Karnataka High Court
Sri U M Ramesh Rao vs Union Bank Of India on 29 January, 2021
Author: B.V.Nagarathna And ,Nrj
-: 1 :-
IN THE HIGH COURT OF KARNATAKA AT BENGALURU R
DATED THIS THE 29TH DAY OF JANUARY, 2021
PRESENT
THE HON'BLE MRS. JUSTICE B.V.NAGARATHNA
AND
THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY
WRIT APPEAL No.538/2020 (GM-RES)
Connected with
WRIT APPEAL No.545/2020 (GM-RES)
IN W.A.No.538/2020
BETWEEN:
1. SRI U.M. RAMESH RAO
S/O. LATE U.M. KRISHNA RAO
AGED ABOUT 77 YEARS,
CHARTERED ACCOUNTANT, I G ROAD,
CHIKKAMAGALUR - 577 101.
2. M/S. VIJAYADEVAN COFFEE ESTATE
A PARTNERSHIP FIRM HAVING
OFFICE AT I G ROAD,
CHIKKAMAGALUR - 577 101.
REPRESENTED BY ITS PARTNER
SRI U.M. RAMESH RAO.
3. M/S. YELLIKUDIGE ESTATE
A PARTNERSHIP FIRM HAVING
OFFICE AT YELLIKUDIGE VILLAGE
ALDUR HOBLI,
CHIKKAMAGALUR TALUK - 577 111
REPRESENTED BY ITS PARTNER
SRI U.M. RAMESH RAO. ... APPELLANTS
(BY SRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
SRI. SRINIVAS S.V., ADVOCATE)
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AND:
UNION BANK OF INDIA
(FORMERLY CORPORATION BANK)
M.G. ROAD,
CHIKKAMAGALUR - 577 101
REPRESENTED BY ITS
AUTHORISED OFFICER. ... RESPONDENT
(BY SRI. DHYAN CHINNAPPA, SENIOR ADVOCATE FOR
SMT.DIVYA PURANDAR, ADVOCATE FOR C/R;
SRI. SHASHIKIRAN SHETTY, SENIOR ADVOCATE FOR
SMT. LATHA S. SHETTY, ADVOCATE FOR
IMPLEADING PROPOSED R-2)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER DATED 13/11/2020 IN W.P.No.12461/2020 (GM-RES)
PASSED BY THE LEARNED SINGLE JUDGE AND CONSEQUENTLY,
ALLOW THE WRIT PETITION AS PRAYED FOR.
IN W.A.No.545/2020
BETWEEN:
1. M/S. SSJV PROJECTS PRIVATE LIMITED
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 1956,
HAVING ITS REGISTERED OFFICE AT
NO. 25/2, 12TH FLOOR,
SN TOWERS, M.G. ROAD,
BANGALORE - 560 001.
REPRESENTED BY ITS DIRECTOR
SHRI. SOMASHEKAR SALIMATH.
2. MR. MANOHAR SHETTY
DIRECTOR OF M/S. SSJV PROJECTS
PRIVATE LIMITED,
S/O. LATE NARAYANA SHETTY,
AGED ABOUT 59 YEARS,
NO.25/2, 12TH FLOOR,
SN TOWERS, M.G. ROAD,
BANGALORE - 560 001. ... APPELLANTS
(BY SRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
SRI. SHREYAS JAYASIMHA, ADVOCATE)
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AND:
M/S. ALLAHABAD BANK
(NOW INDIAN BANK,)
INDUSTRIAL FINANCE BRANCH-N 603,
NO.47, MANIPAL CENTRE,
DICKENSON ROAD,
BANGALORE - 560 042.
REPRESENTED BY ITS
CHIEF MANAGER. ... RESPONDENT
(BY SRI H.R. KATTI, ADVOCATE FOR C/R)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
IMPUGNED ORDER DATED 14/10/2020 PASSED BY THE
HON'BLE SINGLE JUDGE IN W.P.No.13932/2015 AND ALLOW
THE WRIT PETITION.
THESE WRIT APPEALS HAVING BEEN HEARD AND
RESERVED ON 17.12.2020, AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT, TODAY, NAGARATHNA J.,
PRONOUNCED THE FOLLOWING:
JUDGMENT
Though these appeals were listed for preliminary
hearing, with the consent of learned counsel on both sides,
they were heard finally.
2. Writ Appeal No.538 of 2020 arises from Writ
Petition No.12461 of 2020 (GM-RES) disposed of on
13.11.2020, while Writ Appeal No.545 of 2020 arises from
Writ Petition No.13932 of 2015 (GM-RES) disposed of on
14.10.2020. In both the writ petitions, respective learned
Single Judges have declined to entertain the writ petitions
on the ground of availability of an alternative remedy of
appeal available under Section 17 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (54 of 2002) ('SARFAESI Act'
for the sake of convenience). Hence, these appeals.
3. Since common questions of law and facts arise
in these appeals, they have been connected together,
heard and disposed of by this common judgment.
4. The quintessential question that arises for
consideration in these appeals is, whether, coffee
plantation is agricultural land within the meaning of
Section 31(i) of the SARFAESI Act and therefore, the said
Act does not apply to coffee plantation.
Brief facts of the case in Writ Appeal No.538 of
2020:
5. In this case, petitioner No.1 is the partner in
petitioner Nos.2 and 3 partnership firms. Petitioner No.1 is
the co-owner of Watekhan Estate. The petitioners are
owners of 371 acres of coffee plantation / estate in
Hirekolale, Yelagudige and Aldur villages of Chikkamagalur
Taluk. Respondent/Bank (formerly, Corporation Bank)
extended various credit facilities to the writ petitioners in
the nature of agricultural cash credit loans, agricultural
term loans and mortgage loans in relation to the coffee
plantation.
6. There are three schedules, viz., Schedule 'A',
Schedule 'B' and Schedule 'C' comprising of 212.04 acres,
136 acres and 23.17 acres respectively, situated at
Hirekolale village, Kasaba Hobli, Chikkamagalur Taluk and
District. The nature of loan in this case is an Agricultural
Term Loan of Rs.490.00 lakhs and the purpose being to
pay off the share of a retiring partner so as to acquire the
absolute title over Yellikudige estate measuring 154.17
acres. The loan amount along with margin money of
Rs.210.00 lakhs was released to the retiring partner
Sri.K.R.Sethna of Yellikudige estate. There was a Coffee
Crop Hypothecation Loan for 1998-99 season of Rs.10.00
lakhs under Planter's Credit Card Scheme. That was to
meet Coffee crop raising/estate maintenance expenses of
1998-99 season. The repayment was to be by the sale
proceeds of 1998-99 season's coffee crop estimated at 72
tonnes valued at Rs.54.00 lakhs. The equitable mortgage
was of Yellikudige estate admeasuring 154 acres 17 guntas
along with hypothecation of plant and machinery valued at
Rs.700.00 lakhs. There was a collateral security by way
of equitable mortgage of Watekhan Coffee Estate
admeasuring 215.16 acres valued at Rs.662.95 lakhs. The
personal guarantees of continuing partners in their
individual capacity were also given. So also, coffee crop
loans of the year 1997-98 in the names of the appellants
herein were to be closed (as per Annexure 'A'). There
were loans taken in the season 2000-01 by hypothecation
of coffee crops and mortgage of the Watekhan estate and
Yellikudige estate (Annexure 'B').
7. Annexure 'C' is the sanction of the Coffee Crop
Hypothecation Loan during the season 2004-05 for
maintenance of Watekhan Estate. Thus, the loans were
sanctioned under the Corporate Kisan Cash Credit Scheme
(KCCS). The Record of Rights (RTCs) in respect of the
lands in Schedule 'A', Schedule 'B' and Schedule 'C' are as
per Annexures 'D' to 'D16', 'E' to 'E20' and 'F' to 'F3'
respectively. The aforesaid documents would clearly
indicate that the Schedules 'A', 'B' and 'C' lands were being
utilized for the purpose of Coffee plantation as on the
dates when the respective loans were sanctioned. Further,
the nature of the loan was also for the purpose of
improvement of the Coffee plantation and also to pay off
the share of the retiring partner of the firm engaged in
cultivation of coffee. It is evident that the schedule lands
were being used for coffee cultivation on the date of the
sanction of the respective loans.
8. Since, the writ petitioners did not repay the
debt, demand notice dated 28.05.2019 was issued under
Section 13(2) of the SARFAESI Act calling upon petitioner
No.1 to pay a sum of Rs.18,81,45,558/-. A reply or
representation was made in response to the said notice on
06.07.2019 to which the Bank gave its reply on the same
day. Another representation was made on behalf of the
petitioners on 23.08.2019 stating that no action under
SARFAESI Act can lie in respect of the schedule lands.
But, the Bank, replied on 26.09.2019 brushing aside the
objection of the petitioners. The Bank proceeded to issue
possession notice dated 27.09.2019 under Section 13(4) of
the SARFAESI Act, read with Section 9 of the Security
Interest (Enforcement) Rules, 2002 ("2002 Rules" for
short) and it took symbolic possession of the schedule
land.
9. Plaintiff No.1 approached the Debts Recovery
Tribunal-I, Bengaluru, ('DRT' for short) in S.A.
No.542/2019 and also filed an application for stay of
further proceedings. In the meanwhile, e-auction notice
was issued on 14.02.2020 by the Bank. Ultimately, the
Bank issued notice dated 12.10.2020 (Annexure 'S') for
the sale of the Schedule lands by way of e-auction to be
held on 18.11.2020. The same was assailed in the writ
petition and a declaration was sought to the effect that the
action of the respondent in respect of the schedule lands is
illegal, void and without jurisdiction.
10. The learned Single Judge, by the impugned
order held, since the Bank has initiated proceedings under
the SARFAESI Act, the petitioners have a remedy by way
of an appeal under Section 17 of the SARFAESI Act and
hence, the writ petition was dismissed on 13.11.2020.
Being aggrieved, the appeal has been filed. Subsequent to
the dismissal of the writ petition e-auction was held on
18.11.2020. The auction purchaser has filed an
application for impleadment in this appeal.
Brief facts of the case in Writ Appeal No.545 of
2020:
11. The facts in this case are that petitioner No.1
therein is a company engaged in the execution of hydro-
electrical irrigation and infrastructure projects. Petitioner
No.2 is the Director of petitioner No.1 Company. Petitioner
No.1 had applied to respondent No.1/Bank for a short term
loan of Rs.20 crores on the security of all the movable
assets of petitioner No.1. An agreement styled as "Term
Loan Agreement" was entered into between petitioner No.1
as borrower and the respondent/Bank on 21.11.2008. The
immovable assets of petitioner No.1 included two flats (S
402 and S 703) situated at "ACS - Vasundhara" Phase-II,
Site Nos.2 and 3, near Kodihalli, Bengaluru. They are
shown as item No.1 of the petition schedule property.
Petitioner No.2 on behalf of petitioner No.1 had signed a
Letter of Undertaking regarding creation of mortgage of
item No.1 of the schedule property on 21.11.2008. In
addition, petitioner No.2 created charge on immovable
property, i.e., coffee estate situated at Kolagave village of
Chickamagalur District in favour of the respondent/Bank
which is referred as item No.2 of the schedule property.
Item Nos.1 and 2 of the schedule property were
mortgaged for creating credit facilities aggregating to
Rs.210 crores under bank guarantee/letter of credit
account/short term loan. Thus, equitable mortgage
agreements were entered into in respect of schedule item
Nos.1 and 2 of the immovable properties. Two apartments
which form part of item No.1 of the Schedule property
were auctioned under the SARFAESI Act, but when it came
to dealing with item No.2, it was contended by the
appellants herein that the said land being coffee plantation
and agricultural land, could not be proceeded against,
under the provisions of the SARFAESI Act having regard to
Section 31(i) of the said Act.
12. The petitioners in this case assailed notices
dated 14.08.2012 (Annexures 'A' & 'B') in respect of item
Nos.1 and 2 of the schedule property and assailed letter
dated 31.03.2015 (Annexure 'C') rejecting the
representation dated 18.03.2015 made by the petitioners
in respect of item No.2 of the schedule property, which is a
coffee plantation and to quash the measures taken by the
Bank under the SARFAESI Act in respect of item No.2 of
the Schedule property, which is a coffee plantation
comprised in 200 acres with building and structures at
Ashirwad Estate, Kolagave village, Jagar Hobli Post,
Chikamagalur Taluk and District.
13. The learned Single Judge by his order dated
14.10.2020 observed that since there is an alternative
statutory remedy, the writ petition was not maintainable
and hence, it was dismissed reserving liberty to the
petitioners to approach the appropriate forum. Being
aggrieved by the dismissal of the writ petition, the writ
appeal has been preferred.
Submissions:
14. Learned senior counsel, Sri.S.S.Nagananda,
appearing for the appellants in both the writ appeals
contended that the writ petitions have been dismissed
summarily without appreciating the fact that the
petitioners raised the question of jurisdiction of the
respondent/Banks in initiating action under the provisions
of the SARFAESI Act on the schedule lands which are
coffee plantations as under Section 31(i) of the said Act,
they, being agricultural lands, the Act does not apply. He
contended that the jurisdiction of the respondent/Banks to
take any measure under the provisions of the Act in
respect of the coffee plantations being agricultural lands
was questioned by filing a petition under Article 226 of the
Constitution of India. The writ petitions were maintainable
as there is no definition of the expression "agricultural
land" under the provisions of the SARFAESI Act.
Therefore, it was necessary to interpret and give a
meaning to the said expression in light of the fact that in
both these cases, action under the SARFAESI Act was
sought to be initiated in respect of coffee plantation for the
purpose of recovery of outstanding dues, which was
without jurisdiction. Learned senior counsel submitted
that if coffee plantation comes within the nomenclature of
agricultural land under Section 31(i) of the said Act, then
the SARFAESI Act does not apply to such land. Therefore,
the necessity of giving an interpretation to the expression
"coffee plantation" was sought by the appellants/writ
petitioners in the writ petitions in order to determine
whether the respondent/Banks had any jurisdiction to
initiate action in respect of the coffee plantations.
15. It was further submitted that, learned Single
Judges have failed to appreciate the said aspect of the
matter which goes not only to the jurisdiction of the Banks
to initiate any action or take any measure under the
SARFAESI Act in respect of the coffee plantation which is
agricultural land, but also failed to appreciate that the
SARFAESI Act does not apply to any agricultural land.
16. In this context, learned senior counsel for the
appellants relied upon certain judgments to contend that
coffee plantation is just like any other plantation and the
Madras High Court and Kerala High Court have held that
the lands on which cardamom, coca, turmeric, cinnamon
and rubber are grown, are plantation crops. The lands on
which the said crops are grown are agricultural lands and
therefore, on the basis of the said interpretation, in the
instant case, the schedule lands on which coffee is grown
must be declared to be agricultural land, in which event,
the provisions of the SARFAESI Act would not apply in
respect of the said lands.
17. Learned senior counsel contended that in order
to seek such a determination, which touches upon the
question of jurisdiction or the power of the
respondent/Banks to initiate any action or take any
measure under the provisions of the Act, for the purpose
of recovery of outstanding dues, is a question which ought
to have been considered by the learned Single Judges and
ought not to have relegated the parties to file an appeal
under Section 17 of the SARFAESI Act. In this context, the
judgments relied upon are as follows:
(i) Mohammed Basheer K.P. vs.
Deputy General Manager and
others, [(2010 (2) KLJ 225],
(Mohammed Basheer K.P.);
(ii) Commissioner of Income Tax,
West Bengal vs. Raja Benoy
Kumar Sahas Roy, AIR 1957 SC
768, (Raja Benoy Kumar Sahas
Roy).
(iii) Eshwar Purushothaman Gardens
vs. Indian Bank, [2012 (5) CTC
257], (Eshwar Purushothaman
Gardens);
(iv) J.Malliga and others vs. Union
Bank of India and others, [2010
(4) CTC 710], (J.Malliga) and
(v) Indian Bank and others vs. K.
Pappireddiyar and others, [AIR
2018 SC 3540], (K.Pappireddiyar).
18. Learned senior counsel further submitted that
when the SARFAESI Act does not apply to agricultural
lands, the measures taken or the action initiated by the
respondent/Banks in respect of the coffee plantations was
without jurisdiction, is illegal, null and void and outside the
scope and ambit of the Act and therefore, had to be
quashed by the learned Single Judges. Since, the issue of
jurisdiction arose in the instant cases, the writ petitions
were maintainable. This is because the interpretation of
the expression "agricultural land" in relation to the
schedule land, which are coffee plantations, was necessary
in order to determine the validity of the action of the
respondent Banks vis-à-vis the coffee plantations in
question. Therefore, the writ petitions ought to have been
entertained and not dismissed by relegating the parties to
the DRT.
19. Learned senior counsel contended that the DRT
has no authority to interpret the statute but to only
consider, as to, whether, the measures initiated are in
accordance with law or not and hence, the impugned
orders of the learned Single Judges may be set aside and
the issues that arise in these writ petitions may be
considered.
20. In support of his submissions, learned senior
counsel for the appellants relied upon the following
judgments on the issue of maintainability of the writ
petitions despite Section 17 of SARFAESI Act:
(i) Whirlpool Corporation vs.
Registrar of Trade Marks, Mumbai
and others, [(1998) 8 SCC 1],
(Whirlpool Corporation);
(ii) State of H.P. and others vs.
Gujarat Ambuja Cement Limited
and Another, [(2005) 6SCC 499],
(Gujarat Ambuja Cement Limited);
(iii) Embassy Property Developments
Private Limited vs. State of
Karnataka, [2019 SCC Online SC
1542] (Embassy Property
Developments).
21. It was contended that since, there is no
decision till date which answers the question, as to,
whether, the coffee plantation is an agricultural land within
the meaning of Section 31(i) of the SARFAESI Act, it was
necessary that the writ petitions were considered on
merits.
22. In the above context, learned senior counsel
drew our attention to the dictionary meaning of the
expression 'agricultural land', the definition of 'agriculture'
under the Karnataka Land Reforms Act, 1961 (Land
Reforms Act, 1961); Karnataka Land Revenue Act, 1961
(Land Revenue Act, 1964) and other enactments where
the expression 'agricultural land' or 'agriculture' are
defined or used, which shall be alluded to later.
23. Per contra, learned senior counsel, Sri.Dhyan
Chinnappa, appearing for the learned counsel for Union
Bank of India, contended that the learned Single Judge in
W.P.No.12461/2020 had rightly dismissed the writ petition
on the ground of maintainability in view of the availability
of an alternative remedy under Section 17 of the
SARFAESI Act. He submitted that the DRT has the
jurisdiction to consider the issue of the applicability of the
Act to coffee plantations, which are the subject matter in
these cases. The question, whether, a coffee estate is
agricultural land could have been considered by the DRT in
an appeal filed under Section 17 of the SARFAESI Act, as
any person aggrieved by the measures taken by the
financial institutions under the provisions of the SARFAESI
Act, could maintain an appeal before the DRT. He
submitted that there is an efficacious, alternative remedy
available before the DRT which could have considered the
issues raised in these cases.
24. Learned senior counsel, alternatively,
submitted that in the event this Court were to hold that
there was no alternative remedy available for the
petitioners and therefore, they were constrained to file the
writ petitions, invoking the extraordinary jurisdiction of
this Court under Article 226 of the Constitution then, the
matters may be remanded to the learned Single Judges for
a consideration of the question, as to, whether, a coffee
plantation comes within the scope and ambit of the
expression "agricultural land" under Section 31(i) of the
SARFAESI Act. He submitted that in the appeals, it may
not be necessary to answer the said issue and the matter
may be remanded to the learned Single Judge.
25. Learned senior counsel Sri Dhyan Chinnappa in
support of his contentions placed reliance on the following
judgments:
(i) ITC Limited vs. Blue Coast Hotels
Limited, [(2018) 15 SCC 99], (ITC
Limited);
(ii) Authorised Officer, State Bank of
Travancore and another vs.
Mathew K.C. [(2018) 3 SCC 85],
(Mathew K.C.).
26. The other contention of learned senior counsel
was on the aspect of the use to which the agricultural land
was put to, which is one of the major considerations to be
taken note of while determining whether the SARFAESI Act
applies to such lands or not. In this context, learned
senior counsel contended that in the case of coffee
plantation, which is the subject matter in Writ Appeal
No.538 of 2020, there is provision made for home stay and
residence and therefore, the lands are no longer coffee
estate as there is change of user and therefore, it has
ceased to be a coffee plantation and would not come
within the scope and ambit of the expression 'agricultural
land'. Therefore, Section 31(i) of the SARFAESI Act would
not apply in the instant case. Hence, the measures taken
by the respondent/Banks are just and proper and the same
would have to be taken to their logical conclusion and it
would have been so but for the writ petitions filed by the
petitioners in the instant case.
27. Learned senior counsel contended that there
are huge outstanding dues payable to the respondent-
Bank and instead of taking steps to repay the loan amount
as well as the interest thereon by the writ
petitioners/debtors to the Bank, appellants herein, are only
procrastinating the matter by filing the writ petitions
before this Court. That the learned Single Judge was right
in dismissing the writ petitions on the premise that there
was an alternative remedy available for the petitioners and
therefore the orders of the learned Single Judges would
not call for any interference in the appeals filed against the
said order.
28. Learned senior counsel placed reliance on the
following judgments and sought for dismissal of the
appeals:
(i) United Bank of India vs. Satyawati
Tandon and others, [(2010) 8 SCC
110], (Satyawati Tandon);
(ii) ICICI Bank Limited and others vs.
Umakantha Mohapatra and others,
[(2019) 13 SCC 497], (Umakantha
Mohapatra);
(iii) Authorised Officer, State Bank of
India vs. Allwyn Alloys Pvt. Ltd.
And others, [(2018) 8 SCC 120],
(Allwyn Alloys).
(iv) Green Valley Farms vs. Syndicate
Bank, [2019 SCC Onine Ker 4760],
(Green Valley Farms);
29. Learned Senior Counsel, Sri Shashikiran
Shetty, appearing for the impleading applicant / the
purchaser of the 212 acres of land, submitted that on
18.11.2020 subsequent to the dismissal of the writ
petition, auction was conducted by the respondent/Bank
and the impleading applicant is the successful bidder and
hence, the impleading applicant is entitled to the
ownership and possession of the land in question. But the
writ petitioners have raised frivolous issues before this
Court, which may not be entertained and the writ petition
itself may be dismissed or, in the alternative, parties may
be relegated to the DRT for the adjudication of their
respective disputes, including seeking an interpretation of
the expression of agricultural land under the provisions of
the SARFAESI Act.
30. Learned senior counsel submitted that around
17 crores has been deposited by the impleading applicant,
who is the successful bidder and the impleading applicant
is a necessary party to these proceedings. His application
may be allowed and the impugned order may be sustained
by dismissing the writ petitions.
31. Learned counsel for the respondent/Bank in
Writ Appeal No.545 of 2020, Sri.H.R.Katti, submitted that
the writ petition filed by the appellants herein was not
maintainable for two reasons: firstly, what was assailed
was notice dated 14.08.2020 issued under Section 13(2) of
the SARFAESI Act. To that notice, a reply was given on
18.03.2015 and 31.03.2015. Subsequently, on
01.04.2015, another notice was issued under Section
13(4) of the SARFAESI Act in respect of 200 acres of
coffee plantation. On 01.04.2015 itself, symbolic
possession of the same was taken and a mahazar was
drawn. Within seven days thereafter, paper publication
was made. That no prejudice has been caused to the
appellants, as the appellants had, for the purpose of
seeking the loan, mortgaged the coffee estate and in the
absence of repayment, the Bank was justified in recovering
the outstanding dues by taking recourse under the
provisions of the SARFAESI Act, even in respect of the
coffee plantation. The said land does not come within the
purview of agricultural land under Section 31(i) of the
SARFAESI Act.
32. He submitted that the learned Single Judge
was right in upholding the plea of alternative remedy
urged on behalf of the Bank and relegating the writ
petitioners to the DRT. In this regard, learned counsel for
the Banks drew our attention to the various definitions of
the expression 'plantation' and contended that the coffee
plantation does not come within the scope and ambit of
"agricultural land" under Section 31(i) of the Act. He
submitted that even if the land in question is a coffee
plantation, action was rightly initiated against the same
under Section 13(4) of the SARFAESI Act and symbolic
possession has been taken on 01.04.2015.
33. Learned counsel for the respondent/Bank
submitted that O.A. No.636/2013 has been filed by the
respondent/Bank against the petitioners only on
09.12.2015. There is an order of attachment before
judgment but the said proceeding has not progressed on
account of the pendency of the matter before this Court.
34. Learned counsel for the respondent/Bank
specifically drew our attention to the provisions of Section
104 of the Land Reforms Act to contend that on a reading
of the same, it becomes clear that the coffee plantation is
not an agricultural land as it is exempted from certain
provisions of that Act and such land could be dealt with in
any manner known to law and hence, the appeal may be
dismissed.
Points for Consideration:
35. Having heard learned counsel for the
respective parties, the following points would arise for our
consideration:
(i) Whether the writ petitions were
rightly dismissed on the ground of
maintainability in view of the
availability of an alternative remedy
before the DRT under Section 17 of
the SARFAESI Act?
(ii) Whether, the lands in question,
namely, coffee plantations would fall
within the scope of the expression
'agricultural land' under Section 31(i)
of the SARFAESI Act?
(iii) What order?
36. The detailed narration of facts and contentions
would not call for reiteration. The seminal question which
arises in these appeals is, whether, coffee plantations,
which are the subject lands in both these appeals, fall
within the scope and ambit of the expression 'agricultural
land' under Section 31(i) of the SARFAESI Act? But before
answering the said question, it is necessary to discuss on
the issue of maintainability of the writ petitions before this
Court.
Re: Point No.1:
Maintainability of the Writ Petitions under Article
226 of the Constitution:
37. Ordinarily, writ jurisdiction is not available in
cases where there is adequate and specific legal remedy
provided under the statute. The remedy of mandamus and
certiorari will be subject to exercise of sound judicial
discretion and will not be issued where there is another
adequate and specific legal remedy competent to afford
relief upon the same subject-matter. Certiorari will not lie
where there is another adequate remedy by appeal or
otherwise, where the inferior Court has jurisdiction. But
where the law gives an appeal and the party is deprived of
it without any fault or negligence on his part, Certiorari will
lie in lieu of or as a substitute for an appeal, if it is shown
to be in addition to such cause, a meritorious case.
However, to be a bar, the other remedy must be adequate.
Adequate remedy is one which is equally beneficial, speedy
and sufficient and not merely one, which at sometime in
the future, will bring about relief. Where the exigencies of
the case are such that the ordinary methods of appeal or
error may not prove adequate either in point of
promptness or completeness, so that a partial or total
failure of justice may result, then certiorari may issue.
When an appeal does lie, however, in order to quash a
proceeding by certiorari, it is necessary that there be lack
of jurisdiction appearing on the face of the record.
38. In a case where there is the want of
jurisdiction disclosed on the face of petition that is, when it
clearly appears the authority had no jurisdiction with the
subject-matter or of the parties, then writ may issue
notwithstanding the availability of alternative remedy and
as already noted, existence of alternative remedy to be a
bar must be adequate.
39. On the general principles that ought to
regulate the exercise of judicial discretion when alternative
remedies are available, there are a few settled
propositions. One of them is, if any applicant claims to be
aggrieved by a decision made without jurisdiction or in
breach of the rules of natural justice, the fact that he has
not taken advantage of a statutory right of appeal should
normally be regarded as irrelevant. Conversely, if an
applicant seeks an order of certiorari after having appealed
unsuccessfully, certiorari may be refused where he has
failed to raise objections to jurisdiction or to complain of
breach of natural justice at an earlier stage when in full
possession of the facts, but if he has raised these
questions in an appeal and then raised again in his
application for certiorari, recent practice clearly indicates
that where the proceedings impugned were a nullity, an
award of certiorari will not readily be denied. If the
application for certiorari is made while an appeal is
pending, an award of certiorari may still be justified if the
questions to be raised on appeal go to the merits of the
case and the application for certiorari is based on
jurisdictional grounds or breach of natural justice not going
to the merits. Also, the Court ought not to refuse
certiorari because of alternative remedies other than
appeal unless it is clearly satisfied that those other
remedies are more appropriate. (Source: Writ Remedies
by Justice B.P.Banerjee, III Edition).
40. The following judgments of the Hon'ble
Supreme Court on the aspect of maintainability of a writ
petition under Article 226 of the Constitution in the face of
an alternative remedy are referred to as under:
(a) In Veerappa Pillai vs. Raman & Raman
Ltd., [AIR 1952 SC 192], it was observed that where a
particular statute provides a self-contained machinery for
determination of questions arising under the Act, the
remedy that is provided under the Act should be followed
except in cases of acts, which are wholly without
jurisdiction or in excess of jurisdiction, or in violation of
principles of natural justice or refusal to exercise
jurisdiction vested in them or there is an error on the face
of the record and such act, omission, error or excess has
resulted in manifest injustice.
(b) Further, alternative remedy is no bar where a
party comes to the Court with an allegation that his right
has been or is being threatened to be infringed by a law
which is ultra vires the powers of the legislature which
enacted it and as such void, vide Bengal Immunity Co.
vs. State of Bihar [AIR 1955 SC 661].
(c) Similarly, when a fundamental right is
infringed, the bar for entertaining the writ petition and
granting relief on the ground of alternative remedy would
not apply, vide State of Bombay vs. United Motors Ltd.
[AIR 1953 SC 252] and Himmat Lal vs. State of M.P.
[AIR 1954 SC 403].
(d) The rule of alternate remedy being a bar to
entertain a writ petition is a rule of practice and not of
jurisdiction. In appropriate cases, High Court may
entertain a petition even if the aggrieved party has not
exhausted the remedies available under a statute before
the departmental authorities, vide State of West Bengal
vs. North Adjai Cool Company [1971 (1) SCC 309].
(e) Further, alternative remedy must be effective.
An appeal in all cases cannot be said to have provided in
all situations, where an appeal would be ineffective and
writ petition in such a case is maintainable, vide Ram and
Shyam Company vs. State of Haryana [AIR 1985 SC
1147].
(f) Where an authority has acted without
jurisdiction, High Court should not refuse to exercise its
jurisdiction under Article 226 on the ground of existence of
alternative remedy vide Dr. Smt. Kuntesh Gupta vs.
Management H.K. Mahavidyaya [AIR 1987 SC 2186].
Thus, an alternative remedy is not an absolute bar to the
maintainability of a writ petition.
41. On the issue of maintainability of the writ
petition, learned counsel for the appellants relied upon the
following decisions:
(a) In Whirlpool Corporation vs. Registrar of
Trade Marks, Mumbai and others, [(1998) 8 SCC 1],
(Whirlpool Corporation), at paragraph 15, it was observed
that under Article 226 of the Constitution, the High Court,
having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. But, the High
Court has imposed upon itself certain restrictions, one of
which is, if an effective and efficacious remedy is available,
the High Court would not normally exercise its jurisdiction.
But, the availability of an alternative remedy has been
consistently held not to operate as a bar in at least four
contingencies, namely, where the writ petition has been
filed for the enforcement of any of the Fundamental Rights
or where there has been a violation of the principle of
natural justice or where the order or proceedings are
wholly without jurisdiction or the vires of an Act is
challenged.
In the said decision, reliance was also placed on
Rashid Ahmad vs. Municipal Board, Kairana, [AIR
1950 SC 163], (Rashid Ahmad), to observe that where
alternative remedy existed, it would be a sound exercise of
discretion to refuse to interfere in a petition under Article
226 of the Constitution. This proposition was, however,
qualified by the significant words, "unless there are good
grounds therefor", which indicated that alternative remedy
would not operate as an absolute bar and that writ petition
under Article 226 of the Constitution could still be
entertained in exceptional circumstances.
Reference was also made to State of U.P. vs.
Mohd. Nooh, [AIR 1958 SC 86], (Mohd. Nooh), wherein
it was observed that the rule requiring the exhaustion of
statutory remedies before the writ will be granted, is a rule
of policy, convenience and discretion rather than a rule of
law and instances are numerous where a writ of certiorari
has been issued in spite of the fact that the aggrieved
party had other adequate legal remedies.
Ultimately, in paragraph 20 of Whirlpool Corporation,
the Hon'ble Supreme Court observed as under: "Much
water has since flown under the bridge, but there has been
no corrosive effect on these decisions which, though old,
continue to hold the field with the result that law as to the
jurisdiction of the High Court in entertaining a writ petition
under Article 226 of the Constitution, in spite of the
alternative statutory remedies, is not affected, specially in
a case where the authority against whom the writ is filed is
shown to have had no jurisdiction or had purported to
usurp jurisdiction without any legal foundation."
In the said case (Whirlpool Corporation), it was also
observed that the High Court was not justified in
dismissing the writ petition at the initial stage without
examining the contention that the show cause notice
issued to the appellant was wholly without jurisdiction.
In the said case, the Registrar of Trade Marks issued
to the appellant therein a notice under Section 56(4) of the
Trade and Merchandise Marks Act, 1958 to show cause
against the proposed cancellation of appellants' Certificate
of renewal. It was held that the issuance of such a notice
by the Registrar was without authority and it was quashed
by the High Court.
(b) In State of H.P. and others vs. Gujarat
Ambuja Cement Limited and Another, [(2005) 6SCC
499], (Gujarat Ambuja Cement Limited), a detailed
discussion on the plea regarding alternative remedy was
made. It was held that the principle of alternative remedy
is essentially a rule of policy, convenience and discretion
and never a rule of law. Despite the existence of an
alternative remedy, it is within the jurisdiction of discretion
of the High Court to grant relief under Article 226 of the
Constitution. At the same time, it cannot be lost sight of
the fact that though the matter relating to an alternative
remedy has nothing to do with the jurisdiction of the case,
normally the High Court should not interfere if there is an
adequate, efficacious, alternative remedy. If somebody
approaches the High Court without availing the alternative
remedy, the High Court should ensure that he has made
out a strong case or that there exist good grounds to
invoke the extraordinary jurisdiction. The Court, in
extraordinary circumstances, may exercise the power if it
comes to the conclusion that there has been a breach of
principles of natural justice or procedure required for
decision has not been adopted. The rule of exclusion of
writ jurisdiction by availability of alternative remedy is a
rule of discretion and not one of compulsion and the Court
must consider the pros and cons of the case and then may
interfere.
However, there are well recognized exceptions to the
doctrine of exhaustion of statutory remedies. First is, when
the proceedings are taken before the forum under a
provision of law which is ultra vires, it is open to a party
aggrieved thereby to move the High Court for quashing the
proceedings on the ground that they are incompetent
without a party being obliged to wait until those
proceedings run their full course. Secondly, the doctrine
has no application when the impugned order has been
made in violation of the principles of natural justice. Also,
that where the proceedings itself are an abuse of process
of law the High Court in an appropriate case can entertain
a writ petition. Where under a statute there is an
allegation of infringement of fundamental rights or when
on the undisputed facts the taxing authorities are shown to
have assumed jurisdiction which they do not possess can
be the grounds on which the writ petitions can be
entertained.
But, normally, the High Court should not entertain
writ petitions unless it is shown that there is something
more in a case, something going to the root of the
jurisdiction of the officer, something which would show
that it would be a case of palpable injustice to the writ
petitioner to force him to adopt the remedies provided by
the statute. But, if the High Court had entertained a
petition despite availability of an alternative remedy, it
would not be justifiable for the High Court to dismiss the
same on the ground of non-exhaustion of statutory
remedies, unless the High Court finds that factual disputes
are involved and it would not be desirable to deal with
them in a writ petition.
In the said case, the question was liability to pay
purchase tax on the royalty paid by the respondents, i.e.,
the holder of mining lease, where there was a price for
removal of minerals and thus, attracted liability to pay
purchase tax. The Hon'ble Supreme Court in the said
decision rejected the plea that the High Court should not
have entertained the writ petition. Thereafter, the
question relating to liability to pay purchase tax on royalty
paid was taken up for consideration by discussing on the
meaning of the words "royalty", "dead rent", "mining
lease". It was observed that royalty paid by the holder of
a mining lease under Section 9 of the Mines and Minerals
(Regulation and Development) Act, 1957 was not the price
for removal of minerals and hence, did not attract liability
to pay purchase tax.
(c) In Embassy Property Developments Private
Limited vs. State of Karnataka, [2019 SCC Online SC
1542], (Embassy Property), one of the preliminary
questions that arose was whether the High Court ought to
interfere under Article 226/227 of the Constitution, with an
Order passed by the National Company Law Tribunal
(NCLT) in a proceeding under the Insolvency and
Bankruptcy Code, 2016 (IBC), ignoring the availability of a
statutory remedy of appeal to the National Company Law
Appellate Tribunal (NCLAT) and if so, under what
circumstances.
In the said case, there is an exposition on the well
recognised exceptions to the self-imposed restraint of the
High Courts, namely, in cases where a statutory
alternative remedy of appeal is available, or there is lack of
jurisdiction on the part of the statutory/quasi-judicial
authority against whose order judicial review is sought. It
was observed that an "error of jurisdiction" was always
distinguished from "in excess of jurisdiction", till the
judgment of the House of Lords in Anisminic Ltd. vs.
Foreign Compensation Commission [(1969) 2 WLR
163] (Anisminic). In Anisminic, the real question was not,
whether, an authority made a wrong decision but whether
they enquired into and decided a matter on which they had
no right to consider. It was observed by the Hon'ble
Supreme Court that just four days before the House of
Lords delivered the judgment in Anisminic, an identical
view was taken by a three judge Bench of the Hon'ble
Supreme Court in West Bengal & Others vs. Sachindra
Nath Chatterjee & Another, [(1969) 3 SCR 92],
(Sachindra Nath Chatterjee) wherein the view taken by the
Full Bench of Calcutta High Court in Hirday Nath Roy vs.
Ramachandra Barna Sarma, [ILR LXVIII Calcutta
138], (Hirday Nath Roy) was approved. It was held
therein that "before a Court can be held to have
jurisdiction to decide a particular matter, it must not only
have jurisdiction to try the suit brought, but must also
have the authority to pass the orders sought for." This
would mean that the jurisdiction must include (i) the
power to hear and decide the questions at issue and (ii)
the power to grant the relief asked for. Ultimately, in
paragraph 24, it was observed as follows: "Therefore,
insofar as the question of exercise of the power conferred
by Article 226 of the Constitution, despite the availability
of a statutory alternative remedy, is concerned, Anisminic
cannot be relied upon." The distinction between the lack
of jurisdiction and the wrongful exercise of the available
jurisdiction should certainly be taken into account by High
Courts, when Article 226 of the Constitution is sought to be
invoked bypassing a statutory, alternative remedy
provided by a special statute.
In the said case, the question was, as to, whether,
the NCLT lacked the jurisdiction to issue a direction in
relation to a matter covered by Mines and Minerals
(Development and Regulation) Act, 1957 (MMDR Act) and
the Statutory Rules issued thereunder; or, there was mere
wrongful exercise of a recognised jurisdiction, for instance,
asking a wrong question or applying a wrong test or
granting a wrong relief. On a detailed discussion, it was
held that the NCLT did not have jurisdiction to entertain an
application against the Government of Karnataka for a
direction to execute Supplemental Lease Deeds for the
extension of the mining lease. Since, NCLT chose to
exercise jurisdiction not vested in it in law, the High Court
of Karnataka was justified in entertaining the writ petition,
on the basis that NCLT was coram non judice. In the
instant case, the State of Karnataka had invoked the
jurisdiction of the High Court under Article 226 of the
Constitution without taking recourse to the appellate
remedy under NCLAT. It was held that the judicial review
was permissible and the High Court was justified in
entertaining the writ petition assailing the order of the
NCLT, directing execution of a supplemental lease deed for
the extension of the mining lease.
(d) Learned Senior counsel appearing for the
respondent in Writ Appeal No.538 of 2020 placed reliance
on Authorised Officer, State Bank of Travancore and
another vs. Mathew K.C. [(2018) 3 SCC 85], (Mathew
K.C.) wherein it was observed that SARFAESI Act is a
complete Code by itself, providing for expeditious recovery
of dues arising out of loans granted by financial
institutions. The remedy of appeal by the aggrieved under
Section 17 before the Debt Recovery Tribunal, followed by
a right to appeal before the Appellate Tribunal under
Section 18 was adequately provided under the Act.
Therefore, the High Court ought not to have entertained
the writ petition in view of the adequate alternative
statutory remedies available. In that case, an interim
order granted by the High Court in exercise of jurisdiction
under Article 226 of the Constitution, staying further
proceedings at the stage of Section 13(4) of the SARFAESI
Act, on certain deposit to be made was questioned. It was
observed that the writ petition ought not have been
entertained and interim order granted for the mere asking
without assigning special reasons, that too, without even
granting opportunity to the other side to contest the
maintainability of the writ petition and failure to notice the
subsequent developments in the interregnum. In the said
case, it was also observed that the discretionary
jurisdiction under Article 226 of the Constitution is not
absolute but had to be exercised judiciously in the given
facts of a case and in accordance with law.
The normal rule is that a writ petition under Article
226 of the Constitution ought not to be entertained if
alternate statutory remedies are available, except in cases
falling within the well defined exceptions as observed in
Commissioner of Income Tax and Others vs. Chhabil
Dass Agarwal, [(2014) 1 SCC 603], (Chhabil Dass
Agarwal). In the latter decision, it has been held that the
exceptions to the rule of non-interference when efficacious,
alternative remedy is available are as under which are
illustrative and non-exhaustive:
(i) where remedy available under statute is
not effective but only mere formality with
no substantial relief;
(ii) where statutory authority not acted in
accordance with provisions of enactment
in question, or;
(iii) where statutory authority acted in
defiance of fundamental principles of
judicial procedure, or;
(iv) where statutory authority resorted to
invoke provisions which are repealed, or;
(v) where statutory authority passed an
order in total violation of principles of
natural justice.
(e) In United Bank of India vs. Satyawati
Tondon and others, [(2010) 8 SCC 110], (Satyawati
Tondon) it was observed that it is true that the rule of
exhaustion of alternative remedy is a rule of discretion and
not one of compulsion, but it is difficult to fathom any
reason why the High Court should entertain a petition filed
under Article 226 of the Constitution and pass interim
order ignoring the fact that the petitioner can avail
effective, alternative remedy by filing an application,
appeal, revision, etc. and the particular legislation contains
a detailed mechanism for redressal of his grievance.
(f) Of course in ICICI Bank Limited vs. Umakanta
Mohapatra and others, [(2019) 13 SCC 497],
(Umakanta Mohapatra), it was held, the writ petition was
not maintainable and therefore, allowed the appeals.
(g) In Authorised Officer, State Bank of India
vs. Allwyn Alloys Private Limited and others, [(2018)
8 SCC 120], the Hon'ble Supreme Court opined that
Section 34 of the SARFAESI Act clearly bars filing of a civil
suit. No civil court can exercise jurisdiction to entertain
any suit or proceeding in respect of any matter which a
DRT or DRAT is empowered by or under the Act to
determine and no injunction can be granted by any court
or authority in respect of any action taken or to be taken in
pursuance of any power conferred by or under the Act.
42. We have discussed the propositions on the bar
to the writ remedy on account of availability of an
alternative remedy from various angles. We have also
discussed the case law cited at the Bar.
43. In the instant case, the contention of learned
senior counsel for the petitioners is that in view of Section
31(i) of the SARFAESI Act, the provisions of the Act would
not apply to agricultural lands. Thus, the provisions of the
said Act would not apply to coffee plantation/estate, which
are the subject matter of lands in the instant case, in
respect of which action has been initiated under Section 13
of the SARFAESI Act. It was contended that the SARFAESI
Act does not apply to agricultural lands within the scope
and ambit of which coffee plantation or estate falls. Thus,
the action initiated by the respondent/bank as against the
subject land is without jurisdiction and therefore, the writ
remedy under Article 226 of the Constitution is available.
Thus, when exercise of statutory power is without
jurisdiction or lack of it and the action taken is erroneous,
the party aggrieved cannot be relegated to challenge the
said action in the usual course by way of appellate remedy
under Section 17 of the SARFAESI Act.
44. In this regard, reference could also be made to
Article 300A of the Constitution, where no person shall be
deprived of his property save by authority of law. Even
though the right to hold property has ceased to be a
fundamental right under the Constitution of India, but only
a constitutional right, yet, an aggrieved individual has the
remedy to move the High Court under Article 226 for any
violation of Article 300A of the Constitution. The
protection of Article 300A is available not only to any
person, including legal or juristic person, and is not
confined only to a citizen. The expression "property"
under Article 300A means only that which can by itself be
acquired or disposed of or taken possession. It includes
private property in all its forms, and understood, both
movable and immovable, corporeal and incorporeal, such
as, intellectual property rights. When a person has right or
interest in property, the same cannot be deprived except
by authority of law. Deprivation of property may take
place in various ways, such as seizure of goods or
immovable property from the possession of an individual,
but in a manner known to law. Deprivation means, the
rights constituting property rights taken away, also
deprivation by authority of law means, by or under a law
made the competent legislature.
45. Thus, the question in this case is, whether
coffee plantation could be interpreted to be agricultural
land, within the meaning of Section 31(i) of the SARFAESI
Act, in which case it is a bar for the applicability of the
provisions of the Act. In our view, in order to examine a
challenge to an action initiated under the provisions of the
SARFAESI Act in respect of the agricultural land and as to,
whether, the subject land is an agricultural land or not, the
petitions filed under Article 226 of the Constitution of India
were maintainable. In such a case, the High Court cannot
adopt a pedantic approach but has to decide the matter
keeping in view the fact that right to property continues to
be an important constitutional right and in terms of Article
300A, no person can be deprived of his property except by
authority of law, vide Sri Radhey Shyam (Dead)
Through LRs. & others vs. State of Uttar Pradesh &
others [(2011)5 SCC 553].
46. Therefore, in our view, the writ petition raised
a question about applicability of SARFAESI Act to coffee
plantation/estate on the ground that the same is an
agricultural land, having regard to Section 31(i) of the
SARFAESI Act. Whether the said provision is not applicable
to agricultural land and therefore, the action initiated is
illegal and contrary to the object and purpose of the
provision had to be considered. It was necessary to give
an answer to such a question before concluding, whether,
the actions of the respondent/banks were in accordance
with law or not in these cases. If the answer to the
question, whether coffee plantation/estate is an
agricultural land within the meaning of Section 31(c) of the
SARFAESI Act, is in the affirmative, then the provisions of
the Act would not apply and the action initiated by the
respondent/bank would be without jurisdiction. Any action
of an authority without jurisdiction goes to the root of the
matter and in such a case, a writ petition would lie under
Article 226 of the Constitution. In such circumstances, it
would not be sound exercise of discretion to relegate the
parties to the remedy by way of an appeal. This is
particularly so, when a constitutional right, such as Article
300A of the Constitution is involved and the applicability of
the SARFAESI Act to coffee estate in the context of
whether it is an agricultural land or not would be an
important question which has to be decided in the first
instance before deciding on the legality of the action
otherwise.
47. Hence, in our view, the writ petitions filed
under Article 226 of the Constitution in the instant case
were maintainable. This is particularly so, having regard
to the issue raised in these writ petitions as it involves
interpretation of law. It also touches upon the applicability
of the SARFAESI Act and the jurisdiction on the
respondent/bank to take measures under Section 13 of the
said Act vis-à-vis the subject lands, which are coffee
plantations. Hence, we answer point No.1 in favour of the
appellants.
Re: Point No.2:
Whether coffee plantation is an agricultural land
under Section 31(i) of the SARFAESI Act?
48. This would take us to the next point which is to
decide, as to, whether, coffee plantations are agricultural
lands within the meaning of Section 31(i) of the SARFAESI
Act. Before proceeding further, it would be necessary to
understand the object of the SARFAESI Act and allude to
the background of the said enactment. In this regard, it
would be useful to refer to the judgment of the Hon'ble
Supreme Court in Mardia Chemicals vs. Union of India,
[(2004) 4 SCC 311]. (Mardia Chemicals), wherein
reference was made to Narasimham Committee
constituted in the year 1991 relating to the financial
system prevailing in the country. In Chapter V of the
Report under the heading 'Capital Adequacy, Accounting
Policies and other Related Matters', it was opined that
special Tribunals to deal with the recovery of dues of the
advances made by the banks was necessary. Placing
reliance on the Tiwari Committee, it was observed that
setting up of special Tribunals could expedite the recovery
process. The Narasimham Committee in its Second Report
submitted in the year 1992, dealt with legal and legislative
framework in Chapter VIII of the said Report. One of the
measures recommended was to vest the financial
institutions through special statutes, the power of sale of
the asset without intervention of the Court and for
reconstruction of the assets.
49. After the report of the Narasimham
Committee, yet another Committee was constituted for
bringing about the needed steps within the legal
framework. Considering the totality of circumstances and
the financial climate world over, if it was thought as a
matter of policy, to have yet speedier legal method to
recover the dues, apart from recovery of debts due to the
banks and financial institutions. Acting on the said
recommendations, SARFAESI Ordinance, 2002 was
promulgated on 21.06.2002. Thereafter, it was replaced
by a Bill which was passed by both Houses of the
Parliament. The said Act received the assent of the
President on 17.12.2002 as the SARFAESI Act, which came
into force with effect from 21.06.2002.
50. The object of the Act is to regulate the
securitisation and reconstruction of financial assets and
enforcement of the security interest and to provide for a
central database of the security interests created on
property rights, and for matters connected therewith or
incidental thereto. Chapter III deals with the enforcement
of security interests which comprises of Sections 13 to 19.
Chapter VI deals with miscellaneous provisions and
therein, Section 31 reads as under:
"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);
(e) * * * * *
(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 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."
51. Thus, the question to be determined is whether
the provisions of SARFAESI Act would apply to any security
interest created in "agricultural land", vide Section 31(i).
The expression, agricultural land, is not defined under the
Act and therefore, the meaning of the said expression
would have to be discerned with reference to the plain and
dictionary meaning as well as other legislations which deal
with the agricultural land.
52. For an appreciation of the question under
consideration, it would be useful to refer to the following
judgments which arise in the context of applicability of the
SARFAESI Act to plantation crops in the first instance:
(a) In Mohammed Basheer K.P. vs. Deputy
General Manager and others, [(2010 (2) KLJ 225],
(Mohammed Basheer K.P.) the issue raised in the writ
appeal was whether the SARFAESI Act applied to lands on
which rubber plant or trees are grown. In other words,
whether, the rubber plantation was exempted as
agricultural land from the application of the SARFAESI Act.
In that case, reliance was placed on the judgment of the
Hon'ble Supreme Court in Commissioner of Income
Tax, West Bengal vs. Raja Benoy Kumar Sahas Roy,
AIR 1957 SC 768, (Raja Benoy Kumar Sahas Roy), to
observe that the term 'agriculture' includes raising on the
land of products which have some utility, either for
consumption or for trade and commerce. The term,
"agriculture", cannot be defined or understood by the
nature of products cultivated. No such classification is
conceivable unless specifically provided for, having regard
to the specific need to make such classification. If such
classification is to provide different consequences of a
piece of statute law, including its applicability, then such
classification must be found explicit on a clear expression
in that particular statute. It was held that rubber
plantation or rubber sapling grown on land was an
agricultural activity and therefore, the land on which the
rubber was cultivated was agricultural land. Hence, the
writ appeal was allowed and it was held that all steps
taken against the land in question therein under the
SARFAESI Act were quashed and the writ petition was
allowed to that extent by the Kerala High Court.
(b) In the judgment of the Hon'ble Supreme Court
in Commissioner of Income Tax, West Bengal vs.
Raja Benoy Kumar Sahas Roy, [AIR 1957 SC 768],
(Raja Benoy Kumar Sahas Roy), the question was whether
on facts and circumstances of that case, certain sum was
agricultural income and exempt from the payment of tax
under the Income Tax Act. In order to interpret the
expression 'agricultural income', the Hon'ble Supreme
Court delineated on the meaning of 'agriculture' and
'agricultural purpose' and fell back upon the general sense
in which they have been understood in common parlance.
The dictionary meaning of agriculture was referred to and
also the meaning as given in Wharton's Law Lexicon.
Ultimately, the Hon'ble Supreme Court observed that the
primary sense in which the term 'agriculture' is understood
as ager-a field and culture-cultivation i.e., cultivation of
field which, in the strict field sense of the term means
tilling of the land, sowing of the seeds, planting, or similar
operations on the land. After the produce sprouts from
the land, other operations, such as weeding, digging of the
soil around the growth, removal of undesirable under-
growths, tending, pruning, etc. have to be done.
Thereafter, harvesting and running the produce for the
market are operations which have to be carried out. The
latter would all be agricultural operations when taken in
conjunction with the basic operations above described and
it would be futile to say that they are not agricultural
operations at all. According to the Hon'ble Supreme Court,
the mere performance of these subsequent operations on
the products of the land, where such products have not
been raised on the land by the performance of the basic
operations which we have described above, would not be
enough to characterise them as agricultural operations. In
order to invest them with the character of agricultural
operations, these subsequent operations must necessarily
be in conjunction with and a continuation of the basic
operations which are the effective cause of the products
being raised from the land. It is only if the products are
raised from the land by the performance of these basic
operations that the subsequent operations attach
themselves to the products of the land and acquire the
characteristic of agricultural operations. Thus, the
cultivation of the land does not comprise merely of raising
the products of the land in the narrower sense of the term
like tilling of the land, sowing of the seeds, planting, and
similar work done on the land but also includes the
subsequent operations set out above, all of which
operations, basic as well as subsequent, form one
integrated activity of the agriculturist and the term
"agriculture" has to be understood as connoting this
integrated activity of the agriculturist.
The Hon'ble Supreme Court further observed that
one cannot dissociate the basic operations from the
subsequent operations, and say that the subsequent
operations, even though they are divorced from the basic
operations can constitute agricultural operations by
themselves. If this integrated activity which constitutes
agriculture is undertaken and performed in regard to any
land, that land can be said to have been used for
"agricultural purposes" and the income derived therefrom
can be said to be "agricultural income" derived from the
land by agriculture. In that sense, the connotation of the
term "agriculture" has been in the wider sense as
comprising within its scope the basic as well as the
subsequent operations described above. The products
may be food grain or vegetables or fruits which are
necessary for the sustenance of human beings including
plantations and groves, or grass or pasture for
consumption of beasts or articles of luxury such as, betel,
coffee, tea, spices, tobacco etc., or commercial crops like,
cotton, flax, jute, hemp, indigo, etc.
Thus, the test enunciated in this judgment was that
the basic idea in the expression "agriculture" is cultivation
of land in the sense of tilling of land, sowing of seeds,
planting and similar work done on the land itself. The
basic conception is the essential sine qua non of any
operation performed on the land. If the basic operations
are there, the rest of the operations which are consequent
thereto, namely the subsequent operations, are also part
of agriculture, but if the basic operations are wanting, the
subsequent operations do not acquire the characteristic of
agricultural operations. That, the human labour and skill
spent in the performance of subsequent operations cannot
be said to have been spent on the land itself, though it
may have the effect of preserving, fostering and
regenerating the products of the land.
The Hon'ble Supreme Court further observed that
the distinction is not important in cases where the
agriculturist performs these operations as a part of his
integrated activity in cultivation of the land. Where,
however, the products of the land are of spontaneous
growth, unassisted by human skill and labour, and human
skill and labour are spent merely in fostering the growth,
preservation and regeneration of such products of land,
the question falls to be considered, whether, these
subsequent operations performed by the agriculturist are
agricultural operations and enjoy the characteristic of
agricultural operations. This is because the products which
grow wild on the land or are of spontaneous growth not
involving any human labour or skill upon the land are not
products of agriculture and the income derived therefrom
is not agricultural income, as there is no process of
agriculture involved in the raising of these products from
the land.
In the said case, it was held that the forest land
therein was more than 150 years old and trees had
completely fallen and the proprietors had planted fresh
trees in those areas, and they had performed operations
for the purpose of nursing the trees planted by them.
Hence, insofar as those trees were concerned, the income
derived therefrom would be agricultural income. But, the
whole of the income derived from the said forest could not
be treated as non-agricultural income.
(c) In Eshwar Purushothaman Gardens vs.
Indian Bank, [2012 (5) CTC 257], (Eshwar
Purushothaman Gardens), a Division Bench of Madras High
Court considered whether the land given as security on
which commercial/cash crops viz., coconut, sugarcane,
Turmeric, Mango, Coco, etc., are grown and having a farm
house, servant quarters, vermiculture sheds, cattle sheds,
etc., was an agricultural land or not. Following the
judgment in Mohammed Basheer K.P. and Raja Benoy
Kumar Sahas Roy (supra), it was observed that the
connotation of the term 'agriculture' must be given an
expanded interpretation to comprise within its scope the
basic as well as the subsequent operations of cultivation of
land to grow crops to raise products. The products may be
grain or vegetables or fruits, which are necessary for the
sustenance of human beings, including plantations and
groves, or grass or pasture for consumption of beasts or
articles of luxury such as betel, coffee, tea, spices,
tobacco, etc., or commercial crops like cotton, flax, jute,
hemp, indigo, etc. That agriculture cannot be confined
merely to the production of grain and food products for
human beings and beasts but it must also include all
products of the land which have some utility either for
consumption or for trade and commerce which also include
forest products.
(d) Reference was also made to the
Commissioner of Wealth Tax, Andhra Pradesh vs.
Officer in charge (Court of Wards) Paigah, [AIR 1977
SC 113], with regard to the relevant test to determine the
issue as to whether a particular property is agricultural in
nature. The Supreme Court in the aforesaid case observed
that the determination of the character of land according
to the purpose for which it is meant or set apart and can
be used is a matter which ought to be determined on the
facts of each particular case. The Supreme Court opined,
"what is really required to be shown is the connection with
an agricultural purpose and user, and not the mere
possibility of user of land by some possible future owner or
possessor, for an agricultural purpose."
It was also observed by the Madras High Court that
when the available materials are sufficient to arrive at a
clear finding that the secured asset is an agricultural
property, there is no point in directing the
borrower/guarantor to approach the DRT. When the very
initiation of SARFAESI proceeding is under challenge on
the ground of statutory bar, and the available materials
are sufficient to decide the issue, it cannot be said that still
the party should be directed to approach the DRT. It was
further observed that the question regarding alternative
remedy would lose its significance in that case in view of
the voluminous documents produced by the petitioner to
show that the security was created in their agricultural
land. It was further observed that, mere denial in the
counter-affidavit unaccompanied by documents to prove
such defence, would not result in raising a disputed
question so as to direct the parties to approach the DRT.
(e) The controversy in J.Malliga and others vs.
Union Bank of India and others, [2010 (4) CTC 710],
(J.Malliga) was with regard to cardamom plantation and
the question, as to, whether, what activities that were
done for Cardamom cultivation on the lands would be
agricultural lands. It was held that the Cardamom
cultivation did not comprise in merely raising products of
land in narrower sense of term like tilling of land, but
would also include operations, basic as well as the
subsequent which formed an integrated activity. In that
case, there was no dispute that the Cardamom estate was
mortgaged, the land was used for planting the crop and
cultivation of cardamom, requires normal agricultural
activities. Therefore, the SARFAESI Act did not apply to
such lands and invocation of the SARFAESI Act was held to
be barred under Section 31(i) thereof.
(f) In Indian Bank and others vs.
K.Pappireddiyar and others, [AIR 2018 SC 3540],
(K.Pappireddiyar), it was observed 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 was agricultural must be deduced as a matter of fact
from the nature of the land, the use to which it was being
put on the date of the creation of the security interest and
the purpose for which it was set apart.
The matter was remanded by the Hon'ble Supreme
Court to the Madras High Court to adjudicate on the basic
issue, as to, whether, the land in respect of which the
security interest was created was agricultural in nature or
not. It was further held that the question as to whether
the land is agricultural has to be determined on the basis
of the totality of facts and circumstances including the
nature and character of the land, the use to which it as put
and the purpose and intent of the parties on the date on
which the security interest was created.
(g) In the said decision, there is a reference to
ITC Limited vs. Blue Coast Hotels Limited, [(2018)
15 SCC 99], (Blue Coast Hotels Limited). In this decision,
the facts were that the Industrial Financial Corporation of
India (IFCI), the secured creditor, in the capacity of a
financial institution, had entered into a corporate loan
agreement with Blue Coast Hotels (debtor) for a sum of
Rs.150 crores. The agreement included creation of a
special mortgage to secure the corporate loan. The
mortgaged property comprised of the whole of the debtor's
hotel property including agricultural land on which the
debtor was to develop villas. The debtor defaulted in
repayment of the loan and the debtor's account became a
Non-Performing Asset (NPA). Notice under Section 13(2)
of the SARFAESI Act was sent by the creditor calling upon
the debtor to pay the amount overdue within a period of
sixty days. This was followed by a notice issued under
Section 13(4) whereby the symbolic possession of the
hotel was taken over by the creditor and subsequently,
there was a sale by a public auction. A notice of sale by a
public auction was issued in the newspaper. One of the
questions that arose in the said case was, whether, the
land mortgaged by the debtor as a security interest
consisted of agricultural land to which the provisions of the
SARFAESI Act did not apply. The land, therefore, could not
have been recovered. It was observed that the total land
on which the Goa Hotel was located was 1,82,225 sq.m.,
of these 2,335 sq.m. was used for growing vegetables,
fruits, shrubs and trees for captive consumption of the
hotel, which was 12.8% of the total area. It was held that
the land in question was not agricultural land and that the
High Court had misdirected itself in holding that the land
was an agricultural land, merely because it stood as such
in the revenue entries even though the application made
for such conversion was pending. Therefore, the test is
not per se whether the land is shown to be agricultural in
nature in the revenue entries. The question, whether, the
land is agricultural has to be determined on the basis of
the totality of facts and circumstances, as observed in
K.Pappireddiyar (supra).
53. Learned counsel for the respondent/Bank in
Writ Appeal No.545 of 2020 relied upon the following
judgments:
(i) United Bank of India vs.
Satyawati Tandon and others,
[(2010) 8 SCC 110], (Satyawati
Tandon);
(ii) Smt.Meenakshamma vs. The
Authorised Officer, Indian Bank,
(S.A. No.397/2012, DD:
08.02.2013 on the file of Debts
Recovery Tribunal, Bengaluru);
(iii) ITC Limited vs. Blue Coast Hotels
Limited, [(2018) 15 SCC 99], (Blue
Coast Hotels).
We have discussed the first and the third of the
aforesaid decisions. The other decision is of the Debts
Recovery Tribunal (DRT) Bengaluru, which we have
perused.
Legal Framework:
54. A reading of the aforesaid decisions would
indicate that the expression 'agricultural land' in Section
31(i) of the SARFAESI Act has been interpreted in light of
the Dictionary meaning and various other enactments.
Essentially, in those cases, the consideration was on
'agriculture' as an activity, a process or a procedure
involving a series of steps for producing various types of
crops namely food crops, plantation crops, forest produce
or commercial/cash crops, products of agriculture used in
trade and commerce in the manufacture of industrial
material/products etc.
55. But, in our view, those judgments would not be
of much assistance in interpreting the phrase 'agricultural
land' under Section 31(i) of SARFAESI Act. For that, it is
necessary to deduce the meaning and connotation of the
said expression from State laws relating to 'agriculture'
and thereby unravel the meaning of 'agricultural land' in
Section 31(i) of the SARFAESI Act. Also, in these appeals,
learned senior counsel for the appellants has placed
reliance on Land Reforms Act, Land Revenue Act and the
Dictionary meaning of the expression 'agricultural land' in
Section 31(i) of the SARFAESI Act. It becomes necessary
to consider the aforesaid enactments as SARFSESI Act
does not define the said expression. The reason being,
Parliament was conscious of the fact that, the subject
'agriculture' along with its connotations is a State subject
(List II of Seventh Schedule of the Constitution) and
therefore, did not define the expression 'agricultural land'
under Section 31(i) of the SARFAESI Act.
56. Before proceeding further, it would be useful
to refer to Articles 246 of the Constitution. Article 246
deals with subject matter of laws made by Parliament and
by the Legislatures of States.
(a) Clause (1) of Article 246 states that
notwithstanding anything in clauses (2) and (3) Parliament
has exclusive power to make laws with respect to any of
the matters enumerated in List I of the VII Schedule
(Union List).
(b) Clause (2) of Article 246 of the Constitution,
states that notwithstanding anything in clause (3), the
Parliament and the Legislature of any State also have the
power to make laws with respect to any matters
enumerated in List-III to the VII Schedule (Concurrent
List).
(c) Clause (3) thereof, states that the Legislature
of any State has exclusive power to make laws for the
State with respect to any matters enumerated in List-II of
the VII Schedule (State List). However, clause (3) of
Article 246, is subject to clauses (1) and (2) which begins
with a non obstante clause.
(d) The power to legislate which is dealt with
Article 246 has to be read in conjunction with the Entries in
the three Lists of the Seventh Schedule, which are the
fields of legislation which define the respective areas of
legislative competence of the Union and State Legislatures.
While interpreting these entries, they should not be viewed
in a narrow or myopic manner but by giving the widest
scope to their meaning, particularly, when the vires of a
provision of a statue is assailed. In such circumstances, a
liberal construction must be given to the entry by looking
at the substance of the legislation and not its mere form.
However, while interpreting the Entries in the case of an
apparent conflict, every attempt must be made by the
Court to harmonise or reconcile them. Where there is an
apparent overlapping between two Entries, the doctrine of
pith and substance is applied to find out the true character
of enactment and the entry within which it would fall. The
doctrine of pith and substance, in short, means, if an
enactment substantially falls within the powers expressly
conferred by the Constitution upon the legislature which
enacted it, it cannot be held to be invalid merely because it
incidentally encroaches on matters assigned to another
legislature. Also, in a situation where there is overlapping,
the doctrine has to be applied to determine to which entry
a piece of legislation could be related. If there is any
trenching on the field reserved to another legislature, the
same would be of no consequence. In order to examine
the true character of enactment or a provision thereof, due
regard must be had to the enactment as a whole and to its
scope and objects. It is said that the question of invasion
into another legislative territory has to be determined by
substance and not by degree.
(e) In case of any conflict between entries, in List-I
and List-II, the power of Parliament to legislate under List-
I will supersede when, on an interpretation, the two
powers cannot be reconciled. But if a legislation in pith
and substance falls within any of the entries of List-II, the
State Legislature's competence cannot be questioned on
the ground that the field is covered by Union list or the
Concurrent list, vide Prafulla Kumar vs. Bank of
Commerce, Khulna, [AIR 1947 P.C. 60] (Prafulla
Kumar).
57. The entries in List I and List II to which the
laws are under consideration are as under:
(a) Entry 45 of List-I of the VII Schedule deals with
'Banking'. SARFAESI Act, 2002 is also relatable to
Banking. The object of the SARFAESI Act is to regulate
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest and for matters
connected therewith or incidental thereto. Thus, the
SARFAESI Act being an enactment traceable to Entry 45 of
List-I of the VII Schedule, it has excluded the enforcement
of the Act insofar as the security created in agricultural
lands are concerned without defining the said expression
as the subject 'agricultural lands' is relatable to the
respective entries under List-II and is a State subject. In
the circumstances, we have to deduce the meaning of the
expression 'agricultural land' found in Section 31(i) of the
SARFAESI Act with reference to the relevant State
enactments.
(b) Entry 14 of List II (State List) deals with the
subject 'agriculture' including 'agricultural education and
research, protection against pests and prevention of plant
diseases'. Entry 18 of the said list deals with land, that is
to say, right in or over land, land tenures including the
relation of landlord and tenant, and the collection of rents;
transfer and alienation of agricultural land; land
improvement and agricultural loans; colonisation. Entry
46 of List II deals with taxes on agriculture income and
Entry 47-48 speak of duties in respect of succession to
agricultural land and estate duty in respect of agricultural
land. Thus, while interpreting the expression "agricultural
land", reliance would have to be placed on the relevant
State enactment.
58. In light of the above, the State law on which
reliance has been placed is extracted as under:
A. The relevant definition and provisions of the Land
Reforms Act are as under:
"2. Definitions.--(A) In this Act, unless the
context otherwise requires.--
(1) "Agriculture" includes.--
(a) acquaculture;
(aa) horticulture;
(b) the raising of crops, grass or
garden produce;
(c) dairy farming;
(d) poultry farming;
(e) breeding of livestock;
(f) grazing;
but does not include the cutting of wood
only;
xxx
(10) "To cultivate" with its grammatical
variations and cognate expressions means to till
or husband the land for the purpose of raising
or improving agricultural produce whether by
manual labour or by means of cattle or
machinery, or to carry on any agricultural
operation thereon; and the expression
"uncultivated" shall be construed
correspondingly;
Explanation.--A person who takes up a
contract to cut grass, or to gather the fruits or
other produce of any land, shall not on that
account only be deemed to cultivate such land;
xxx
(18) "Land" means agricultural land, that is to
say, land which is used or capable of being used
for agricultural purposes or purposes
subservient thereto and includes horticultural
land, forest land, garden land, pasture land,
plantation and tope but does not include house-
site or land used exclusively for non-agricultural
purposes;
xxx
(25) "Plantation crops" means cardamom,
coffee, pepper, rubber and tea;
xxx
79-A. Acquisition of land by certain
persons prohibited.- (1) On and from the
commencement of the Karnataka Land Reforms
(Amendment) Act, 1995, no person who or a family
or a joint family which has an assured annual
income of not less than rupees twenty five lakhs
from sources other than agricultural lands shall be
entitled to acquire any land whether as land owner,
landlord, tenant or mortgagee with possession or
otherwise or partly in one capacity and partly in
another.
(2) For purposes of sub-section (1).-
(i) the aggregate income of all the
members of a family or a joint family
from sources other than agricultural
land shall be deemed to be income of
the family or joint family, as the case
may be, from such sources;
(ii) a person or a family or a joint family
shall be deemed to have an assured
annual income of not less than rupees
twenty five lakhs from sources other
than agricultural land on any day if such
person or family or joint family had an
average annual income of not less than
rupees twenty five lakhs from such
sources during a period of five
consecutive years preceding such day.
Explanation.- A person who or a family or a
joint family which has been assessed to income tax
under the Income Tax Act, 1961 (Central Act 43 of
1961) on an yearly total income of not less than
rupees twenty five lakhs for five consecutive years
shall be deemed to have an average annual income
of not less than rupees twenty five lakhs from
sources other than agricultural lands.
(3) Every acquisition of land otherwise
than by way of inheritance or bequest in
contravention of this section shall be null and void.
(4) Where a person acquires land in
contravention of sub-section (1) or acquires it by
bequest or inheritance he shall, within ninety days
from the date of acquisition, furnish to the
Tahsildar having jurisdiction over the Taluk where
the land acquired or the greater part of it is
situated a declaration containing the following
particulars, namely.-
(i) particulars of all lands;
(ii) the average annual income of himself
or the family;
(iii) such other particulars as may be
prescribed.
(5) The Tahsildar shall, on receipt of the
declaration under sub-section (4) and after such
enquiry as may be prescribed send a statement
containing the prescribed particulars relating to
such land to the Deputy Commissioner who shall,
by notification, declare that with effect from such
date as may be specified in the notification, such
land shall stand transferred to and vest in the State
Government without further assurance free from all
encumbrances. From the date specified in such
notification the Deputy Commissioner may take
possession of such land in such manner as may be
prescribed.
(6) For the land vesting in the State
Government under sub-section (5), where the
acquisition of the land was by bequest or
inheritance, an amount as specified in Section 72
shall be paid and where the acquisition was
otherwise than by bequest or inheritance, no
amount shall be paid.
79-B. Prohibition of holding agricultural
land by certain persons.- (1) With effect on and
from the date of commencement of the
Amendment Act, except as otherwise provided in
this Act.-
(a) no person other than a person
cultivating land personally shall be
entitled to hold land; and
(b) it shall not be lawful for.-
(i) an educational, religious or charitable
institution or society or trust, other
than an institution or society or trust
referred to in sub-section (7) of
Section 63, capable of holding
property;
(ii) a company;
(iii) an association or other body of
individuals not being a joint family,
whether incorporated or not; or
(iv) a co-operative society other than a co-
operative farm, to hold any land.
(2) Every such institution, society, trust,
company, association, body or co-operative
society.-
(a) which holds lands on the date of
commencement of the Amendment
Act and which is disentitled to hold
lands under sub-section (1), shall,
within ninety days from the said date,
furnish to the Tahsildar within whose
jurisdiction the greater part of such
land is situated a declaration
containing the particulars of such land
and such other particulars as may
prescribed; and
(b) which acquires such land after the said
date shall also furnish a similar
declaration within the prescribed
period.
(3) The Tahsildar shall, on receipt of the
declaration under sub-section (2) and after such
enquiry as may be prescribed, send a statement
containing the prescribed particulars relating to
such land to the Deputy Commissioner who shall,
by notification, declare that such land shall vest in
the State Government free from all encumbrances
and take possession thereof in the prescribed
manner.
(4) In respect of the land vesting in the
State Government under this section an amount as
specified in Section 72 shall be paid.
Explanation.- For purposes of this section it
shall be presumed that a land is held by an
institution, trust, company, association or body
where it is held by an individual on its behalf.
x x x
80. Transfers to non-agriculturists
barred.- (1) (a) No sale (including sales in
execution of a decree of a civil court or for recovery
of arrears of land revenue or for sums recoverable
as arrears of land revenue), gift or exchange or
lease of any land or interest therein, or
(b) no mortgage of any land or interest
therein, in which the possession of the mortgaged
property is delivered to the mortgagee, shall be
lawful in favour of a person.-
(i) who is not an agriculturist, or
(ii) who being an agriculturist holds as
owner or tenant or partly as owner
and partly as tenant land which
exceeds the limits specified in Section
63 or 64; or
(iii) who is not an agricultural labourer; or
(iv) who is disentitled under Section 79A
or Section 79B to acquire or hold any
land:
Provided that the Deputy Commissioner
having jurisdiction over the area or any officer not
below the rank of an Deputy Commissioner
authorised by the State Government in this behalf
in respect of any area may grant permission for
such sale, gift, or exchange, to enable a person
other than a person disentitled to acquire or hold
land under Section 79-A or Section 79-B who bona
fide intend taking up agriculture to acquire land on
such conditions as may be prescribed in addition to
the following conditions, namely.-
(i) that the transferee takes up
agriculture within one year from the
date of acquisition of land, and
(ii) that if the transferee gives up
agriculture within five years, the land
shall vest in the State Government
subject to payment to him of an
amount equal to eight times the net
annual income of the land or where
the land has been purchased, the
price paid for the land, if such price is
less than eight times the net annual
income of the land.
(2) Nothing in sub-section (1) shall apply
to lands granted under Section 77.
81. Sections 79-A, 79-B, and 80 not to
apply in certain cases.- (1) Nothing in Section
79-A or Section 79-B or Section 80 shall apply to.-
(a) the sale, gift or mortgage of any land or
interest therein in favour of the Government:
the Karnataka State Road Transport
Corporation constituted under the Road
Transport Corporation Act, 1950 (Central Act
LXIV of 1950), the Karnataka Power
Transmission Corporation Limited constituted
under the Companies Act, 1956 the
Karnataka Housing Board constituted under
the Karnataka Housing Board Act, 1962
(Karnataka Act 10 of 1963), the Industrial
Areas Development Board constituted under
the Karnataka Industrial Areas Development
Act, 1966 (Karnataka Act, 18 of 1966), the
Karnataka Slum Clearance Board established
under the Karnataka Slum Areas
(Improvement and Clearance) Act, 1973,
(Karnataka Act 33 of 1974) the Bangalore
Development Authority constituted under the
Bangalore Development Authority Act, 1976
(Karnataka Act 12 of 1976), a
Nagarabhivruddhi Pradhikara constituted
under the Karnataka Nagarabhivruddhi
Pradhikaragala Adhiniyama, 1987
(Karnataka Act 34 of 1987);
(b) the mortgage of any land or interest therein
in favour of.-
(i) a co-operative society;
(ii) a financial institution;
(iii) x x x x x;
(iv) x x x x x;
(v) x x x x x;
(vi) any company as defined in Section 3
of the Companies Act, 1956 (Central
Act 1 of 1956) in which not less than
fifty-one per cent of the paid up share
capital is held by the State
Government or the Central
Government or both;
(vii) any corporation, not being a company
as defined in Section 3 of the
Companies Act, 1956 (Central Act 1 of
1956) established or constituted by
the State Government or the Central
Government or both;
(viii) the Coffee Board constituted under
the Coffee Act, 1942 (Central Act 7 of
1942),
as security for any loan or other facility given by
such society, bank, company, corporation or Board
for agricultural purposes.
Explanation.- In this clause 'agricultural
purposes' include making land fit for cultivation,
cultivation of land, improvement of land,
development of sources of irrigation, raising and
harvesting of crops, horticulture, forestry, planting
and farming, cattle breeding, animal husbandry,
dairy farming, seed farming, pisciculture,
apiculture, sericulture, piggery, poultry farming and
such other activities as are generally carried on by
agriculturists, dairy farmers, cattle breeders,
poultry farmers and other categories of persons
engaged in similar activities including marketing of
agricultural products, their storage and transport
and the acquisition of implements and machinery,
in connection with any such activity;
(c) the sale of any land or interest therein
referred to in clause (b) in enforcement of
the said security;
(d) the sale of any land in favour of a sugar
factory for purposes of research of seed farm
or sale in favour of the Coffee Board
constituted under the Coffee Act, 1942
(Central Act 7 of 1942).
(2) The institutions referred to in clause
(b) of sub-section (1) acquiring land or interest
therein shall dispose of the same by sale, within
the prescribed period:
Provided that pending such sale the land
may be leased for a period not exceeding one year
at a time and the lease shall stand determined
when the land is sold or on the expiry of one year,
whichever is earlier and notwithstanding anything
to the contrary in this Act or in any other law for
the time being in force the lessee shall not be
entitled to any right other than as such lessee in
the land.
(3) Any sale by the institution under this
section shall be subject to the other provisions of
this Act.
x x x
104. Plantations.--The provisions of Section
38, Section 63 other than sub-section (9)
thereof, Sections 64, 79-A, 79-B and 80, shall
not apply to plantations.
Explanation.--In this section 'Plantation'
means land used by a person principally for the
cultivation of plantation crop and includes.--
(i) any land used by such person for any
purpose ancillary to the cultivation of
such crop or for preparation of the same
for the market; and
(ii) agricultural land interspersed within the
boundaries of the area cultivated with
such crop by such person.
not exceeding such extent as may be
determined by the prescribed authority as
necessary for the protection and efficient
management of such cultivation.
B. The relevant provisions of the Land Revenue Act are
as under:
2. Definitions.--In this Act, unless the
context otherwise requires.--
xxx
(8) 'Class of Land' means any of the
following classes of land, namely, dry land,
wet land, garden land or plantation land;
Explanations.--For purposes of this Act.--
xxx
(d) 'Plantation Land' means land in which
a plantation crop, that is, cardamom, coffee,
pepper, rubber or tea, can be grown.
xxx
(14) "Land" includes benefits to arise out
of land, and things attached to the earth, or
permanently fastened to anything attached
to the earth, and also shares in, or charges
on, the revenue or rent of villages or other
defined areas;
C. The relevant definition and provisions of the Right to
Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013 are as follows:
"3. In this Act, unless the context otherwise
requires.--
xxx
d) "agricultural land" means land used for the
purpose of--
(i) agriculture or horticulture;
(ii) dairy farming, poultry farming,
pisciculture, sericulture, seed farming
breeding of livestock or nursery
growing medicinal herbs;
(iii) raising of crops, trees, grass or garden
produce; and
(iv) land used for the grazing of cattle;"
D. The relevant definition under Income Tax Act, 1961
reads as under:
2. In this Act, unless the context otherwise
requires,--
(1A) "agricultural income" means--
(a) any rent or revenue derived from
land which is situated in India and is
used for agricultural purposes;
(b) any income derived from such land
by--
(i) agriculture; or
(ii) the performance by a
cultivator or receiver of rent-in-
kind of any process ordinarily
employed by a cultivator or
receiver of rent-in-kind to render
the produce raised or received by
him fit to be taken to market; or
(iii) the sale by a cultivator or
receiver of rent-in-kind of the
produce raised or received by
him, in respect of which no
process has been performed
other than a process of the
nature described in paragraph (ii)
of this sub-clause;
(c) any income derived from any
building owned and occupied by the
receiver of the rent or revenue of any
such land, or occupied by the cultivator
or the receiver of rent-in-kind, of any
land with respect to which, or the
produce of which, any process
mentioned in paragraphs (ii) and (iii) of
sub-clause (b) is carried on :
Provided that--
(i) the building is on or in the immediate
vicinity of the land, and is a building which the
receiver of the rent or revenue or the
cultivator, or the receiver of rent-in-kind, by
reason of his connection with the land,
requires as a dwelling house, or as a store-
house, or other out-building, and
(ii) the land is either assessed to land
revenue in India or is subject to a local rate
assessed and collected by officers of the
Government as such or where the land is not
so assessed to land revenue or subject to a
local rate, it is not situated--
(A) in any area which is comprised within
the jurisdiction of a municipality (whether
known as a municipality, municipal
corporation, notified area committee, town
area committee, town committee or by any
other name) or a cantonment board and which
has a population of not less than ten
thousand; or
(B) in any area within the distance,
measured aerially,--
(I) not being more than two kilometres,
from the local limits of any municipality or
cantonment board referred to in item (A) and
which has a population of more than ten
thousand but not exceeding one lakh; or
(II) not being more than six kilometres,
from the local limits of any municipality or
cantonment board referred to in item (A) and
which has a population of more than one lakh
but not exceeding ten lakh; or
(III) not being more than eight kilometres,
from the local limits of any municipality or
cantonment board referred to in item (A) and
which has a population of more than ten lakh.
Explanation 1.--For the removal of
doubts, it is hereby declared that revenue
derived from land shall not include and shall
be deemed never to have included any income
arising from the transfer of any land referred
to in item (a) or item (b) of sub-clause (iii) of
clause (14) of this section.
Explanation 2.--For the removal of
doubts, it is hereby declared that income
derived from any building or land referred to
in sub-clause (c) arising from the use of such
building or land for any purpose (including
letting for residential purpose or for the
purpose of any business or profession) other
than agriculture falling under sub-clause (a) or
sub-clause (b) shall not be agricultural
income.
Explanation 3.--For the purposes of
this clause, any income derived from saplings
or seedlings grown in a nursery shall be
deemed to be agricultural income.
Explanation 4.--For the purposes of
clause (ii) of the proviso to sub-clause (c),
"population" means the population according
to the last preceding census of which the
relevant figures have been published before
the first day of the previous year;
E. The relevant definition and provisions of the
Karnataka Agricultural Income Tax Act, 1957 is
as follows:
"2. Definitions.-
(1) In this Act, unless the context otherwise
requires,--
(a) "agricultural income" means,--
(1) any rent or revenue derived from
land situated in the State of Karnataka
and used for growing plantation crops;
(2) any income derived from such land by,--
(i) agriculture, or
(ii) the performance by a cultivator or
receiver of rent-in-kind of any process
ordinarily employed by a cultivator or
receiver of rent-in-kind to render the
produce raised or received by him fit
to be taken to market, or
(iii) the sale by a cultivator or receiver
of rent-in-kind of the produce raised
or received by him in respect of which
no process has been performed other
than a process of the nature described
in paragraph (ii);
(3) any income derived from any building
owned and occupied by the receiver of the
rent or revenue of any such land, or
occupied by the cultivator, or the receiver of
rent-in-kind, of any land with respect to
which, or the produce of which, any
operation mentioned in paragraphs (ii), and
(iii) of sub-clause (2) is carried on:
Provided that the building is on or in the
immediate vicinity of the land, and is a
building which the receiver of the rent or
revenue or the cultivator or the receiver of
the rent-in-kind by reason of his connection
with the land requires as a dwelling house or
as a store-house or other out-building;
Explanation.--Income derived from any
building means the receipts by way of rent
from the building or portion thereof let out
for rent."
F. The relevant definition and provisions of the
Karnataka Agricultural Produced Marketing
(Regulation) Act, 1966 (APMC) are as follows:
"2. Definitions:-In this Act, unless the
context otherwise requires,-
(1)"Agricultural produce" means the
produce or goods specified in the Schedule.
SCHEDULE
VIII PLANTATION CROPS AND SPICES
13. Coffee seeds to the extent of free sale
quota:-
(i) raw coffee (cherry coffee)
(ii) cured coffee seeds
(iii) uncured coffee seeds"
G. The relevant definition and provisions of the
Karnataka Town and Country Planning Act, 1961
are as given below:
"2. Definitions.--In this Act, unless the
context otherwise requires,--
(1) 'Agriculture' includes horticulture,
farming, growing of crops, fruits, vegetables,
flowers, grass, fodder, trees or any kind of
cultivation of soil, breeding and keeping of
livestock including cattle, horses, donkeys,
mules, pigs, fish, poultry and bees, the use
of land which is ancillary to the farming of
land or any purpose aforesaid, but shall not
include the use of any land attached to a
building for the purposes of garden to be
used along with such building; and
'agricultural' shall be construed accordingly;"
H. P.Ramanatha Aiyar's Advanced Law Lexicon (5th
Edition, 2017, Lexis Nexis) gives the following
meanings to the respective words, namely agriculture
and plantation:
" (1) Agriculture: The science or art of
cultivating soil, harvesting crops and
raising livestock.
(2) Plantation: Large scale farming
operation, carried on by hired labour.
Ex: Rubber plantation.
The ordinary significance of the term
"plantation" is a farm. These terms are
nearly synonymous. A plantation is a place
planted; land brought under cultivation;
ground occupied by trees or vegetables,
which have been planted."
---*---
59. We have perused the definition of the word
'agriculture' under various enactments. Under the Land
Reforms Act the definition of 'agriculture' is an inclusive
one which also includes the raising of crops, grass or
garden produce. The expression "plantation crops" is
defined to mean cardamom, coffee, pepper, rubber and
tea, etc. This implies that all other crops are non-
plantation crops. The word "land" means agricultural land,
including garden land, plantation, but does not include
house site or land used exclusively for non-agricultural
purposes. Under Section 104 of the said Act, certain
provisions of the said Act do not apply to plantations. The
word 'plantation' is explained under Section 104 to mean
land used by a person principally for the cultivation of
plantation crops and includes any land used ancillary to the
cultivation of such crop or for preparation of the same for
the market and agricultural land within the area cultivated
with such crop for the protection and efficient management
of such cultivation.
60. Under the Land Revenue Act, the definition
'class of land' includes plantation land. Plantation land
means land on which a plantation crop i.e., cardamom,
coffee, pepper, rubber and tea can be grown.
61. Thus, under both the Land Reforms Act and
Land Revenue Act, plantation crops and plantation land
refer to only cardamom, coffee, pepper, rubber and tea.
62. Under 2013 Act, 'agricultural land' means land
used for the purpose of raising or crops. Crops would
include plantation crops referred to above.
63. Under Karnataka Agricultural Income Tax Act,
1957, 'Agricultural Income' means any revenue derived
from land situated within the State and used for growing
plantation crops. On an analogy, the expression plantation
crops would include coffee. Under the APMC Act also,
under Schedule 8, coffee is included as a plantation crop.
In all the aforesaid enactments, coffee has been defined to
be a plantation crop
64. Thus, the need to interpret the expression
"agricultural land" under the SARFAESI Act can be on the
basis of the following tests:
(I) That the word "Agriculture", which is
inherent in the expression "Agricultural
Land" in Section 31(i) of the SARFAESI
Act, must be given a contextual
interpretation and not an expansive one.
(II) That the contextual interpretation
depends upon the nature of crops grown
on the land. Whether it refers to only
non-commercial crops, i.e., excluding
plantation or cash crops? Thus, whether
agricultural land can take within its scope
and ambit land on which plantation crops
such as coffee, tea, rubber, cardamom
and pepper are grown?
(III) Generally speaking, while determining
the nature of the land and as to whether
it is agricultural land, the character of
the land according to the purpose for
which it is meant or set apart can be an
important test. Thus, there must be a
connection between the user of the land
and the purpose, which is agricultural
purpose. Also, agricultural activity does
not mean only cultivation per se, but it is
an integrated activity which would
include not only the cultivation of crops
but also its process for its future use.
(IV) Use and nature of the land must be
determined on the date of creation of the
security interest and for the purpose for
which it was set apart.
(V) The purpose and intent on the date on
which security interest was created.
(VI) The revenue entries showing the land to
be agricultural in nature would not per se
be a determinative factor. But, the
totality of the facts and circumstances of
the case has to be borne in mind.
(VII) In the event there is any change in the
user of the agricultural land for non-
agricultural activity, the same would
have also a bearing when action is
initiated under the provisions of the
SARFAESI Act.
65. In fact, the Hon'ble Supreme Court in
K.Pappireddiyar (supra) has observed that the nature of
the land use to which it has been put to on the date of
creation of security interest and the purpose to which it
was set apart are matters which have to be taken into
consideration. Even in the case of Blue Coast Hotels, it was
observed that, the question whether the land is
agricultural or not had to be determined on the basis of
totality of facts and circumstances and not whether the
land was shown to be agricultural in nature in the revenue
entries per se.
66. In the instant case, what has to be considered
is, whether, land on which coffee is grown is agricultural
land or not. The same has to be also in light of the
relevant provisions of the State Acts which throw light as
to how a coffee estate / plantation is construed.
67. Sub-Section (1) of Section 2(A) of the
Karnataka Land Reforms Act defines 'agriculture' to include
the raising of crops. The expression 'plantation crops' is
defined to mean cardamom, coffee, rubber, pepper and
tea as per sub-Section (25) of Section 2(A) of the said Act.
This implies that all other crops are non-plantation crops.
68. Chapter VIII of the Karnataka Land Reforms
Act deals with exemptions. Section 104 deals with
plantations. The said section states that the provisions of
Section 38, Section 63 other than sub-section (9) thereof,
Sections 64, 79-A, 79-B and 80 shall not apply to
plantations. For the purpose of that section, "plantation"
means the land used by a person principally for the
cultivation of plantation crop and includes (i) any land used
by such person for any purpose ancillary to the cultivation
of such crop or for preparation of the same for the market;
and (ii) agricultural land interspersed within the
boundaries of the area cultivated with such crop by such
person, not exceeding such extent as may be determined
by the prescribed authority as necessary for the protection
and efficient management of such cultivation.
69. As already noted the expression "plantation
crops" is defined in Section 2(A)(25) of the Karnataka Land
Reforms Act to mean cardamom, coffee, rubber, pepper
and tea. Thus, in case of these plantation crops, inter alia,
Sections 79-A, 79-B and 80 of the said Act would not
apply. Section 79-A states that the acquisition of land by
certain persons is prohibited. Section 79-B prohibits the
holding of agricultural land by certain persons. Section 80
states that transfer to non-agriculturists is barred. The
said Section includes not only sale, gift, exchange, lease of
any land or interest therein, but also states that mortgage
of any land or interest therein, in which the possession of
the mortgaged property is delivered to the mortgagee,
shall not be lawful in favour of a person, who is not an
agriculturist, or who is disentitled under Section 79-A or
Section 79-B to acquire or hold any land, unless the
Deputy Commissioner having jurisdiction over the area,
permits such sale, gift or exchange, etc.
70. However, Section 81(1)(b)(i) & (ii) of the
Karnataka Land Reforms Act states that, nothing in Section
79-A or Section 79-B or Section 80 would apply, inter alia,
to the mortgage of any land or interest therein in favour of
(i) a co-operative society or (ii) a financial institution, as
security for any loan or other facility given by such society,
bank, etc., for any "agricultural purposes". The expression
"agricultural purposes" includes making land fit for
cultivation, cultivation of land, improvement of land,
development of land, development of sources of irrigation,
raising and harvesting of crops, horticulture, forestry,
planting and farming, cattle breeding, animal husbandry,
dairy farming, seed farming, pisciculture, apiculture,
sericulture, piggery, poultry farming and such other
activities as are generally carried on by agriculturists, dairy
farmers, cattle breeders, poultry farmers and other
categories of persons engaged in similar activities including
marketing of agricultural products, their storage and
transport and the acquisition of implements and
machinery, in connection with any such activity. Section
81(1)(c) states that nothing in Section 79-A or Section 79-
B or Section 80 would apply to the sale of any land or
interest therein referred to in clause (b) in enforcement of
the said security i.e., mortgage to a co-operative society or
bank.
71. Thus, Section 81 is an exception to Section 79-
A, Section 79-B and Section 80. Therefore, there could be
a mortgage of any land or interest therein in favour of a
bank or a financial institution and also sale of any land or
interest therein mortgaged to any financial institution for
enforcement of the security for any loan or other facility
for agricultural purposes. This would imply that the land on
which coffee plantation is raised is no doubt agricultural
land on a plain interpretation, but, such land is exempted
from the provisions contained in Sections 79A, 79B and 80
of the said Act. Thus, when an agricultural land is mortgaged
to a bank and the mortgage is for agricultural purposes and if
the outstanding dues to the financial institution are not paid,
the same could be enforced for realization of the debt.
Thus, irrespective of whether the land on which plantation
or other crops are grown, Section 80 enables mortgage of
such land for obtaining a loan for agricultural purpose.
72. Then, the question would arise, as to, what
would be the position if the land on which plantation crop
grown, is mortgaged to any financial institution for a non-
agricultural purposes, i.e., as security for any loan or other
facility for non-agricultural purposes. In such a case,
Section 104 states that the bar under Section 79-A, 79-B
and Section 80 would not apply to plantations. This would
mean that such plantations could be mortgaged even for
non-agricultural purposes, in which event, the security of
lands on which plantation crops are raised for the loan
could be realized under the provisions of Land Reforms
Act. Then, can such land be excluded from the scope and
ambit of agricultural land under Section 31(i) of the
SARFAESI Act is the question.
73. On a conjoint reading of Section 81 with
Section 104 of Karnataka Land Reforms Act, what emerges
insofar as land on which plantation crops, such as coffee
are grown, such lands are exempted from the provisions of
Sections 79-A, 79-B and 80 and they could be dealt with
by way of sale, lease, gift, mortgage or exchange and the
limitations mentioned in those sections do not apply to
such land.
74. More particularly, Sections 79-A, 79-B and 80
do not apply to the mortgage of any land or interest
therein in favour of a financial institution when as a
security for any loan or other facility is given by such
financial institution for agricultural purposes. The
expression "agricultural purposes" is given a wide meaning
in Section 81 of the Land Reforms Act.
75. Further, there could also be sale of any land or
land in which interest is created by way of a mortgage for
the purpose of enforcement of the said security in respect
of land on which plantation crops are grown. This would
mean that there would be no restriction on transfer of
interest in land on which plantation crop is grown by way
of mortgage in favour of a financial institution and any
such land mortgaged to a financial institution could be sold
for the enforcement of the said security.
76. Thus, coffee, being a plantation crop within the
meaning of Section 2(A)(25) of the Land Reforms Act, is
exempted from the provisions of Sections 79-A, 79-B and
80 as per Section 104 of the said Act. Also, under Section
81 of the said Act, the bar under Section 79-A, 79-B and
80 of the said Act would not apply in the case of mortgage
of any land or interest therein to any financial institution as
security for any loan or other facilities given by such
financial institution for agricultural purposes. Hence, any
land used for raising a plantation crop, if mortgaged to a
financial institution, even if for non-agricultural purposes,
could also be sold for enforcement of the said security.
77. In Shankar Bhairu Bamane vs. Syndicae
Bank and others, [ILR 1998 KAR 3028], (Shankar
Bhairu Bamane), Sections 80 and 81 of the Land Reforms
Act were considered and it was observed, a reading of
Section 81 makes it clear that there is no bar for even
financial institutions to acquire agricultural properties; a
bank can also bid and purchase agricultural properties.
This is on account of the exemption under Section 81 of
the said Act.
78. The Karnataka State Legislature has been very
cautious in exempting only lands on which plantation crops
are grown from the purview of Sections 79-A, 79-B and
Section 80 of the Land Reforms Act, which means that, the
bar contained in those sections would apply in the case of
lands on which crops which are not in the nature of
plantation crops are raised. Such lands only i.e., lands on
which plantation crops are not raised, in our view, are
agricultural lands for the purpose of Section 31(i) of the
Act. This means the bar contained under Sections 79-A,
79-B and 80 of the Land Reforms Act, do not apply as per
Section 104 of the said Act to plantation lands or land on
which plantation crops are grown. Such lands would not
come within the purview of agricultural land under Section
31(i) of SARFAESI Act.
79. In this context, it would be useful to note that,
the expression 'plantation crop' under sub-section (25) of
Section 2(A) of the Land Reforms Act means cardamom,
coffee, pepper, rubber and tea. Therefore, Section 104
which deals with plantation is placed in the Exemptions
Chapter of the Land Reforms Act. Also, Section 81 which is
an exception to Section 79-A and Section 79-B deal with
restrictions on holding or a transfer of agricultural land
have also to be borne in mind, while applying the same to
the facts of the present case.
80. In this context, it would be useful to refer to
the 'Principles of statutory interpretation" by Justice G.P.
Singh", 14th Edition, wherein it has been observed that if a
word has been defined in 'interpretation clause' or
'definition clause', prima facie, that definition governs
wherever that word is used in the body of that statute.
That means if, in an enactment, the Parliament or the
Legislature has defined a term in a particular manner, the
said term as defined would govern what is proposed,
authorized or done under that enactment, but where the
context makes the definition given in the
interpretation/definition clause inapplicable, a defined word
when used in the body of the statute, may have to be
given a different meaning from that contained in the
interpretation clause. Therefore, all definitions in the
interpretation clause normally commences with the
expression 'unless there is anything repugnant in the
subject or context' or 'unless the context otherwise
requires".
81. Under the provisions of the Land Reforms Act,
the land used for the purpose of growing plantation crop
though an agricultural land for all other purposes,
nevertheless, such plantation land is exempted from the
provisions of Sections 79-A, 79-B and 80, which implies
that it is not treated on par with the land on which non-
plantation crops or other agricultural produce is grown.
82. Thus, insofar as the State of Karnataka is
concerned, having regard to Section 104 and Section 81 of
the Land Reforms Act, lands on which the plantation crops
are grown, being exempt from the restrictions pertaining
to agricultural land mentioned in Section 79-A, 79-B and
80, in view of Section 104 and Section 81 of the said Act,
would not come within the scope and ambit of the
'agricultural land' under Section 31(i) of the SARFAESI Act.
In this regard, we find much force in the argument of Sri.
Katti appearing for respondent-Bank.
83. Thus, on a contextual interpretation, land on
which plantation crops are grown is not agricultural land
within the meaning of Section 31(i) of the SARFAESI Act.
84. In this context, we also place reliance on the
judgment of the Madras High Court in D.Ravichandran
vs. The Manager, Indian Overseas Bank and another,
CDJ 2006 MHC 789, (Writ Petition No.250/2006
disposed of on 02.02.2006), wherein it has been
observed that clause (i) of Section 31 of the SARFAESI Act
states that the provisions of the Act shall not apply to any
security interest created in agricultural land. The Act does
not define the term "Agricultural Land". The object of the
Act is to improve the recovery process by vesting the
powers with the banks and financial institutions powers to
take possession of secured assets and sell them in case
the borrowers commit default in repayment of the loan. If
that is the subject of the enactment and object of the Act,
the term "agricultural land" cannot be given such a liberal
and wide construction or interpretation. Further, when the
loan is borrowed from a bank and there is a default in
repayment and measures are initiated under the SARFAESI
Act, after issuance of notice and receipt of reply, questions
such as the loan being agricultural loan or the land being
the agricultural land may not be raised, particularly when
the credit facility is in the nature of agricultural loan on
agricultural lands being given as secured assets. This
reasoning is in line with what we have deduced above.
The same is also in consonance with the provisions of Land
Reforms Act and Karnataka Agricultural Income Tax Act,
1957, which apply only to plantations crops.
85. In Writ Appeal No.538 of 2020, the loan was
obtained for agricultural purposes and there being no bar
for the mortgage of any land or interest therein in favour
of the financial institution such as a bank, as security for
agricultural purpose, the sale of such land or interest
therein for the enforcement of the said security is
permissible as per Section 80 read with Section 104 of
Land Reforms Act.
86. In Writ Appeal No.545/2020, under Section 104
of the Land Reforms Act, there being an exemption of the
applicability of the provisions of Section 79-A, 79-B and 80 to
plantations or lands on which the plantation crops are raised,
such as coffee estate, the said lands could be mortgaged for
the purpose of credit facility to a financial institution and the
bar under Sections 79-A, 79-B and 80 would not apply.
Hence, there was no bar for the mortgage of coffee estate in
this case. Consequently, for the realization of the
outstanding debt, the security could be enforced by sale of
the land or interest therein.
87. Thus, what emerges is that the land on which
plantation crops are raised (coffee in the instant case), if
mortgaged or given by way of a security to a financial
institution to obtain a credit facility, whether for an
agricultural purpose or for a non-agricultural purpose, the
said security could be enforced and Section 31(i) of
SARFAESI Act does not apply to such land. That means the
financial institution can enforce the security created on such
lands. We make it clear that this judgment concerns the
interpretation of lands on which plantation crops are grown
being construed as agricultural lands within Section 31(i) of
the SARFAESI Act only as the lands in these cases concern
plantation crops. We have not ventured to consider the
matter in the context of non-plantation crops.
88. Hence, in the instant case, the securities created
in the coffee plantations can be enforced for the realization of
the debts as coffee plantation would not come within the
scope and ambit of agricultural land under Section 31(i) of
the SARFAESI Act insofar as State of Karnataka is concerned.
Conclusions:
89. In view of the aforesaid discussion, the
following conclusions are arrived:
(i) That in these cases, the writ petitions were
maintainable under Article 226 of the
Constitution of India;
(ii) That the expression 'agricultural land' in
Section 31(i) of the SARFAESI Act, does
not include land on which plantation crops
are grown namely, cardamom, coffee,
pepper, rubber and tea as defined in
Section 2(A)(25) of the Land Reforms Act.
Therefore, the measures initiated by the
respondent banks in relation to the coffee
estates in these appeals are not hit by
Section 31(i) of the SARFAESI Act, as the
said Act is applicable to land on which
plantation crops are grown, including
coffee plantation, in the instant cases.
90. In the result, the writ appeals are disposed in
the aforesaid terms.
Parties to bear their respective costs.
In view of the disposal of the appeals in the
aforesaid terms, pending applications stand disposed.
Sd/-
JUDGE
Sd/-
JUDGE
RK/-S*
Ct: R*
