Mathew Michael and Tojo Mathew v. Dhanlaxmi Bank and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940** ## **OP (DRT).No. 22 of 2019** **AGAINST THE ORDER/JUDGMENT IN SA 271/2018 of DEBT RECOVERY TRIBUNAL, ERNAKULAM** ## **PETITIONERS:** - **1 MATHEW MICHAEL, AGED 67 YEARS VELLIIYEPPALLIL HOUSE, ANTHINADU P.O., PRAVITHANAM, PALA- 686652.** - **2 TOJO MATHEW, AGED 1 YEARS VELLIIYEPPALLIL HOUSE, ANTHINADU P.O., PRAVITHANAM, PALA- 686652.** **BY ADVS. SRI.MOHAN JACOB GEORGE SMT.NIGI GEORGE SMT.P.V.PARVATHY (P-41) SMT.REENA THOMAS SRI.T.K.NAVAS** ## **RESPONDENTS:** - **1 DHANLAXMI BANK, REPRESENTED BY ITS BRANCH MANAGER, MUNNAR BRANCH, IDUKKI DISTRICT.** - **2 THE AUTHORIZED OFFICER, DHANLAXMI BANK, KOCHI ZONE, MARINE DRIVE, ERNAKULAM- 682031.** - **3 DEBTS RECOVERY TRIBUNAL-I, HOUSING BOARD BUILDING, PANAMPILLY NAGAR, ERNAKULAM REPRESENTED BY ITS REGISTRAR.** ## **BY ADV. SRI.C.K.KARUNAKARAN** **THIS OP (DEBT RECOVERY TRIBUNAL) HAVING BEEN FINALLY HEARD ON 7.02.2019, THE COURT ON 14.02.2019 PASSED THE FOLLOWING:** OP(DRT).No.22/19 2 ## **JUDGMENT** - 1.This O.P.(DRT) filed under Article 227 of the Constitution of India seeks direction to the Debt Recovery Tribunal to consider and pass orders on Exhibit P2 application for the issuance of Commission in S.A.No.271/2018 filed by the petitioners. A further direction is sought for to respondents 1 and 2 not to proceed for taking physical possession of the property till a decision is taken on the jurisdictional issue. - 2.Heard learned counsel for the petitioner, learned Government Pleader as well as the learned standing counsel appearing for the Bank. 3. The learned counsel for the petitioner contends that the petitioners are applicants in S.A.No.271/2018 pending before the Debts Recovery Tribunal (Kerala), Ernakulam. The 1[st] petitioner was conducting a proprietorship in the name of M/sEmay Trading Company. It had apparently availed loans from respondents 1 and 2 by hypothecating an extent of 44.80 Ares of property in Re-survey No.190/3.4.5, Block No. 35 in OP(DRT).No.22/19 3 Bharananganam village, Meenachil Taluk, Kottayam district. Proceedings had been initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act for short) for realisation of amounts. It is stated that Exhibit P1 Securitisation Application was moved by the petitioner in May 2018, challenging the proceedings on the ground that item No.1 property listed in the demand notice is agricultural land. It is stated that in October 2018, the petitioner had filed a Commission Application seeking the appointment of an Advocate Commissioner for ascertaining whether the property in question is agricultural land or not. It is stated that without awaiting orders on the preliminary issue, the respondents are taking steps to initiate coercive proceedings under the SARFAESI Act as against the agricultural property of the petitioner. 4. The learned counsel for the petitioner would rely on the decisions of this Court in **Sidheek A.V and others v.** **Authtorised Officer, Federal Bank, M.G.Road Branch** OP(DRT).No.22/19 4 [2017(5) KHC 373] to contend that when a contention is raised that the secured asset is an agricultural property and an application is filed for the specific purpose of getting an adjudication done on the jurisdictional issue, the Tribunal is bound to consider the said application at the outset. A decision of the Three Judge Bench of the Apex Court in **Indian Bank and another v. K.Pappireddiar and another** [2018 (4) KHC 86] is also relied on to contend that the classification of land as per revenue records is not conclusive of the question whether the SARFAESI Act does or does not apply. After referring to the decision in **ITC ltd** (supra) also, the Three Judge Bench observed that whether the parcel of land is agricultural must be deduced as a matter of fact from the nature of land, use of which it was being put on the date of the creation of security interest and the purpose for which it was set apart. 5. A statement has been filed by the learned Standing Counsel on behalf of the respondents. It is stated that the petitioners had borrowed amounts which were classified as NPA as early as on OP(DRT).No.22/19 5 31.12.2013. It is stated that Exhibit P1 Securitisation Application was filed as early as on 16.5.2018, but no order of interim stay was granted. It is stated that under orders passed by the CJM, Kottayam, the Advocate Commissioner had attempted to take physical possession of one of the secured assets, which is a residential house in 44.80 Ares of property in Bharanamganam village. But this was resisted by persons claiming to be tenants of the petitioner. It is stated that tenants moved the Munsiff's Court, Erattupetta and obtained an interim injunction, which was taken up by the respondents before this Court by filing O.P.(C) No.3215/2018. By judgment dated 21.12.2018, this Court directed the Munsiff's Court to consider and finally dispose of the suit. The Munsiff's Court, thereupon, heard and dismissed the I.A. for injunction holding that the DRT is the proper Forum to ventilate the grievances, if any. It is stated that in the meanwhile, the petitioner had filed Exhibit P2 I.A. before the DRT seeking the appointment of an Advocate Commissioner on the ground that the property could not be proceeded against, since it is an agricultural land. It is stated that the Apex Court has in **ITC Ltd v. Blue Coast** OP(DRT).No.22/19 6 **Hotel Ltd and others** [(2018) SCC Online SC 237] specifically held that only agricultural property of an agriculturalist used as source of his livelihood stands exempted under Section 31(1) of the SARFAESI Act, 2002. It is also stated that under Section 31(1) of the SARFAESI Act, 2002 will not extend to an agricultural property that was willingly mortgaged for loans. It is further contended that the property in question is not agricultural property at all and it is a palatial residential house. It is further contended that the petitioner is not an agriculturalist and the exemption is not applicable to the petitioner. 6. The learned standing counsel for the respondents would also place reliance on the decision of the Apex Court in **ITC Ltd** (supra) and of the interdiction of the Apex Court in **ICICI Bank Ltd. and others v. Umakanta Mohapatra and others** [Civil Appeal Nos.2828-2930 of 2018 decided on 19.3.2018] would contend that this Court would not be justified in interfering in matters arising under the SARFAESI Act, in view of the fact that the Debt Recovery Tribunal has chosen not to OP(DRT).No.22/19 7 interdict the further proceedings in Exhibit P1 Securitisation Application. A decision of this Court in **Sharada Flour Products Pvt.Ltd v. Dhanalaxmi Bank Ltd** [2018 (3) KLT 900 is also relied on to contend that the question as to what is agricultural land in terms of Section 31 has been elaborately considered by this Court and it was held that a security interest created in a particular item of property for the availing of loans itself would show that the parties did not treat the land as agricultural land and that the debtor offered the land as security disregading it's nature. It is, therefore, contended that after having offered the property as security and having created a security interest on the property in question with full knowledge of is obligations, the petitioner cannot turn around and contend that security interest ought not to have been created. 7. I have considered the contentions advanced. Section 31 of the SARFAESI Act states that the provisions of the Act shall not be applied to any security interest created in agricultural land. The petitioner had preferred Securitisation Application in May OP(DRT).No.22/19 8 2018. His contentions were to the effect that there was illegality in the proceedings taken against him, as also the invocation of the SARFAESI Act as against the properties in question. No interim order was granted by the DRT. It appears that there are other secured assets as well. In any view of the matter, the petitioner had thereafter submitted Exhibit P2 application for appointment of an Advocate Commissioner to ascertain the nature of the land. The contention now taken is that item No.1 in the demand notice is an agricultural property and is entitled to exemption in terms of Section 31 of the SARFAESI Act. It is apparent that the petitioner has now raised the contention that one of the items offered as security against which the respondents are taking steps in terms of the provisions of the SARFAESI Act is an agricultural land in respect of which no such proceedings are liable to be initiated. This, according to me, is an issue which has to be considered by the DRT. The contention of the respondents that the property in question was willingly offered by the petitioner as security and that as such, the contention that no security interest would be created on such property OP(DRT).No.22/19 9 cannot be validly taken by him at a later stage is also a matter which is to be considered by the Tribunal. The rival contentions of the parties shall be taken note of and orders shall be passed by the Tribunal on the claim by the petitioner that the property in question is agricultural property and that proceedings under the SARFAESI Act cannot be proceeded in respect of that property. The issue shall be considered by the Tribunal, at the earliest and at any rate within one month. It is made clear that the question whether an Advocate Commission is required to be taken out in the matter, in the light of the pleadings raised by the parties and the decisions of the Apex Court, is a matter, which the Tribunal is to consider in accordance with law. The petitioner shall not seek any adjournment in the matter. The Securitisation Application is posted before the Tribunal on 25.2.2019, on which date the parties shall mark appearance before the Tribunal and the Tribunal shall proceed to pass appropriate orders on the question whether the property in question is liable to be proceeded against under Sections 13 and 14 of the SARFAESI Act. The proceedings taken against the 40.88 Ares of land OP(DRT).No.22/19 10 belonging to the petitioner shall be kept in abeyance for a period of one month from the date of receipt of a copy of this judgment to enable the DRT to consider the question. The writ petition is ordered accordingly. Sd/- **Anu Sivaraman, Judge** sj OP(DRT).No.22/19 11 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 COPY OF THE SECURITIZATION APPLICATION FILED AS S.A.NO.271/2018. EXHIBIT P2 COPY OF THE COMMISSION APPLICATION FILED AS I.A.NO.2287/2018 IN S.A.NO.271/2018. EXHIBIT P3 Copy of I.A.No.1567/2018 in SA271/18** True copy PS to Judge PS to Judge