Kaningat Ramachandra Menon v. State Bank of India and The Authorized Officer, State Bank of India, Asset Recovery Management Branch

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 25THDAY OF MAY 2023 / 4TH JYAISHTA, 1945 OP (DRT) NO. 216 OF 2023 ``` ``` AGAINST THE ORDER DATED 12-04-2023 IN I.A.NO.174 OF 2023 IN SA 57/2022 OF DEBT RECOVERY TRIBUNAL- II, ERNAKULAM PETITIONER/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-600 007, RESIDING AT MADHAVAM, KANINGAT HOUSE, VASANTH NAGAR, PUTTURACKAL, THRISSUR, PIN – 680 022. ``` ``` BY ADVS.B.PREMNATH (E) MANI GOVINDA MARAR SARATH M.S. ``` ## `RESPONDENTS/RESPONDENTS/DEFENDANTS:` ``` STATE BANK OF INDIA ``` ``` SME BRANCH, GROUND FLOOR, STATE BANK BHAVAN, 1KOVILAKATHUMPADAM, THIRUVAMBADI, THRISSUR,PIN – 680 022.REPRESENTED BY ITS MANAGER. ``` ``` THE AUTHORIZED OFFICER STATE BANK OF INDIA, ASSET RECOVERY MANAGEMENT BRANCH, 2 2ND FLOOR, R.S. BUILDING, M.G.ROAD, ERNAKULAM, COCHIN, PIN – 682 011. ``` ``` BY ADV. JITHESH MENON (SC) S. EASWARAN ``` ``` THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 25.05.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(DRT)No.216/2023 ``` ``` -:2:- ``` Dated this the 25[th] day of May,2023 ## **J U D G M E N T** The original petition is filed challenging Ext P5 order passed by the Debts Recovery Tribunal-2, Ernakulam, (in short, ‘Tribunal’), in I.A.No.174/2023 in S.A.No.57/2022. 2. The brief relevant facts leading to Ext P5 order are: - (i) The petitioner had availed a loan from the second respondent – bank in the year 2015. - (ii) The petitioner defaulted in repaying the loan amount. Then, the first respondent filed O.A.No.407/2021 before the Tribunal, invoking the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, ‘Act’). (iii)The petitioner has filed his objections to the ``` O.P.(DRT)No.216/2023 ``` ``` -:3:- ``` above application. However, without considering the said objections, the second respondent issued Ext P3 possession notice on 19.01.2022. - (iv)Immediately, the petitioner filed S.A.No.57/2022 before the Tribunal. Thereafter, the petitioner filed I.A.No.174/2023 (Ext P4), to appoint an Advocate Commissioner for conducting a local inspection and filing a report regarding the nature of the property. - (v) The Tribunal, by the impugned Ext P5 order, has dismissed Ext P4. Ext P5 is patently illegal and unsustainable in law. Hence, the original petition. 3. Heard; Sri. B. Premnath, the learned counsel appearing for the petitioner and Sri. S. Easwaran, the learned Standing Counsel appearing for the respondents. 4. Sri. B. Premnath, argued that the Tribunal ``` O.P.(DRT)No.216/2023 ``` ``` -:4:- ``` has in a very casual and mechanical manner, relying on the decisions of the Hon'ble Supreme Court in **Indian Bank & Anr. v. K. Pappi Reddiyar & Anr.** [(2018) 18 SCC 252], decision of this Court in **Mathew Michael & Anr. v. Dhanlaxmi Bank and 2 Ors.** [O.P. (DRT)No.22/2019] and the decision of the Andhra Pradesh High Court in **Kandukuri Raja Babu v. The Rajahmundry Municipal Corporation** [C.R.P. No.1705/2022], dismissed the above application. The learned counsel also placed emphasis on the decision of the Hon'ble Supreme Court in **K. Sreedhar v. Raus Constructions Pvt. Ltd.** [2023 SCC OnLine SC 13] to fortify his contentions. He argued that the Tribunal has erred to appreciate the fact that the petitioner has a statutory right to get an Advocate Commissioner appointed and conduct a local inspection to prove his case that the property is an agricultural land, which is ``` O.P.(DRT)No.216/2023 ``` ``` -:5:- ``` exempted from the provisions of the Act. Therefore, this Court may set aside Ext P5 order and direct the Tribunal to re-consider Ext P4 application. 5. On the contrary, Sri. S. Easwaran, argued that O.A. was filed by the bank as early as on 25.11.2021. It is later, after Ext P3 notice was issued, that the petitioner filed the Securitization Application. The application was filed only on 11.01.2023. In fact, impugned Ext P5 order was passed on 12.04.2023 and the application stands posted for final hearing to 31.05.2023. The petitioner has not produced Securitization Application and the written statement along with the original petition. The sole intention of the petitioner is to procrastinate the final determination of the Securitization Application `.` There is no error in the impugned order warranting interference by this Court. The Tribunal has only ``` O.P.(DRT)No.216/2023 ``` ``` -:6:- ``` followed the ratio decidendi of the Hon'ble Supreme Court in **Indian Bank** and the decision of this Court in **Mathew Michael** (supra). The original petition is devoid of any merits and may be dismissed. 6. The point is whether Ext P5 order warrants interference by this COurt. 7. On an appreciation of the pleadings and materials on record, it can be deciphered that S.A.No.57/2022 was filed subsequent to O.A.No.407/2021. 8. It is the petitioner’s case now that, the secured asset is an agricultural property, which is exempted from the application of the Act. But, there is absolutely no material produced by the petitioner to substantiate the said aspect either in the O.A. or in the Securitization Application. 9. It is only at the fag end of the consideration of ``` O.P.(DRT)No.216/2023 ``` ``` -:7:- ``` the Securitization Application, that the petitioner has come up with Ext P4 application, to depute an Advocate Commissioner and conduct a local inspection, to prove that the property is an agricultural land. 10. The Hon'ble Supreme Court in **Indian Bank** ## (supra) has categorically held thus: “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. The Division Bench of the Madras High Court has failed to adjudicate on the basic issue as to whether the land in respect of which the security interest was created, was agricultural in nature. The DRT rejected the objection of the debtor that the land was agricultural. In appeal, the DRAT reversed that finding. Apart from referring to the position in law, the impugned judgment of the High Court contains no discussion of the material which was relied upon by the parties in support of their respective cases; the Bank urging that the land was not agricultural while the ``` O.P.(DRT)No.216/2023 ``` ``` -:8:- ``` debtor urged that it was. 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 purpose and intent of the parties on the date on which the security interest was created.** In the absence of a specific finding, we are of the view that it would be appropriate and proper to set aside the judgment of the High Court and to remit the proceedings for being considered afresh.” [emphasis supplied] 11. Similarly, in case **K. Sreedhar** (supra), the ## Hon'ble Supreme Court has held as follows: “30. Thus, as per the law laid down by this Court in the aforesaid two decisions, **only in a case where the secured property is actually put to use as agricultural land and solely on the basis of the revenue records/Pattadar and once the secured property is put as a security by way of mortgage etc. meaning thereby the same was not treated as agricultural land, such properties cannot be said to be exempted from the provisions of the SARFAESI Act under Section 31(i) of the SARFAESI Act. Applying the law laid down in the aforesaid two decisions to the facts of the case on hand and when no evidence was led at all on behalf of the borrowers** ``` O.P.(DRT)No.216/2023 ``` ``` -:9:- ``` **that the secured properties in question were actually put to use as agricultural land and/or any agricultural activity was going on, the High Court has committed an error in applying Section 31(i) of the SARFAESI Act and quashing and setting aside the entire Possession Notice, Auction Notice as well as Sale etc.** ” [emphasis supplied] 12. A reading of the above principles laid down by the Hon'ble Supreme Court undoubtedly shows 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 the loan. 13. In the case on hand, indisputably, the petitioner had availed the loan in the year 2015. Ext P4 application has been filed in 2023, i.e., after a lapse of nearly eight years. It is humanly impossible for the Advocate Commissioner, even if now deputed, to ``` O.P.(DRT)No.216/2023 ``` ``` -:10:- ``` ascertain and report the nature of land as on the date of creation of security interest. 14. It is to be remembered that an Advocate Commissioner is an officer of the court and not an agent of the party. The petitioner has not produced a scrap of material to substantiate his contention that the secured asset was an agricultural land as on the date of creation of security interest. The petitioner cannot expect to prove his case on the basis of a commission report, which is only corroborative in nature. 15. I do not find any error or illegality in Ext P5 order passed by the Tribunal disallowing Ext.P4 application for deputing an Advocate Commissioner. There is no error or illegality in Ext.P5 order warranting the exercise of the power of superintendence of this Court under Article 227 of the ``` O.P.(DRT)No.216/2023 ``` ``` -:11:- ``` Constitution of India. The original petition is meritless and is hence, dismissed. Sd/- ## **C.S.DIAS,JUDGE** DST/25.05.23 //True copy// P.A.To Judge ``` O.P.(DRT)No.216/2023 ``` ``` -:12:- ``` ## `APPENDIX` ## `PETITIONER’S EXHIBITS` ``` TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER UNDER SECTION 13(2) OF EXHIBIT P1 THE SARFAESI ACT, DATED 25.11.2021 ``` ``` TRUE COPY OF THE OBJECTIONS SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT TO EXHIBIT P1 EXHIBIT P2 NOTICE, DATED 18.01.2022 ``` ``` TRUE COPY OF THE POSSESSION NOTICE ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER UNDER THE SARFAESI EXHIBIT P3 ACT, DATED 19.01.2022 ``` ``` TRUE COPY OF THE AFFIDAVIT AND PETITION IN I.A.NO. 174 OF 2023 IN S.A.NO. 57 OF 2022 ON THE FILE OF EXHIBIT P4THE DEBT RECOVERY TRIBUNAL-II, ERNAKULAM, DATED 11.01.2023. ``` ``` TRUE COPY OF THE ORDER OF THE DEBT RECOVERY TRIBUNAL-II, ERNAKULAM IN I.A.NO. 174 OF 2023 IN EXHIBIT P5 S.A.NO. 57 OF 2022, DATED 12.04.2023 ``` ``` RESPONDENT’S EXHIBITS: NIL ```