Sri. Velayudhan V v Bajaj Finance Limited

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR. JUSTICE GOPINATH P.` ``` FRIDAY, THE 13[TH] DAY OF JANUARY 2023 / 23RD POUSHA, 1944 ``` ## `OP (DRT) NO. 495 OF 2022` ``` IN RESPECT TO THE MATTER IN I.A. NO.2507/2022 IN SA NO 518/2022 ONT HE ``` ``` FILES OF THE DEBT RECOVERY TRIBUNAL-1, ERNAKULAM ``` ## `PETITIONER/APPLICANT:` ``` 1SRI. VELAYUDHAN V AGED 81 YEARS S/O. LATE APPUTTY, JASVI HOUSE, PALAZHI, GURUVAYURAPPAN COLLEGE P.O, KOCHIKODE, PIN - 673014 BY ADVS. P.JAYABAL MENON REKHA AGARWAL NAZRIN BANU JOSEPH V. GREGORY RESPONDENTS/DEFENDANTS: ``` ``` 1BAJAJ FINANCE LIMITED 3RD & 6TH FLOOR, DD TRADE TOWERS, KALOOR- KADAVANTHARA ROAD, KALOOR P.O, KOCHI-682 017, REPRESENTED BY ITS AUTHORISED OFFICER. 2BAJAJ FINANCE LIMITED HAVING ITS REGISTERED OFFICE AT MUMBAI-PUNE ROAD, AKRUDI P.O, PURE-411035 AND HAVING ONE OF ITS BRANCH OFFICE AT 2ND FLOOR, PUKKALKKAT CITY CENTRE, SIVADAS TOWER, NEAR ALAPPAT REGENCY, M.K.K NAIR ROAD, PALARIVATTOM P.O, KOCHI-682 025, REPRESENTED BY ITS BRANCH MANAGER BY ADVS. PRADEESH CHACKO AHSANA(K/001196/2022) PRASANTH KUMAR S.D.(K/000086/2017) ``` ``` THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON ``` ``` 13.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` OP(DRT) No.495 of 2022 ``` 2 ## **JUDGMENT** ## **Dated this the 13[th] day of January, 2023** The petitioner has approached this Court being aggrieved by the fact that the Tribunal through Ext.P13 order dated 11.11.2022 on I.A. No.2507/2022 in S.A. No.518/2022 has rejected the stay application filed by the petitioner. It is the case of the petitioner that the land in question is agricultural land to which the provision of the SARFAESI Act, 2002 does not apply. 2. Learned counsel appearing for the petitioner would submit that the reasoning adopted by the Tribunal as is evident from paragraph 5 of Ext.P13 order cannot be sustained. It is submitted that the Tribunal has rejected the plea of the petitioner on the ground that the petitioner did not properly invite the attention of the Tribunal to the provisions of the Land Reforms Act and also did not produce copies of the statutory provisions to enable the Tribunal to consider the contention raised on merits. It is submitted that if the proceedings are continued against the petitioner, ``` OP(DRT) No.495 of 2022 ``` 3 the petitioner will be put to serious prejudice, injury and hardship. 3. Learned counsel appearing for the respondent bank would submit that the petitioner is a guarantor and mortgagor in respect of the loan availed by his son. It is submitted that son of the petitioner had earlier approached this Court and this Court had permitted him to clear the liabilities in instalments. It is submitted that without complying with the terms of that judgment, the petitioner has now come up with the contention that the property in question is agricultural land. It is submitted that there is absolutely no merit in the contention taken up by the learned counsel for the petitioner as the borrower had, at the time of creation of mortgage, produced a certificate from the Village Officer stating that the properly is not agricultural land. It is submitted that this is sufficient to hold that the property is not agricultural land. It is submitted that this Court, in judgment in OP (DRT) No.447/2022 held as follows: ``` OP(DRT) No.495 of 2022 ``` 4 “5. Having regard to the facts and circumstances of the case, I am of the view that there is considerable merit in the contention taken by the learned counsel appearing for respondents 1 and 2. The reasons which compel me to take such a view are the following: 1) A reading of the judgment in **ITC Limited (supra)** makes it clear that a person who gives an undertaking in terms similar to the undertaking given in Ext.R1(b) cannot turn around and contend that proceedings under the SARFAESI cannot be continued against the land in question on account of the fact that the land is agricultural land. In particular, it is necessary to refer to the following findings of the Supreme court in **ITC Limited (supra)** “38. The purpose of enacting S.31(i) and the meaning of the term "agricultural land" assume significance. This provision, like many others is intended to protect agricultural land held for agricultural purposes by agriculturists from the extraordinary provisions of this Act, which provides for enforcement of security interest without intervention of the Court. The plain intention of the provision is to exempt agricultural land from the provisions of the Act. In other ``` OP(DRT) No.495 of 2022 ``` 5 words, the creditor cannot enforce any security interest created in his favour without intervention of the Court or Tribunal, if such security interest is in respect of agricultural land. The exemption thus protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act. It is also intended to deter the creation of security interest over agricultural land as defined in S.2(zf). Thus, security interest cannot be created in respect of property specified in S.31. 39. In the present case, security interest was created in respect of several parcels of land, which were meant to be a part of single unit i.e. the five star hotel in Goa. Some parcels of land now claimed as agricultural land were apparently purchased by the debtor from agriculturists and are entered as agricultural lands in the revenue records. The debtor applied to the revenue authorities for the conversion of these lands to non - agricultural lands which is pending till date due to policy decision. 40. It is undisputed that these lands were mortgaged in favour of the creditor under a deed dated 26/02/2010. ``` OP(DRT) No.495 of 2022 ``` 6 Obviously, since no security **i** nterest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis. The undisputed position is that the total land on which the Goa Hotel was located admeasures 182225 sq. mtrs. Of these, 2335 sq. mtrs. are used for growing vegetables, fruits, shrubs and trees for captive consumption of the hotel. There is no substantial evidence about the growing of vegetables but what seems to be on the land are some trees bearing curry leaves and coconut. This amounts to about 12.8 % of the total area. xxx xxxx xxxx xxxx 44. In 'Commissioner of Wealth Tax, Andhra Pradesh v. Officer - in - Charge (Court of Wards) Paigah, 1976 (3) SCC 864, this Court interpreted the definition of the term 'Agricultural Land' with respect to S.2(e) of the Wealth Tax Act, 1957 that excluded the said term from the definition of assets. This Court observed: "We agree that the determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a ``` OP(DRT) No.495 of 2022 ``` 7 matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of "assets", but its actual condition and intended user which has to be seen for purposes of exemption from wealth - tax. One of the objects of the exemption seemed to be to encourage cultivation or actual utilisation of land for agricultural purposes. If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owners or possessors, so as to connect it with an agricultural purpose, the land could not be "agricultural land" for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good prima facie evidence." (emphasis supplied) Similarly, in the case of Kunjukutty Saheb v. State of Kerala, 1972 (2) SCC 364, this Court held as follows: "We suppose that something or other can be, and often is, grown on any vacant land, but that would ``` OP(DRT) No.495 of 2022 ``` 8 not necessarily make it agricultural land for our purposes. To give an example the possibility of cultivating, or even the actual cultivation of, what is essentially a building site in the heart of a town would not make it agricultural land. It is the purpose for which it is held that determines its character and the existence of a few coconut trees or a vegetable patch on the land cannot alter the fact that it is held for purposes of building and not for purposes of agriculture." In any event, having regard to the character of the land and the purpose for which it is set apart, we are of the view that the land in question is not an agricultural land. The High Court mis - directed itself in holding that the land was an agricultural land merely because it stood as such in the revenue entries, even though the application made for such conversation lies pending till date.” M/s. Concern Readymix (supra), was again a case where an undertaking similar to Ext.R1(b) was considered by the Division Bench of the Telangana High Court. That Court came to the definite conclusion that a person who makes a representation of a crucial fact in ``` OP(DRT) No.495 of 2022 ``` 9 the form of a sworn affidavit, which essentially induced the Bank to grant a loan on its strength cannot go back from the representation and contend that the land in question is agricultural land against which proceedings cannot be taken under the provisions of the SARFAESI Act. 2). The contention based on Section 23 of the Indian Contract Act, 1872 must necessarily fail. Section 23 of the Contract Act reads as follows: “23. **What considerations and objects** **are lawful, and what not.** — The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law;or is fraudulent;or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.” It is not open to the petitioner to contend that ``` OP(DRT) No.495 of 2022 ``` 10 the provision contained in Section 31 excluding agricultural lands from the purview of the SARFAESI Act is on the ground of public policy. This is because there is no legal bar in the mortgage of agricultural land and the petitioner has no case that the land in question cannot be proceeded against at all by the Bank for recovery of its liabilities. Moreover, the Supreme Court in **ITC Limited (supra)** has explained why there is a provision of the nature specified in sub-section (i) of Section 31 excluding agricultural lands from the purview of the provisions of the SARFAESI Act. A reading of the judgment makes it clear that the exclusion was not on the ground of any public policy and was only intended as a protection against the operation of drastic provisions of the Act against land which forms the bread and butter of agriculturists, who may be deriving income from carrying out agricultural operations in the land in question. The facts of this case do not indicate that the petitioner is depending on the income from the land (income arising from the coconut palms on it) for livelihood. I see no averment that even attempts to suggest so. I also cannot read Ext.R1(b) undertaking as falling foul of the 1st part of Section 23. The 1st part of Section 23 ``` OP(DRT) No.495 of 2022 ``` 11 of the Contract Act provides that the consideration or object of an agreement is lawful unless it is forbidden by law or is of such a nature that if permitted, it would defeat the provisions of any law. It is settled that the mere description of the land as agricultural land in the Revenue Records or other documents relating to the land is not decisive of the nature of the land. The undertaking given in the form of Ext.R1(b) is actually an undertaking regarding the nature of the land as held by the Division Bench of the Telangana High Court in **M/s. Concern Readymix (supra)** . It is this undertaking which prompted the Bank to extend the loan. The fact that the petitioner gave an undertaking regarding the nature of the land, which resulted in the land not being treated as agricultural land for the purpose of Section 31 of the SARFAESI Act is, in my opinion, not a ground to contend that the said undertaking is hit by the provisions of the 1st part of Section 23 of the Contract Act, which deals with objects or considerations which are forbidden by law or if permitted would defeat the provisions of any law. In other words, since the undertaking relates to the nature of the land and contains an express statement that the land in question is not ``` OP(DRT) No.495 of 2022 ``` 12 agricultural land, it cannot be said that the taking of such undertaking is hit by the provisions of Section 23 of the Contract Act. 3) The contention of the learned counsel for the petitioner that the Tribunal should have allowed the commission application and should have considered the nature of the land before it rejected the application for interim relief, is also not acceptable. The purpose of taking an undertaking in the form of Ext.R1(b) is to ensure that there is no argument taken at a later point in time that the land in question is agricultural land to which the provisions of the SARFAESI Act do not apply. If borrowers are permitted to contend that the land in question is agricultural land even after giving an undertaking in the form of Ext.R1(b), it would defeat the purpose for which an undertaking in the form of Ext.R1(b) has been obtained. As I have already found that Ext.R1(b) is not hit by the provisions of Section 23 of the Contract Act, it does not lie in the mouth of the petitioner to now seek to establish that the land in question is agricultural land by the appointment of an Advocate Commissioner to determine the nature of the land. 4) The petitioner cannot be allowed to approbate and reprobate and the petitioner ``` OP(DRT) No.495 of 2022 ``` 13 cannot take a contention today that the land in question is agricultural land. The rule is succinctly stated in the opinion of Scrutton L.J in **Verschures Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd. (1921) 2 K.B. 608** , in the following words: - "A plaintiff is not permitted to "approbate and reprobate." The phrase is apparently borrowed from the Scots law, where it is used to express the principle embodied in our doctrine of election - namely, that no party can accept and reject the same instrument: Ker v. Wauchope, (1819) 1 Bli. 1,21; Douglas - Menzies v. Umphelby, (1908) A.C. 224. The doctrine of election is not however confined to instruments. A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. That is to approbate and reprobate the transaction." The Supreme Court in **Chairman, N. T. P. C. Ltd. v. Reshmi Constructions, Builders and Contractors, (2004 KHC 170)** , has held: - “36. In Halsbury’s Laws of England, 4th ``` OP(DRT) No.495 of 2022 ``` 14 Edition, Vol. 16 (Reissue) para 957 at page 844 it is stated: On the principle that a person may not approbate and reprobate a special species of estoppel has arisen. The principle that a person may not approbate and reprobate express two propositions: (1) That the person in question, having a choice between two courses of conduct is to be treated as having made an election from which he cannot resile. (2) That he will be regarded, in general at any rate, as having so elected unless he has taken a benefit under or arising out of the course of conduct, which he has first pursued and with which his subsequent conduct is inconsistent.” The petitioner has derived the benefit of sanction of a loan by issuing an undertaking in the form of Ext.R1(b). It is, therefore, not open to him to now turn around and contend that, the said undertaking is contrary to law and cannot be pressed into service by the Bank to substantiate that the action initiated under the SARFAESI Act is valid and legal. 5) The impugned order is not perverse and the Tribunal has not committed any error requiring its correction in proceedings under Article 227 ``` OP(DRT) No.495 of 2022 ``` 15 ## of the Constitution of India. The Original Petition fails and it is accordingly dismissed. No costs.” It is submitted that the petitioner cannot therefore contend that the land in question is an agricultural land, after having obtained and produced a certificate that the land is not agricultural land, at the time the loan was availed. 4. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent bank, I am of the view that the reasoning adopted by the Tribunal to the extent it refuses to consider the contention of the petitioner on the ground that the relevant provisions of the Land Reforms Act was not brought to the notice of the Tribunal cannot be sustained. The Tribunal must apply its mind to the contentions raised and order of the Tribunal must reflect that the Tribunal was alive to the contentions raised before it. Therefore, I am constrained to interfere with Ext.P13 order of the ``` OP(DRT) No.495 of 2022 ``` 16 Tribunal in exercise of jurisdiction under Article 227 of the Constitution of India. The availability of any alternate remedy to the petitioner need not detain this Court as it is well settled that Article 227 being a constitutional remedy can be exercised even when there is an alternate remedy. Accordingly, Ext.P13 order is set aside and I.A. No.2507/2022 in S.A. No.518/2022 will stand restored to the file of the Tribunal. The parties shall appear before the Tribunal on 20.01.2023. The Tribunal shall consider I.A. No.2507/2022 in S.A. No.518/2022 on 20.01.2023 and shall pass afresh orders on the said I.A. on or before 05.02.2023. The original petition is disposed of as above. ## **Sd/-** **GOPINATH P.** **JUDGE** SKP/13-01 ``` OP(DRT) No.495 of 2022 ``` 17 ## `APPENDIX OF OP (DRT) 495/2022` |`PETITIONER’S EXHIBITS:`|| |---|---| |`EXHIBIT P1`|`TRUE COPY OF THE DOC. NO. 2257/1990 OF`| ||`CHEVAYOOR S.R.O DATED 31/07/1990 ALONG WITH`| ||`ENGLISH TRANSLATION.`| |`EXHIBIT P2`|`TRUE COPY OF THE CERTIFIED COPY OF DOC. NO.`| ||`3757/1987 OF CHEVAYOOR S.R.O DATED 18/09/1987`| ||`ALONG WITH ENGLISH TRANSLATION`| |`EXHIBIT P3`|`TRUE COPY OF THE CERTIFIED COPY OF DOC.`| ||`NO.1349/1988 OF CHEVAYOOR S.R.O DATED`| ||`24/03/1988`| |`EXHIBIT P4`|`TRUE COPY OF THE CERTIFIED COPY OF DOC. NO.`| ||`2596/1988 OF CHEVAYOOR S.R.O DATED 22/06/1988`| ||`ALONG WITH ENGLISH TRANSLATION.`| |`EXHIBIT P5`|`TRUE COPY OF THE CERTIFIED COPY OF DOC. NO.`| ||`1294/75 OF CHEVAYOOR S.R.O DATED 24/05/1975`| ||`ALONG WITH ENGLISH TRANSLATION`| |`EXHIBIT P6`|`TRUE COPY OF THE CERTIFIED COPY OF DOC.`| ||`NO.1779/2016 OF CHEVAYOOR S.R.O DATED`| ||`27/05/2016 ALONG WITH ENGLISH TRANSLATION`| |`EXHIBIT P7`|`TRUE COPY OF THE THANDAPER ACCOUNT EXTRACT`| ||`BEARING NO. 2017/66071/11 DATED 21/03/2018`| ||`ISSUED BY THE VILLAGE OFFICER, PANTHEERANKAVU`| ||`VILLAGE ALONG WITH ENGLISH TRANSLATION.`| |`EXHIBIT P8`|`TRUE COPY OF THE RE-SETTLEMENT REGISTER BEARING`| ||`NO.287/2022 DATED 22/01/2022 , ISSUED BY THE`| ||`VILLAGE OFFICER, PANTHEERANKAVU VILLAGE ALONG`| ||`WITH ENGLISH TRANSLATION.`| |`EXHIBIT P9`|`PHOTOGRAPHS (6 NOS.) OF THE PETITIONER'S`| ||`PROPERTY COVERED AS PER EXHIBIT P1`| |`EXHIBIT P10`|`TRUE COPY OF THE NOTICE ISSUED BY ADV. T.G`| ||`MEENA NAIR DATED 11/01/2022`| |`EXHIBIT P11`|`TRUE COPY OF THE JUDGEMENT OF THIS HONOURABLE`| ||`COURT IN W.P (C) NO. 2762/2022 DATED 4/07/2022`| |`EXHIBIT P12`|`TRUE COPY OF THE NOTICE ISSUED BY ADV.`| ||`T.G.MEENA NAIR DATED 21.10.2022`| |`EXHIBIT P13`|`TRUE COPY OF THE ORDER PASSED BY THE DRT-1,`| ||`ERNAKULAM IN I.A NO.2507/2022 IN S.A`| ||`NO.518/2022 DATED 11/11/2022`| |`RESPONDENTS’ ANNEXURES:`|| |`ANNEXURE C1`|`THE NOTICE SENT TO THE COUNSEL FOR THE`| ||`PETITIONER AS WELL AS THE RESPONDENT BANK`| |`ANNEXURE C2`|`THE ROUGH SKETCH OF THE PREMISES SHOWN TO ME BY`| ||`THE PETITIONER`| |`ANNEXURE C3`|`A PHOTOGRAPH DEPICTING THE PATHWAY`| |`ANNEXURE C4`|`THE 2 PHOTOGRAPHS OF THE BUILDING UNDER`| ||`CONSTRUCTION,`| ``` OP(DRT) No.495 of 2022 ``` 18 |`ANNEXURE C5`|`THE 2 PHOTOGRAPHS OF THE IRRIGATION FACILITY`| |---|---| |`ANNEXURE C6`|`6 PHOTOGRAPHS SHOWING THE TREES IN THE PROPERTY`| |`ANNEXURE C7`|`THE COPY OF THE REQUEST SUBMITTED BY THE LEGAL`| ||`MANAGER`| |`RESPONDENTS’ EXHIBITS:`|| |`EXHIBIT R(1)(A)`|`REPLY TO RTI ISSUED BY VILLAGE OFFICER`| |`EXHIBIT R(1)(B)`|`CERTIFICATE ISSUED BY VILLAGE OFFICER`| ``` TRUE COPY ``` ``` P.A. TO JUDGE ```