Kerala High Court
M/S. Periyar Polymers vs Federal Bank Ltd on 16 February, 2024
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 16TH DAY OF FEBRUARY 2024 / 27TH MAGHA, 1945
OP (DRT) NO. 35 OF 2024
SA.51/2022 OF DEBT RECOVERY TRIBUNAL, ERNAKULAM
PETITIONERS:
1 M/S. PERIYAR POLYMERS
OKKAL, ERNAKULAM REPRESENTED BY ITS PARTNER
K.M.PAULY, PIN - 683574
2 M/S. TWO IN ONE STORAGE EXTRUSIONS
OKKAL, ERNAKULAM REPRESENTED BY ITS PARTNER
K.M.PAULY, PIN - 683550
3 K.M.PAULY
AGED 61 YEARS
S/O. K.P.MATHAI, KALLOOKADAN HOUSE,
OKKAL.P.O, PERUMBAVOOR,
ERNAKULAM, PIN - 683550
4 K.M.JAMES
AGED 56 YEARS
S/O. K.P.MATHAI, KALLOOKADAN HOUSE,
OKKAL.P.O, PERUMBAVOOR,
ERNAKULAM, PIN - 683550
5 REJI PAULY
AGED 52 YEARS
W/O. K.M.PAULY, KALLOOKADAN HOUSE,
OKKAL.P.O, PERUMBAVOOR,
ERNAKULAM, PIN - 683550
6 SMT. KOCHUTHRESSIA
AGED 65 YEARS
W/O. LATE ANTONY, PEREPPATTU MANJALY HOUSE,
KORATTY, THRISSUR, PIN - 680308
BY ADVS.
K.SANEESH KUMAR
P.SHRIHARI
V.B.SANTHINI
O.P.(DRT) No.35/2024
:2:
RESPONDENTS:
1 FEDERAL BANK LTD
GROUND FLOOR, VAREKULAM BUILDING,
NEAR PRIVATE BUS STAND, KALADY, ERNAKULAM
REPRESENTED BY ITS MANAGER, PIN - 683574
2 AUTHORISED OFFICER
FEDERAL BANK LTD., LCRD / ERNAKULAM DIVISION,
GROUND FLOOR, FEDERAL TOWERS, MARINE DRIVE,
KOCHI-, PIN - 682031
BY ADV LEO GEORGE
THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR
ADMISSION ON 16.02.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
O.P.(DRT) No.35/2024
:3:
N. NAGARESH, J.
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O.P.(DRT) No.35 of 2024
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Dated this the 16th day of February, 2024
JUDGMENT
~~~~~~~~~
Petitioners 1 to 6 have filed this OP(DRT) seeking
to set aside Exts.P12 to P14. Ext.P12 is an order passed by
the Debts Recovery Tribunal-I, Ernakulam in IA No.144/2022
declining stay of proceedings. Ext.P13 is an order in IA
No.145/2022 declining to appoint Advocate Commissioner
for local inspection. Ext.P14 is order in IA No.3812/2023
refusing to stay Section 14 proceedings.
2. Petitioners 1 and 2 are Partnership Firms and
petitioners 3 to 5 are Partners thereof. The petitioners, for
business purpose, availed financial facilities like renewed
Cash Credit and Term Loan. When the petitioners failed to
maintain the loan accounts due to demonetisation and
Covid-19 pandemic, the 1st respondent-Bank issued Ext.P2
Section 13(2) notice. The petitioners filed objection. The
petitioners filed Ext.P6 IA No.144/2022 to stay further
proceedings. Ext.P7 IA No.145/2022 was filed by the
petitioners for appointment of an Advocate Commissioner to
inspect and report the nature and cultivation in the secured
asset. They also filed IA No.3812/2023 to stay all measures
including Section 14 proceedings.
3. The Debts Recovery Tribunal rejected IA
No.144/2022 as per Ext.P12 order and dismissed IA
No.3812/2023 as per Ext.P14 order. The application of the
petitioners for appointment of Advocate Commissioner for
local inspection was rejected as per Ext.P13 order. The
petitioners challenge Exts.P12 to P14 orders.
4. The counsel for the petitioners argued that the
rejection of the commission application is per se illegal as the
Tribunal virtually shut a valid opportunity of the petitioners to
establish before the Tribunal that item No.10 property in
Ext.P2 notice is an agricultural property and cultivating land.
5. The 2nd respondent resisted the OP(DRT) filing a
statement. The 2nd respondent submitted that a sum of
₹14,22,59,911/- is due to be recovered from the petitioners
as on 31.08.2021. The credit facilities availed by the
petitioners are not agricultural loans. The petitioners are not
agriculturists and they are not depending on the income
derived from agricultural operations carried out in item No.10
property. The petitioners have alternate remedy under
Section 18 of the Act, 2002 to challenge Exts.P12 to P14.
The OP(DRT) is therefore liable to be dismissed.
6. I have heard the learned counsel for the
petitioners and the learned Standing Counsel representing
the respondents.
7. The application of the petitioners for appointment
of Advocate Commissioner stands rejected as per Ext.P13
order of the Debts Recovery Tribunal. The Tribunal noted
that in order to claim exemption under Section 31(i) of the
SARFAESI Act, the petitioners ought to have placed relevant
material before the Tribunal to show that the secured asset
was agricultural property on the date of creation of security
interest over the same, as laid down by the Hon'ble Apex
Court in Indian Bank and others v. K. Pappireddiyar and
others [AIR 2018 SC 3540]. Relying on a judgment of this
Court, the Tribunal concluded that the pertinent question to
be decided, when a contention that the property is an
agricultural land, is to ascertain whether the land is
agricultural or not on the date of creation of the security
interest for the purpose of taking loan.
8. The Tribunal held that the petitioners have not
produced any material before the Tribunal to show that the
secured asset was agricultural property on the date of
creation of security interest. The Tribunal held that even if an
Advocate Commissioner makes site visit, he cannot give a
finding as to whether what was the nature of the property on
the date of creation of security interest over the same.
9. I find that the petitioners had produced Ext.P5
certificate issued by the Agricultural Officer certifying that the
6th petitioner is a bona fide farmer and belongs to small and
marginal farmer category. She is actively cultivating crops in
the property including coconut trees, nutmegs, rubber,
arecanut, etc.
10. That may by itself not be sufficient for the
petitioners to avail the benefit of Section 31(i). To get the
benefit of Section 31(i), the petitioners have to further
establish that the property was used as agricultural land at
the time of creating security interest in the property. It is for
this purpose that the petitioners moved application for
appointment of Advocate Commissioner for local inspection.
11. This Court in the judgment in Jayakumar v. State
Bank of India [2024 (1) KLT 458] considered the issue of
appointment of Advocate Commissioner for making local
inspection of secured asset. This Court held that the
petitioners can possibly establish the status of the land as
agricultural land at the time of mortgage by causing local
inspection. Rejection of the application submitted by the
petitioners for local inspection in the circumstances would
amount to shutting out the best evidence in the case in the
form of report on local inspection.
12. Following the said judgment of this Court in
Jayakumar (supra), Ext.P13 order dated 19.12.2023 of the
Debts Recovery Tribunal-I, Ernakulam in IA No.145/2022 in
SA No.51/2022 is set aside. The Debts Recovery Tribunal is
directed to reconsider IA No.145/2022 and pass appropriate
orders thereon expeditiously. The Tribunal shall proceed
with SA No.51/2022 only after considering IA No.145/2022
afresh.
OP(DRT) is disposed of as above.
Sd/-
N. NAGARESH, JUDGE
aks/13.02.2024
APPENDIX OF OP (DRT) 35/2024
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF AMENDED S.A.51/2022
PRODUCED WITHOUT ANNEXURES FILED ON
3/1/2024.
Exhibit P2 A TRUE COPY OF DEMAND NOTICE DATED
03/09/2021 ISSUED BY THE 2ND
RESPONDENT.
Exhibit P3 TRUE COPY OF POSSESSION NOTICE DATED
04/01/2022 ISSUED BY THE 2ND
RESPONDENT.
Exhibit P4 TRUE COPY OF POSSESSION NOTICE DATED
17/01/2022 ISSUED BY THE 2ND
RESPONDENT.
Exhibit P5 A TRUE COPY OF THE CERTIFICATE ISSUED
BY THE AGRICULTURAL OFFICER DATED
21.1.2022.
Exhibit P6 - A TRUE COPY OF THE I.A.144/2022
FILED BY THE PETITIONER ON 9.2.2022.
Exhibit P7 A TRUE COPY OF THE I.A.145 OF 2023
FILED FOR THE APPOINTMENT OF ADVOCATE
COMMISSIONER ON 9.2.2022
Exhibit P8 A TRUE COPY OF THE I.A 3812/2023 FILED
ON 2.11.2023
Exhibit P9 A TRUE COPY OF THE COUNTER FILED IN
I.A 144/2022 ON 1.12.2023
Exhibit P10 A TRUE COPY OF THE COUNTER FILED IN
145/2022 ON 1.12.2023.
Exhibit P11 A TRUE COPY OF THE COUNTER FILED IN
I.A.3812/2023 ON 1.12.2023
Exhibit P12 A TRUE COPY OF THE ORDER PASSED IN I.A
144/2022 DATED 19.12.2023
Exhibit P13 A TRUE COPY OF THE ORDER PASSED IN I.A
145/2023 DATED 19.12.2023
Exhibit P14 A TRUE COPY OF THE ORDER PASSED IN I.A
3812/2023 DATED 19.12.2023
