Jayakrishnan P.S. Elamkula thillam and Shibu K.P. Karavattu v. Authorized Officer, Pala Urban Co-operative Bank Ltd. and Pala Urban Co-operative Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **THURSDAY, THE 16TH DAY OF JULY 2020 / 25TH ASHADHA, 1942** ## **WP(C).No.40444 OF 2016(E)** ## **PETITIONERS:** - **1 JAYAKRISHNAN P.S. ELAMKULATHILLAM, KEZHUVAMKULAM P.O., KOTTAYAM DISTRICT** - **2 SHIBU K.P. KARAVATTU HOUSE, KEZHUVAMKULAM P.O., KOTTAYAM DISTRICT** **BY ADV. SRI.TOM JOSE (PADINJAREKARA)** ## **RESPONDENTS:** |**1**|**THE AUTHORIZED OFFICER,**| |---|---| ||**PALA URBAN CO-OPERATIVE BANK LTD.,**| ||**NO.1850, PALA HEAD OFFICE,**| ||**PALA**| |**2**|**PALA URBAN CO-OPERATIVE BANK LTD.**| ||**NO.1850, PALA HEAD OFFICE,**| ||**PALA**| ||**REPRESENTED BY ITS CHIEF MANAGER**| ||**BY ADV. SRI.P.C.HARIDAS**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.07.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **-:2:-** W.P.(C) No.40444/16 ## **JUDGMENT** Dated this the 16[th] day of July, 2020 This writ petition is filed challenging inter alia Exts.P4 and P5 notices issued by the Advocate Commissioner appointed by the Chief Judicial Magistrate Court, Kottayam, seeking to take over possession of the property of the 1[st] petitioner under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act' for short). 2. 1[st] petitioner availed a credit facility from the 2[nd] respondent bank in the year 2011, while 2[nd] petitioner had availed a personal overdraft. Since repayments could not be made in full, notice under Section 13(2) of the SARFAESI Act was issued, claiming a sum of Rs.39,18,708/-. Subsequently, the Chief Judicial Magistrate Court, Kottayam, appointed an Advocate Commissioner by order dated 27.10.2016 to take over possession of the security interest. It is at this juncture that the petitioners rushed to this Court, claiming that the property over which security interest is created is an agricultural property W.P.(C) No.40444/16 ## **-:3:-** which is beyond the scope of proceedings under the SARFAESI Act. 3. In order to justify his claim that the property is an agricultural property, petitioners rely upon Ext.P2, application for loan, Ext.P6, receipt issued by the Kerala Agricultural Labour Welfare Board, Thrissur and Ext.P8 photograph. 4. Controverting the contentions in the writ petition, the respondents have filed counter affidavit in which it is stated that the writ petition is not maintainable since the remedy, if any, of the petitioners was to prefer an appeal before the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. The claim that the property is an agricultural property is stoutly opposed by the respondents and they justified the action initiated by the 2[nd] respondent bank. It is also stated that the photograph produced by the petitioners does not clearly depict the true nature of the property. 5. I have heard Sri.Tom Jose Padinjarekara, learned counsel for the petitioners as well as Sri.P.C.Haridas, learned counsel for the respondents. 6. It is trite law that the securitisation proceedings do not apply to an agricultural property on account of the specific W.P.(C) No.40444/16 ## **-:4:-** exclusion in Section 31(1) of the SARFAESI Act. What is relevant is the nature of land at the time of creation of security interest. What was the nature of land at the time the security interest was created? The answer to the aforesaid question requires a factual assessment/ analysis. Jurisdiction under Article 226 cannot be used to decide disputed questions of fact. This is all the more so, since, what is an agricultural land is not defined under the SARFAESI Act and even classification of land in revenue records is not dispositive or conclusive of the said question. 7. In this context it is apposite to refer to the decision in **Indian Bank v. Pappireddiyar** (AIR 2018 SC 3540), wherein it was held as follows: _“9. 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 is 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._ _10. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx Both having regard to the two-judge Bench decision in Blue Coast Hotels Limited and as explained above, 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 was put and the_ **-:5:-** W.P.(C) No.40444/16 _purpose and intent of the parties on the date on which the security interest was created.”_ 8. This Court under Article 226 of the Constitution of India cannot decide the question whether the security interest created is on an agricultural property or not, as it is a disputed question of fact. Even though the records produced by the petitioners may depict that the security interest created is that of an agricultural property, it is not for this Court, at this juncture, to decide that aspect and the remedy of the petitioners is to move the Debts Recovery Tribunal under Section 17 of the SARFAESI Act. 9. It is no longer in dispute that issuance of a notice by an Advocate Commissioner to take possession of the security interest is a stage at which the borrower can approach the Debts Recovery Tribunal challenging securitisation proceedings. Facts being so, the petitioners ought to have moved the Tribunal challenging the steps taken by the Bank and invited a decision on the question as to the nature of the property. 10. When confronted with the aforementioned position of law, the learned Counsel Sri.Tom Jose brought to the notice of this Court the decision in W.A. No.980 of 2016, ## W.P.(C) No.40444/16 ## **-:6:-** wherein, in a similar situation this Court while relegating the appellant therein to the Debts Recovery Tribunal under the SARFAESI Act, observed that the time taken between the date of institution of the writ petition and the date of judgment, was eligible to be excluded, while calculating the period for instituting the securitisation application. Reference to the said judgment seems to be appropriate, especially since, this case has been pending in this Court from 19.12.2016 onwards and there was an interim order restraining dispossession. In such circumstances, it is only proper that while relegating petitioners to the remedy under the SARFAESI Act, the time spent by the petitioners in pursuing this writ petition be excluded while calculating the time to prefer the securitisation application before the Debts Recovery Tribunal. Accordingly, the following directions are issued; (i) The petitioners are given the liberty to challenge the proceedings resulting in Exts.P4 and P5 notices by way of securitisation application before the appropriate Debts Recovery Tribunal under Section 17 of the SARFAESI Act . (ii) If the petitioners file a Securitisation Application challenging the order of the Chief Judicial Magistrate, Kottayam W.P.(C) No.40444/16 ## **-:7:-** within three weeks from the date of receipt of a copy of this judgment, the Debt Recovery Tribunal shall accept the said application, number the same and proceed to consider the same on merits. (iii) The time period spent for pursuing this writ petition, i.e. from 19.12.2016 till the date of judgment, shall be excluded by the Debts Recovery Tribunal for calculating the period for institution of the securitisation application. (iv) If the petitioners take up the contention that the security interest created is not an agricultural property, then certainly, the Tribunal shall endeavour to consider the question and decide the same as a preliminary one. (v) Petitioners shall also be at liberty to file a fresh petition for regularisation of the loan account apart from Ext.P7, which they claim to be pending with the bank and if such a petition is filed within a period of four weeks from today, the 2[nd] respondent shall consider the same independently in accordance with law, within a period of three months from the date of receipt of such petition. (vi) Till such time orders are passed by the Debt Recovery Tribunal on the preliminary issue mentioned in Clause (iii) above, W.P.(C) No.40444/16 **-:8:-** the respondent Bank shall refrain from proceeding further. If no such proceedings are initiated by the petitioners within the time prescribed in this judgment, the Bank will be free to proceed with Exts.P4 and P5 and other appropriate steps. The writ petition is disposed off as above. **Sd/-** **JUDGE** vps W.P.(C) No.40444/16 ## **-:9:-** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** - **TRUE COPY OF THE NOTICE DATED 16.7.2016 ISSUED BY THE RESPONDENT BANK UNDER SECTION 13(2) OF THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002** - **EXHIBIT P2 TRUE COPY OF LOAN APPLICATION FORM OF THE PETITIONER AND THE PERSONAL OVERDRAFT OF RUPEES FIVE LAKHS TAKEN BY THE 2ND PETITIONER MORTGAGING THE PETITIONER'S PROPERTY** - **EXHIBIT P3 TRUE COPY OF THE PETITION FILED BY THE RESPONDENT BANK BEFORE THE CHIEF JUDICIAL MAGISTRATE COURT DATED 26.10.2016** - **EXHIBIT P4 TRUE COPY OF THE NOTICE DATD 8.12.2016 ISSUED BY THE ADVOCATE COMMISSIONER TO THE 1ST PETITIONER** - **EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 8.12.2016 ISSUED BY THE ADVOCATE COMMISSIONER TO THE 2ND PETITIONER** - **EXHIBIT P6 TRUE COPY OF THE RECEIPT DATED 11.4.2016 IN RESPECT OF PAYMENT OF RS.11/ISSUED BY THE KERALA AGRICULTURAL LABOUR WELFARE BOARD, THRISSUR.** - **EXHIBIT P7 TRUE COPY OF THE REPRESENTATION DATED 15.12.2016 SUBMITTED BY THE 1ST PETITIONER TO THE RESPONDENT BANK** - **EXHIBIT P8 PHOTO OF THE MORTGAGED PROPERTY** - **RESPONDENT'S/S EXHIBITS:** - **EXT.R1A TRUE COPY OF PHOTOGRAPHS**