honourable Mr v. The Union Bank of India

In the High Court of Judicature at MadrasDated: 6.2.2008Coram:The Honourable Mr.Justice S.J.MukhopadhayaandThe Honourable Mr.Justice M.VenugopalWrit Appeal No.163 of 2008& Writ Petition No.1634 of 2008& M.P.No.1 of 2008 in W.A.No.163 of 2008& M.P.Nos.1 and 2 of 2008 in W.P.No.1634 of 2008B.Jagadeesh .. Appellant in Writ Appeal and petitioner in Writ Petitionvs.1. The Union Bank of India, Rep. by its Authorised Officer, 649/50, Oppanakara Street, Coimbatore-641 001.2. The Authorised Officer Under SARFAESI Act, 2002, Union Bank of India, Regional Office, 649/50, Oppanakara Street, Coimbatore-641 001.3. The Branch Manager, Union Bank of India, Coonoor Branch, Bedford, Upper Coonoor, Coonoor, The Nilgiris. .. Respondents in both the Writ Appeal and the Writ PetitionWrit Appeal against the order of this Court dated 25.1.2008 inM.P.No.2 of 2008 in W.P.No.1634 of 2008.Writ Petition No.1634 of 2008 filed under Article 226 of theConstitution of India, praying for issuance of a Writ ofCertiorarified Mandamus, calling for the records relating to thenotice issued by the second respondent in reference RO:LSD 800,dated 3.9.2007 and the consequential Tender cum Auction Sale Noticedated 28.12.2007 published in the Indian Express, Coimbatore https://hcservices.ecourts.gov.in/hcservices/ Edition, dated 28.12.2007 and quash the same and forbear therespondents from in any manner interfering with the peacefulpossession and enjoyment of the agricultural lands comprised inSurvey Nos.91/11, 91/25, 91/26, 91/24, 91/20, 91/25, 91/22, 91/23and 91/21, Mulligur Village, measuring a total extent of 8.28hectares, approximately 20.45 acres. For appellant/Writ Petitioner : Mr.T.S.SivagnanamFor respondents in both WA/WP : Mr.Srinath SridevanJudgment(The Judgment of the Court was delivered by S.J.Mukhopadhaya,J)As the parties in both the Writ Petition and the Writ Appealare one and the same, the parties are arrayed as per the rank inthe Writ Petition.2(i). The petitioner who is the borrower, preferredW.P.No.1634 of 2008 against the notice issued by the secondrespondent-Union Bank of India in Reference RO:LSD 800, dated3.9.2007 and the consequential Tender-cum-Auction Sale Notice,dated 28.12.2007. Further prayer has been made to forbear therespondents from in any manner interfering with the peacefulpossession and enjoyment of the agricultural lands in SurveyNos.91/11, 91/25, 91/26, 91/24, 91/20, 91/25, 91/22, 91/23 and91/21, Mulligur Village, measuring a total extent of 8.28 hectares,approximately 20.45 acres.(ii) The aforesaid Writ Petition was initially heard by thelearned single Judge on a petition for interim stay and by theimpugned order dated 25.1.2008, the following conditional order ofinterim stay was passed:"2. Considering the facts andcircumstances of the case, there will be anorder of interim stay on condition that thepetitioner shall pay a sum of Rs.25,00,000/-(Rupees twenty five lakhs only) before29.1.2008, failing which, the interim staygranted shall stand cancelled automaticallywithout further reference to this Court.The respondents are at liberty to proceedfurther in case of any default of payment."(iii) Having asked the petitioner to pay a sum of Rs.25 lakhs,the petitioner preferred Writ Appeal No.163 of 2008 against suchpart of the interim order. In this background, we heard both the https://hcservices.ecourts.gov.in/hcservices/ Writ Appeal and Writ Petition together on merits for their finaldisposal.3. From the pleadings and records, it appears that the demandnotice dated 3.9.2007 issued under Section 13(2) of theSecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 (for short, 'the Act')by the respondents-Union Bank of India (for short, 'the Bank'). Inthe reply dated 17.10.2007 filed under Section 13(3-A) of the Act,the following pleas were taken by the petitioner:(i) The claim made in the notice already formed part of theappeal filed by the petitioner which is pending in O.S.(S).No.87 of2006 and therefore, the question of making a subsequent demandunder a fresh notice does not arise.(ii) Notice under Section 13(2) is defective, since it doesnot disclose the execution of loan documents, nor it reflects as toon what interest the amount as alleged as outstanding had beenclaimed.(iii) The very invocation of the notice as against anagricultural property is not sustainable in view of Section 31(i)of the Act. 4. The property being agricultural property, similar pleashave been taken by the petitioner before this Court. It issubmitted by learned counsel appearing for the petitioner that therespondents have not disputed the fact that the land in question isan agricultural property and thereby, the provisions of the Act arenot attracted.5. Learned counsel appearing for the Bank referred to thereply submitted by the Bank, dated 27.10.2007 and in the groundsshown in the letter dated 27.10.2007 in reply to the petitioner'sobjection, it is only stated that the property offered ascollateral by the petitioner in the account, does not come underthe purview of the exemption laid down under the Act. Further, itis stated that the demand notice dated 3.9.2007 does not form partof the appeal filed by the petitioner, which is pending in O.A.(S).No.87 of 2007.6. We have heard the learned counsel appearing for the partiesand noticed the rival contentions.7(i). It is not in dispute that the provisions of the Act willnot apply in certain cases as stipulated under Section 31 of theAct, including any security interest of created in agriculturalland. But that is a question of fact to be determined taking intoconsideration the nature of the land; whether the security interesthas been created on an agricultural land or not, as in the present https://hcservices.ecourts.gov.in/hcservices/ case, in their reply, the Bank has disputed the fact that the landis covered under Section 31 of the Act. (ii) Further, it appears from the submissions and pleadingsthat the Firm availed two loans and the petitioner and his brotheravailed two separate loans and in regard to one of them, theO.A.No.87 of 2006 is pending before the Tribunal at Coimbatore. Asunder Section 17 of the Act, in the present case, including theborrower, if aggrieved by any measures referred to under Section 13(4) of the Act taken by the secured creditors, has a right toprefer an application along with the requisite fee before the DebtsRecovery Tribunal, we are of the view that instead of deciding thecase under Article 226 of the Constitution of India, the petitionershould avail the alternative remedy. 8(i). As we find that the auction-sale notice was issued on28.12.2007 and in the normal course, application can be filed underSection 17 of the Act within 45 days from the date on which suchmeasures have been taken, we allow the petitioner to prefer anapplication under Section 17 of the Act against the demand noticedated 3.9.2007 and the auction notice dated 28.12.2007, withinthree weeks from today. (ii) If any application is preferred by the petitioner beforethe Tribunal having jurisdiction over the matter, within theaforesaid period of three weeks, the Tribunal, after issuingnotice, will fix an early date and decide the matter on merits,after hearing the parties. The Tribunal shall also decide thepreliminary issue whether the demand notice dated 3.9.2007 whichwas issued under Section 13(2) of the Act and the auction-salenotice dated 28.12.2007 which was issued under Section 13(4) of theAct, are maintainable, in view of Section 31(i) of the Act.(iii) The petitioner is given liberty to file a petition forinterim order before the Tribunal. (iv) The respondents should not auction-sale the property inquestion for a period of five weeks from today.(v) In case the petitioner fails to prefer any application orthe petition for interim order, within the time stipulated above,the present order shall stand recalled . 9. In view of the above observation and direction, we are ofthe view that the Writ Appeal has become infructuous. https://hcservices.ecourts.gov.in/hcservices/

10. Both the Writ Appeal and Writ Petition are disposed ofwith the aforesaid observation and direction. No costs. TheMiscellaneous Petitions are closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.csTo1. Debts Recovery Tribunal, Coimbatore.2. The Authorised Officer Union Bank of India, 649/50, Oppanakara Street, Coimbatore-641 001.3. The Authorised Officer Under SARFAESI Act, 2002, Union Bank of India, Regional Office, 649/50, Oppanakara Street, Coimbatore-641 001.4. The Branch Manager, Union Bank of India, Coonoor Branch, Bedford, Upper Coonoor, Coonoor, The Nilgiris.1 cc to M/s. T.S.Sivagnanam, Advocate, Sr. 58021 cc to M/s. Srinath Sridevan, Advocate, SR. 6206Writ Appeal No.163 of 2008& Writ Petition No.1634 of 2008AVM (CO)kk 7/2