Sony Sebastian, Devasia P.A., Mercy Devasia, Roy Joseph, Jessy Joseph and Sheeba Joseph v. Kerala Gramin Bank and The Authorized Officer, Kerala Gramin Bank

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 16[TH] DAY OF FEBRUARY 2024 / 27TH MAGHA, 1945** **OP (DRT) NO. 67 OF 2023** **SA.463/2022 OF DEBTS RECOVERY TRIBUNAL, ERNAKULAM** **PETITIONERS:** - **1 SONY SEBASTIAN AGED 62 YEARS S/O DEVASIA, VADAKKE POONDIKULATH, THERMALA VELLAD P.O. KANNUR DISTRICT, PIN - 670571** **2 DEVASIA P.A. AGED 59 YEARS S/O AGUSTY, PALAPPURATH (H), PATHENPARA ALAKKODE P.O. KANNUR DISTRICT, PIN - 670571 3 MERCY DEVASIA AGED 50 YEARS W/O DEVASIA P.A., PALAPPURATH (H), PATHENPARA ALAKKODE P.O. KANNUR DISTRICT, PIN - 670571 4 ROY JOSEPH AGED 52 YEARS S/O JOSEPH, LAKSHMI NIVAS, TALAP, PALLIKKUNNU P.O. KANNUR DISTRICT., PIN - 670004 5 JESSY JOSEPH AGED 57 YEARS W/O SONY SEBASTIAN, CHERUVALLATH, THERMALA VELLAD P.O. KANNUR DISTRICT, PIN - 670571 6 SHEEBA JOSEPH AGED 42 YEARS W/O ROY JOSEPH, LAKSHMI NIVAS, TALAP, PALLIKKUNNU P.O. KANNUR DISTRICT, PIN – 670004** **BY ADVS. ALEX ABRAHAM C.C.ABRAHAM ARUN KRISHNA DHAN** O.P.(DRT) No.67/2023 : 2 : ## **RESPONDENTS:** - **1 KERALA GRAMIN BANK REPRESENTED BY ITS AUTHORISED OFFICER KANNUR MAIN BRANCH, FORT ROAD, KANNUR P.O., KANNUR, PIN - 670001** - **2 THE AUTHORISED OFFICER KERALA GRAMIN BANK, KANNUR MAIN BRANCH, FORT ROAD, KANNUR P.O., KANNUR, PIN – 670001** ## **BY ADV M.GOPIKRISHNAN NAMBIAR** **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.67/2023 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## O.P.(DRT) No.67 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 16[th] day of February, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ Petitioners 1 to 3, who have availed loans from the 1[st] respondent-Bank and who are the applicants in SA No.463/2022 on the files of the Debts Recovery Tribunal-I, Ernakulam, have filed this OP(DRT) aggrieved by Ext.P7 order dated 21.12.2022 passed by the Tribunal in IA No.2240/2022. 2. Petitioners 1 to 3 availed six agricultural loans. Petitioners 4 and 5 availed a capital facility loan and the 6[th] petitioner availed a credit facility loan as per separate loan agreements. Agricultural properties owned by petitioners 1 to 3 were given as security. O.P.(DRT) No.67/2023 : 4 : 3. When the repayments in loan accounts defaulted, the respondents filed petition under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before the Chief Judicial Magistrate's Court, Thalassery. The Chief Judicial Magistrate appointed an Advocate Commissioner to take over possession of the mortgaged property. The petitioners approached this Court filing W.P.(C) No.30023/2021 contending that the SARFAESI Act does not apply in cases of security interest created on agricultural land. This Court disposed of the said writ petition as per Ext.P1 judgment dated 10.08.2022 relegating the petitioners to the Debts Recovery Tribunal. 4. The petitioners filed SA No.463/2022 challenging the recovery proceedings contending that secured assets are agricultural properties. The petitioners filed Ext.P3 IA No.2126/2022 for stay of recovery proceedings. Ext.P4 IA No.2240/2022 was filed seeking to appoint an Advocate Commissioner to inspect the property and to report the O.P.(DRT) No.67/2023 : 5 : nature of the property. 5. In Ext.P3 stay petition, the Debts Recovery Tribunal passed an order directing the petitioners to remit ₹41,61,109/- on or before 05.11.2022 and a further sum of ₹41,61,109/- before 05.12.2022. Aggrieved by Ext.P5 order, the petitioners filed OP(DRT) No.427/2022 before this Court. By Ext.P6 judgment dated 03.02.2022, this Court set aside Ext.P5 order. In Ext.P6, this Court observed that the petitioners are entitled to adduce evidence to justify the contention that the secured assets are agricultural properties. 6. To the surprise of the petitioners, the Debts Recovery Tribunal passed Ext.P7 order in IA No.2240/2022 declining to entertain Ext.P4 application for appointment of Advocate Commissioner holding that appointing an Advocate Commissioner would be a futile exercise. It is aggrieved by Ext.P7 order of the Tribunal in IA No.2240/2022 that the OP(DRT) has been filed. O.P.(DRT) No.67/2023 : 6 : 7. The Debts Recovery Tribunal ought to have complied with the observations made by this Court in Ext.P5 judgment, contended the counsel for the petitioners. The petitioners have to prove the nature of their property adducing best evidence. If an Advocate Commissioner is appointed, nature and character of the property can be ascertained, contended the counsel for the petitioners. Ext.P7 order is therefore highly arbitrary and illegal. 8. Standing Counsel entered appearance on behalf of the respondents and resisted the OP(DRT). Ext.P7 order of the Debts Recovery Tribunal is justified, contended the Standing Counsel. To get the benefit of Section 31 of the SARFAESI Act, the petitioners have to establish that at the time of mortgaging their secured asset, the property was used as agricultural land. 9. The Standing Counsel relied on the judgment of the Apex Court in _**K. Sreedhar v. M/s. Raus Constructions Private Limited and others** [AIR 2023 SC 306]_ . Merely because in revenue records the secured properties are O.P.(DRT) No.67/2023 : 7 : shown as agricultural land, is not sufficient to attract Section 31(i) of the SARFAESI Act. For the purpose of attracting Section 31(i), the properties in question ought to be actually used as agricultural lands at the time when the security interest was created, contended the Standing Counsel. 10. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents. 11. The Debts Recovery Tribunal has dismissed IA No.2240/2022 filed by the petitioners for appointment of Advocate Commissioner to inspect mortgaged properties holding that it is for the petitioners to establish as to whether the existence of trees would give the secured asset the character of agricultural properties. While dismissing the IA, the Debts Recovery Tribunal further held that if an Advocate Commissioner visits the secured asset, he cannot give any report as to what was the lie and nature of the land on the date of creation of security interest. O.P.(DRT) No.67/2023 : 8 : 12. It is the consistent case of the petitioners that the secured assets are agricultural properties. In fact, out of the various financial advances disbursed to the petitioners, six are agricultural loans. The property covered in item No.1 is covered by two separate title deeds. One title deed covers five acres of property and the second title deed covers 5.5 Acres of property. In one of those properties, there is a residential building where the 1[st] petitioner and his family reside. Apart from the residential building, the entire extent of property is agricultural property. 13. It is to be noted that the respondents have extended agricultural loan facility to the petitioners. 14. This Court considered a similar issue in the judgment in _**Jayakumar v. State Bank of India** [2024 (1) KLT 458]_ . In the said judgment, this Court found that to avail the benefit of exemption under Section 31(i), the petitioners may have to establish that the land in question was put to agricultural purposes at the time of creation of mortgage. This can be established by the petitioners by causing a local O.P.(DRT) No.67/2023 : 9 : inspection. Such inspection can bring in credible evidence as to the age of the coconut trees and the status of the land as an agricultural land at the time of creation of mortgage. 15. The Debts Recovery Tribunal concluded that if an Advocate Commissioner visits the secured assets, he would file a report with regard to the lie and nature of the present condition of the secured asset and that he cannot give any report as to what was the lie and nature of the land on the date of creation of the security interest over the properties. The said conclusion is not true to facts. An Advocate Commissioner can very well determine the approximate age of the standing trees in the land, which in turn would be a piece of evidence indicating existence of agriculture at the time or prior to the date of creation of security interest. 16. In the facts and circumstances of the case, I am of the view that the petitioners can possibly establish the status of the secured assets as agricultural land at the time of mortgage by causing a local inspection. Rejection of the application submitted by the petitioners for local inspection, O.P.(DRT) No.67/2023 : 10 : in the circumstances, would amount to shutting out the best evidence in the form of report on local inspection. 17. Ext.P7 order dated 21.12.2022 in IA No.2240/2022 in SA No.463/2022 passed by the Debts Recovery Tribunal-I, Ernakulam is therefore set aside. The Debts Recovery Tribunal is directed to reconsider IA No.2240/2022 and pass orders afresh expeditiously. The Debts Recovery Tribunal shall proceed with SA No.463/2022 only after passing orders in IA No.2240/2022. OP(DRT) is disposed of as above. Sd/- **N. NAGARESH, JUDGE** aks/13.02.2024 O.P.(DRT) No.67/2023 ## : 11 : ## **APPENDIX OF OP (DRT) 67/2023** ## **PETITIONER'S EXHIBITS** **Exhibit-P1 TRUE COPY OF THE JUDGMENT DATED 10.08.2022 IN W.P.(C) NO. 30023 OF 2021 Exhibit-P2 TRUE COPY OF THE APPLICATION IN S.A. NO 463/2022 DATED 16.09.2022 BEFORE THE DEBT RECOVERY TRIBUNAL - I, ERNAKULAM Exhibit-P3 TRUE COPY OF I.A. NO. 2126 OF 2022 IN S.A. 463 OF 2022 BEFORE THE DEBT RECOVERY TRIBUNAL - I, ERNAKULAM Exhibit-P4 TRUE COPY OF I.A. NO. 2240 OF 2022 IN IN S.A. 463 OF 2022 BEFORE THE DEBT RECOVERY TRIBUNAL - I, ERNAKULAM Exhibit-P5 TRUE COPY OF THE AD INTERIM ORDER IN I.A. 2126 OF 2022 IN S.A. 463 OF 2022 BEFORE THE DEBT RECOVERY TRIBUNAL - I, ERNAKULAM Exhibit-P6 TRUE COPY OF THE JUDGMENT IN OP(DRT) 427 OF 2022 DATED 03.02.2022 Exhibit-P7 CERTIFIED COPY OF THE ORDER DATED 21.12.2022 IN I.A. NO. 2240 OF 2022 IN S.A. NO. 463 OF 2022**