Kaningat Ramachandra Menon vs South Indian Bank Limited
2023 Latest Caselaw 6880 Ker

             IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT

                 THE HONOURABLE MR.JUSTICE C.S.DIAS

        THURSDAY, THE 22ND DAY OF JUNE 2023 / 1ST ASHADHA, 1945

                        OP (DRT) NO. 215 OF 2023

 AGAINST THE ORDER DATED 31.3.2023 IN I.A.NO.3565/2022 IN SA 599/2022 OF
                 DEBT RECOVERY TRIBUNAL- 2, ERNAKULAM
PETITIONER/APPLICANT:

            KANINGAT RAMACHANDRA MENON, AGED 70 YEARS
            S/O.KANINGAT MADHAVI AMMA, PROPRIETOR OF M/S.EXTAL
            INTERNATIONAL, NO.58, 6TH STREET, CHOWDHARY NAGAR,
            VALSARAVAKKOM, CHENNAI-600007, RESIDING AT MADHAVAM,
            KARINGAT HOUSE, VASANTH NAGAR, PUTTURACKAL,
            THRISSUR, PIN - 680022

            BY ADVS.B.PREMNATH (E)
            MANI GOVINDA MARAR
            SARATH M.S.


RESPONDENTS/DEFENDANTS:

    1       SOUTH INDIAN BANK LIMITED
            MAIN ROAD, OPP. ALL SAINTS CHURCH, MISSION QUARTERS,
            THAMPURAN NAGAR, VELIYANNOOR, THRISSUR,
            REPRESENTED BY ITS MANAGER, PIN - 680001

    2       THE AUTHORIZED OFFICER
            SOUTH INDIAN BANK LIMITED, REGIONAL OFFICE-THRISSUR,
            1ST FLOOR, JUBILEE BUILDING, CIVIL LANE ROAD, NEAR
            CHILDREN'S PARK, AYYANTHOLE, THRISSUR, PIN - 680003

            BY ADVS.T.C.SURESH MENON
            MOHAN JACOB GEORGE
            P.V.PARVATHY (P-41)(K/000036/1991)
            REENA THOMAS(R-364)
            NIGI GEORGE(K/1169/2012)


    THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR
ADMISSION ON 22.06.2023, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 OP(DRT)NO.215 OF 2023
                               :: 2 ::




                         JUDGMENT

Dated this the 22nd day of June 2023

The original petition is filed to set aside Ext.P3

order passed by the Debt Recovery Tribunal-II,

Ernakulam (in short 'Tribunal') in I.A.No.3565/22 in

S.A.599/22.

2. The brief relevant facts leading to the impugned

order are:

(i) The petitioner is a guarantor of a Kissan Credit Card Overdraft Facility that was availed by his wife from the first respondent bank for Rs.1.6 crore.

(ii) As the petitioner's wife got afflicted with cancer and the cultivation did not thrive as expected, the petitioner and his wife were unable to pay the instalments on time.

(iii) The respondents proceeded against the secured asset under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest OP(DRT)NO.215 OF 2023 :: 3 ::

Act, 2002 (in short 'Act') by issuing Ext.P1 notice under Section 13(2) of the Act.

(iv) Subsequently, the respondents proceeded under Section 14 of the Act, by filing an application before the jurisdictional Magistrate.

(v) Immediately, the petitioner filed S.A.599/22 (in short 'S.A.') before the Tribunal. Along with the S.A., the petitioner filed I.A.3565/22 (Ext.P2) to appoint an Advocate Commissioner to elucidate the matters stated in the application.

(vi) The Tribunal, by the impugned Ext.P3 order, rejected Ext.P2 application in cryptic and laconic manner.

(vii) Ext.P3 is patently illegal and erroneous. Hence, the original petition.

3. The respondents have filed a counter affidavit

denying the allegations in the original petition. It is,

inter alia, contended that the petitioner and his wife

had availed the credit facility for the purpose of OP(DRT)NO.215 OF 2023 :: 4 ::

cultivation of banana and mixed crops by executing

Annexure B1 hypothecation agreement. The petitioner

had created security interest by depositing the title

deeds of the properties covered by Ext.B2 possession

certificate. It is clearly stated in the certificate that the

property is 'purayidom' (garden land). There is no

bonafides on the part of the petitioner to contend that

the property offered as collateral security is

agricultural land. The petitioner has deliberately taken

up the contention in order to wriggle out of his liability

to pay the outstanding amount. Hence, the original

petition may be dismissed.

4. Heard Sri.B.Premnath, the learned counsel

appearing for the petitioner and Sri.Mohan Jacob

George, the learned counsel appearing for the

respondents.

5. The point is whether there is any illegality in

Ext.P6 order.

OP(DRT)NO.215 OF 2023 :: 5 ::

6. The petitioner's assertion is that the loan was

sanctioned for carrying out agricultural operations in

the property, that Annexures A3 and A4 series of

photographs establish the present nature of the

properties and that the electricity connection is in the

category of agricultural electricity connection. All the

above materials establish that the property offered as

collateral security is an agricultural land, which is

exempted under Section 31(1)(i) of the Act.

7. It is to corroborate the above materials, that the

petitioner wanted to appoint an Advocate

Commissioner. The application was opposed by the

respondents, inter alia, contending that only the

agricultural crops were offered as the primary security

and the properties covered under Ext.B2 possession

certificate were offered as collateral security.

8. The Tribunal, after appreciating the rival

pleadings and the decision of this Court in Mathew OP(DRT)NO.215 OF 2023 :: 6 ::

Michael and others v. Dhanalaxmi Bank and others [O.P.

(DRT)No.22/2019] and the decision of the Hon'ble

Supreme Court in Indian Bank and another v.

K.Pappireddiyar and another [2018 (18) SCC 252], by

the impugned order, held that the pertinent question to

be considered is the nature and character of the land as

on the date of creation of the secured asset.

Consequently, the question whether the collateral

security is an agricultural land or not is a matter to be

decided after trial. Hence, the Tribunal held that the

petitioner's request to appoint an Advocate

Commissioner, as prayed for in Ext.P2 application, is to

be decided later.

9. The schedule to Ext.R1(d) unambiguously shows

that the crops were hypothecated to the Bank at an

estimated value of Rs.16/- lakh.

10. Going by the petitioner's own assertion, his

wife had availed financial assistance for Rs.1.6/- Crore. OP(DRT)NO.215 OF 2023 :: 7 ::

It was in the above situation, the Bank sought for

additional collateral security.

11. Ext.R1(e) letter confirming the deposit of title

deeds undoubtedly establish that the petitioner had also

deposited the title deeds pertaining to 'A and B'

Schedule properties. In Ext.R1(f) possession certificate

issued by the Avanur Village Office, Thrissur, the

property is classified as 'purayidom'.

12. Section 31(1)(i) of the Act excludes the

provision of Act in respect of any security interest

created in an agricultural land.

13. The Hon'ble Supreme Court in ITC limited v.

BlueCoast Hotels Ltd. [2018 (15) SCC 99], interpreting

Section 31(1)(i), has held as follows:

"36. The purpose of enacting Section 31(i) and the meaning of the term "agricultural land" assume significance. This provision, like many others is intended to protect agricultural land held for agricultural purposes by agriculturists from the extraordinary provisions of this Act, which provides for enforcement of security interest without intervention of the OP(DRT)NO.215 OF 2023 :: 8 ::

Court. The plain intention of the provision is to exempt agricultural land from the provisions of the Act. In other words, the creditor cannot enforce any security interest created in his favour without intervention of the Court or Tribunal, if such security interest is in respect of agricultural land. The exemption thus protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act. It is also intended to deter the creation of security interest over agricultural land as defined in Section 2(1)(zf). Thus, security interest cannot be created in respect of property specified in Section 31."

14. It is trite; the relevant question while

deciding the defence that the property is an

agricultural land or not, is to find out the nature of

the land as on the date of creation of security

interest.

15. On an appreciation of the materials on

record, it may be true that the petitioner and his

wife had availed financial assistance for carrying out

agricultural operations, but security that was OP(DRT)NO.215 OF 2023 :: 9 ::

created is, prima facie, found to be not agricultural

land.

16. In the above conspectus, the finding of the

Tribunal, that Ext.P2 application can only be

considered after the conclusion of the trial in the

S.A., is justifiable and correct. I do not find any

error in the decision taken by the Tribunal, in view

of the materials that are now placed before this

Court. Nonetheless, if the petitioner can

substantiate that the security interest created in

favour of the respondent bank is an agricultural

land, necessarily the Tribunal will have to decide

whether there is a necessity to appoint an Advocate

Commissioner. At any rate, there is no error in

Ext.P3 order warranting interference by this Court

under Article 227 of the Constitution of India.

17. Resultantly, the original petition is

dismissed, without prejudice to the right of the OP(DRT)NO.215 OF 2023 :: 10 ::

petitioner to produce substantial material and

adduce such other evidence, at appropriate stage,

and the Tribunal may, in its discretion, on being

satisfied that the petitioner has substantiated his

contention, then the Tribunal may consider the

application to appoint an Advocate Commissioner.

With the above observation, the original

petition is dismissed.

SD/-

C.S.DIAS JUDGE jes OP(DRT)NO.215 OF 2023 :: 11 ::

APPENDIX OF OP (DRT) 215/2023

PETITIONER'S EXHIBITS:

Exhibit P1      TRUE COPY OF THE NOTICE UNDER SECTION 13(2)
                OF    THE    SARFAESI    ACT    ISSUED    BY   THE
                RESPONDENTS       TO   THE    PETITIONER,    DATED
                25.11.2021.
Exhibit P2      TRUE COPY OF THE AFFIDAVIT AND PETITION IN

I.A.NO. 3565 OF 2022 IN S.A.NO. 599 OF 2022 ON THE FILE OF THE DEBT RECOVERY TRIBUNAL-II, ERNAKULAM, DATED 19.12.2022 Exhibit P3 TRUE COPY OF THE ORDER OF THE DEBT RECOVERY TRIBUNAL-II, ERNAKULAM IN I.A.NO. 3565 OF 2022 IN S.A.NO. 599 OF 2022, DATED 31.03.2023

Exhibit-P4 TRUE PHOTOCOPY OF SOME OF THE PHOTOGRAPHS OF THE EXTENT OF 37.4 CENTS (0.1507 HECTARE) OF LAND SITUATED IN R.S.NO. 65/12 OF AVANUR VILLAGE, THRISSUR DISTRICT Exhibit-P5 TRUE PHOTOCOPY OF SOME OF THE PHOTOGRAPHS OF THE EXTENT OF 50.70 CENTS (0.2054 HECTARE) OF LAND SITUATED IN R.S.NO. 65/39 OF AVANUR VILLAGE, THRISSUR DISTRICT Exhibit-P6 TRUE COPY OF THE ELECTRICITY BILL DATED 8.11.2022 WITH RESPECT TO CONSUMER NO.1156955008623, PRODUCED AS ANNEXURE A5 IN S.A.NO.599 OF 2022 Exhibit-P7 TRUE COPY OF THE ELECTRICITY BILL DATED 9.9.2022 WITH RESPECT TO CONSUMER NO.1156958001442, PRODUCED AS ANNEXURE A6 IN S.A.NO.599 OF 2022

RESPONDENTS' EXHIBITS:

Ext.R1(a)(i) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY YUSAF Ext.R1(a) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY RIYAS Ext.R1(a)(ii) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY SAITHALY OP(DRT)NO.215 OF 2023 :: 12 ::

Ext.R1(a)(iii) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY SAITHALY Ext.R1(a)(iv) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY AZHISHA Ext.R1(a)(v) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY FAISAL Ext.R1(a)(vi) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY SAMSUDEEN MUGHARI Ext.R1(a)(vii) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY MUHAMAD RAFI Ext.R1(a)(viii) COPY OF THE LEASE DEED DATED 10.08.2017 EXECUTED BY SAMSUDHEEN Ext.R1(b) COPY OF THE LEGAL SCRUTINY REPORT Ext.R1(c) COPY OF THE LEGAL SCRUTINY REPORT Ext.R1(d) COPY OF AGREEMENT OF HYPOTHECATION Ext.R1(e) COPY OF LETTER CONFIRMING TITLE DEED Ext.R1(f) COPY OF POSSESSION CERTIFICATE DATED 01.08.2017 Ext.R1(h) COPY OF SECTION 13(2) NOTICE Exhibit R1(g) COPY OF THE COUNTER AFFIDAVIT AND WRITTEN STATEMENT IN SA NO.599/2022