K.P.Chinnasamy v. State Bank of India, Belur Branch

1BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 08.04.2011CORAM:THE HONOURABLE MS.JUSTICE K.SUGUNAANDTHE HONOURABLE MR.JUSTICE A.ARUMUGHASWAMYW.P.(MD).No.2800 of 2011and M.P.Nos.1 to 3 of 2011K.P.Chinnasamy : Petitioner Vs.1.The Authorized Officer, State Bank of India, Belur Branch, Thumbal Main Road, Belur, Salem District.2.M/s.Win Associates, No.C-99, 10-B Cross, West Extension, Thillai Nagar, Trichy 620 018.3.The Presiding Officer, Debts Recovery Tribunal, IV Floor, Kalyani Towers, Melur Road, Madurai.: RespondentsPRAYER: Writ Petition is filed under Article 226 of the Constitution ofIndia praying to issue a Writ of Certiorarified Mandamus calling for therecords of the first respondent pertaining to 13(4) possession noticeissued by the first respondent under SARFAESI Act, 2002, dated 24.03.2010and quash the same and consequently direct the first respondent toregularize the loan account of the petitioner. For Petitioner: Mr.S.SureshFor Respondent 1: Mr.S.Sethuraman O R D E R[Order of the Court was made BY K.SUGUNA, J]This Writ Petition is filed challenging 13(4) possession notice dated24.03.2010 issued by the first respondent bank under the Securitisationand Reconstruction of Financial Assets and Enforcement of SecurityInterest Act, 2002, [hereinafter referred to as "the Act"].2. The stand of the learned counsel appearing for the petitioner isthat even as per the possession notice issued by the first respondentbank, the lands comprised in S.F.Nos.28/6 and 28/1 are agricultural lands.Under Section 31(i) of the Act, the agricultural lands cannot be thesubject matter of the issue and the same is applicable with reference tothe dwelling house of the agriculturist. In support of his contention, thelearned counsel for the petitioner has relied on a Judgment of a DivisionBench of this Court in J.Malliga v. Authorized Officer, Union Bank ofIndia reported in 2010 (4) MLJ 63, at Paragraph Nos.9 and 10, which readas follows:- https://hcservices.ecourts.gov.in/hcservices/ 2"9. In the present case, the impugned notice itself refersto the land as "cardamom plantations". The cultivation of thecardamom requires normal agricultural activities, and therefore,applying the normal principles of interpretation in fiscalstatutes, according to which, if there are two views possible,one favourable to the assessee should be given. In this case,the one favouorable to the petitioners, who are the borrowers,should be given. Section 31(i) of the SARFAESI Act reads asfollows :-"31. Provisions of this Act not to apply in certaincases.– The provisions of this Act shall not apply to–...(i) any security interest created in agriculturalland ..."In D. Ravichandran vs. Manager, Indian Overseas Bank, (2006) 132Company Cases 803 (Madras), the Bank contended that the asset inthat case was not an agricultural land but a barren land. Alearned single Judge of this Court held that, "the questionwhether the secured asset in question is an agricultural land ornot, whether any agricultural operations are being carried on bythe petitioner therein etc., in the absence of any documentaryproof on record are undoubtedly question of fact ..." andrefused to go into the question under Article 226 of theConstitution of India. In Model Financial Corporation vs.Indian Bank, W.P. No.3705 of 2007 decided on 20.12.2007, alearned single Judge of the Andhra Pradesh High Court observedthat the submissions made "relating to the aspect whether thesubject matter of the security would fall within theagricultural lands or not and, at present, whether they arebeing put to agricultural use or not are predominantly questionsof fact and cannot be gone into by a writ court". In thepresent case, it is admitted that it is a cardamom estate, inparagraph 4 of the counter. The sanction order refers toproduction of cardamom. The General Comments at column 12 ofthe sanction order shows that the loan is for "new cardamonplanting". The recommendation by the Branch Manager of the Bankfor sanctioning the term loan is as follows :"The undersigned inspected the land on 8th May, 2005. Theland is well prepared for new planting. For irrigation,sufficient amount of water available in a well within the field.The whole area is irrigated with the help of pipe line. Theapplicant's husband Mrs. T.K.S. Jothi has good experience incardamom plantation. He is looking after the land."Therefore, the fact that the mortgaged land is a cardamom estateis not disputed. The loan is for planting the crop. When it isadmitted by the respondent-Bank that the above activities arecarried on in the land and that cardamom is planted, then thejudgments in A.I.R. 1977 S.C. 113, A.I.R. 1957 S.C. 768 andA.I.R. 1977 S.C. 121 cited supra will necessarily apply, sinceas stated earlier, cultivation of cardamom requires normalagricultural activities. In these circumstances, it is not https://hcservices.ecourts.gov.in/hcservices/ 3necessary to direct the petitioner to invoke the alternateremedy since as per the section extracted above, the Act doesnot apply to agricultural land. 10. In view of the above, the impugned notice is withoutjurisdiction and the respondent-Bank cannot proceed against theproperties of the petitioners under the Securitisation andReconstruction of Financial Assets and Enforcement of SecurityInterest Act (SARFAESI), 2002. It is needless to say that therespondent-Bank has the right to recover the amounts due in amanner known to law. The invocation of this Act alone is heldto be barred by Section 31(i) of the SARFAESI Act."3. On the other hand, it is the stand of the learned counsel appearingfor the first respondent bank that without exhausting the alternativeremedy available under the Act, the petitioner has straight-awayapproached this Court. According to the learned counsel for the firstrespondent bank, it is an admitted fact that while filing the present WritPetition, the Debts Recovery Tribunal was not functioning, consequently,this Writ Petition has been filed. But, now the Debts Recovery Tribunal isfunctioning, and therefore, the petitioner has to be directed to approachthe Debts Recovery Tribunal. In support of his contention, the learnedcounsel for the first respondent bank has relied on a Judgment of aDivision Bench of this Court in Kalpesh P.C.Surana v. Indian Bank reportedin 2010 (3) MLJ 849 at Paragraph No.20, which reads as follows:-"20. The issues whether the provisions of the Act areapplicable, whether there is any procedural error are allmatters to be adjudicated in an application (appeal) underSection 17 of the Act and not in a writ petition. In thisregard, we are guided by the decision of the Supreme Court inPUNJAB NATIONAL BANK V. O.C.KRISHNAN (2001) 6 SCC 569), whichdealt with a decision of the Calcutta High Court, whichexercised jurisdiction under Article 227 of the Constitutionand interfered with an order of a Debt Recovery Tribunalordering sale of mortgaged property under the provisions ofRecovery of Debts Due to Banks and Financial Institutions Act,1993. The Supreme Court held thus:"6. The Act has been enacted with a view to provide aspecial procedure for recovery of debts due to the banks and thefinancial institutions. There is a hierarchy of appeal providedin the Act, namely, filing of an appeal under Section 20 andthis fast-track procedure cannot be allowed to be derailedeither by taking recourse to proceedings under Articles 226 and227 of the Constitution or by filing a civil suit, which isexpressly barred. Even though a provision under an Act cannotexpressly oust the jurisdiction of the court under Articles 226and 227 of the Constitution, nevertheless, when there is analternative remedy available, judicial prudence demands that theCourt refrains from exercising its jurisdiction under the saidconstitutional provisions. This was a case where the High Courtshould not have entertained the petition under Article 227 ofthe Constitution and should have directed the respondent to takerecourse to the appeal mechanism provided by the Act." https://hcservices.ecourts.gov.in/hcservices/

44. We have considered the above submissions made by the learnedcounsel on either side.5. It is not disputed by the learned counsel appearing for thepetitioner that as on date, the Debts Recovery Tribunal is functioning.Since there is a statutory alternative remedy available, we agree with theobjection raised by the learned counsel for the first respondent bank. 6. In view of the above, the Writ Petition is disposed of givingliberty to the petitioner to approach the Debts Recovery Tribunal within aperiod of two weeks from today and for a period of two weeks from today,the first respondent bank is restrained from taking any further stepsbasing on Section 13(4) possession notice dated 24.03.2010. No costs.Consequently, connected Miscellaneous Petitions are closed. SD DEPUTY REGISTRAR ( LA )/TRUE COPY/ASST REGISTRAR NBTo1. The Authorized Officer, State Bank of India, Belur Branch, Thumbal Main Road, Belur, Salem District.2.The Presiding Officer, Debts Recovery Tribunal, IV Floor, Kalyani Towers, Melur Road, Madurai.DM:2011::APRIL:09::: ORDER MADE INW.P.(MD).No.2800 of 201108.04.20114P:3C::