Wilson Joseph v. The Authorized Officer/ Chief Manager, South Indian Bank Ltd, et al.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.S.DIAS** **WEDNESDAY, THE 31[ST] DAY OF MAY 2023 / 10TH JYAISHTA, 1945** **OP (DRT) NO. 220 OF 2023 AGAINST THE ORDER/JUDGMENT IN SA 571/2022 OF DEBT RECOVERY** **TRIBUNAL, ERNAKULAM** ## **PETITIONER/S:** WILSON JOSEPH AGED 62 YEARS MADATHINAKATH HOUSE, KOOMBARA P.O. MARANCHATTY, KOZHIKODE, PIN - 673604 BY ADVS. ARUN KRISHNA DHAN T.K.SANDEEP ARJUN SREEDHAR ALEX ABRAHAM VEENA HARIKUMAR SWETHA R. HARIKRISHNAN P.B. ## **RESPONDENT/S:** 1 THE AUTHORIZED OFFICER/CHIEF MANAGER, SOUTH INDIAN BANK LTD, REGIONAL OFFICE, REGENCY SQUARE, K.K.ROAD, COLLECTORATE P.O. KOTTAYAM, PIN - 686002 2 M/S.SOUTH INDIAN BANK LTD., REPRESENTED BY ITS CHIEF MANAGER, REGIONAL OFFICE, REGENCY SQUARE, K.K.ROAD, COLLECTORATE P.O. KOTTAYAM, PIN - 686002 3 M/S.SOUTH INDIAN BANK LTD REPRESENTED BY BRANCH MANAGER, MONIPALLY BRANCH, WARD NO.III, URALIL BUILDING, MONIPALLY P.O. KOTTAYAM, PIN - 686636 4 M/S.SOUTH INDIAN BANK LTD.,REPRESENTED BY BRANCH MANAGER, THIRUVAMBADI BRANCH, THIRUVAMBADI, KOZHIKODE, PIN - 673603 5 BIJU JOSEPH, S/O.JOSEPH, BILJA VILLA, KADAMBANCHIRA, KOZHA P.O., KOTTAYAM, PIN - 686640 2 OP (DRT) NO. 220 OF 2023 6 SUJA BIJU W/O. BIJU JOSEPH, BILJA VILLA, KADAMBANCHIRA, KOZHA P.O., KOTTAYAM, PIN - 686640 ## **OTHER PRESENT:** SRI P A AUGUSTINE THIS OP (DEBT RECOVERY TRIBUNAL) HAVING COME UP FOR ADMISSION ON 31.05.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP (DRT) NO. 220 OF 2023 3 ## **JUDGMENT** The original petition is filed challenging Ext.P6 common order that has been passed by the Debt Recovery Tribunal II, Ernakulam (in short, 'Tribunal'), rejecting I.A.No.1255/2023 in S.A.No.571/2022 (Ext.P4), filed by the petitioner to appoint an Advocate Commissioner. 2. The brief relevant facts leading to Ext.P6 order are: the petitioner had stood as a guarantor for a loan availed by the respondents 5 and 6 from the 2[nd] respondent Bank. The petitioner offered his agricultural land as collateral security. The principal borrowers had defaulted in payment of the EMIs. The 2[nd] respondent has initiated proceedings under the SARFAESI Act, against the property of the petitioner. To substantiate the fact that the secured asset is an agricultural land, which is exempted from the purview of the Act, the petitioner OP (DRT) NO. 220 OF 2023 4 filed the above Ext.P4 application, to ascertain and report regarding the nature of the land and the cultivation being carried out in the scheduled property. But, the Tribunal, by the impugned Ext.P6 order, dismissed the application. Ext.P6 is patently wrong and ex-facie illegal. Hence, the original petition. 3. Heard; Sri.Arun Krishna Dhan, the learned Counsel appearing for the petitioner and Sri.Augustine P.A., the learned Counsel appearing for the respondents 1 to 4. 4. Sri.Arun Krishna Dhan, reiterated the contentions in the original petition and contended that in view of Exts.P2 and P3 certificates issued by the authorities, the secured asset is undoubtedly an agricultural land. It is to prove the above aspect, the petitioner had filed Ext.P4 application. However, the Tribunal, without considering the application in its proper perspective, has in a OP (DRT) NO. 220 OF 2023 5 mechanical manner rejected the same. Ext.P6 warrants to be interfered with by this Court. 5. Sri.P.A.Augustine, on the contrary, argued that along with Ext.P4 application the petitioner had filed an application to stay further coercive proceedings. The Tribunal, by the impugned Ext.P6 common order, had directed the petitioner to deposit an amount of Rs.22,50,000/- on or before 30.05.2023. Yet, the petitioner did not deposit the amount. Instead, on the same day, the petitioner has filed the present original petition. Furthermore, the petitioner has submitted Ext.P5 declaration before the 2[nd] respondent, undertaking that he could not take a volte face and contend that the secured asset is an agricultural land, which is exempted from the purview of the Act. Therefore, there is no bonafides or merits in the writ petition, which is only liable to be dismissed. OP (DRT) NO. 220 OF 2023 6 6. The point is whether there is any error in Ext.P6 order warranting interference by this Court. 7. On an appreciation of the pleadings and materials on record, I find that the petitioner has executed Ext.P5 declaration before the 2[nd] respondent Bank stating as follows: “4) That I/We hereby declare that above said immovable property is non agricultural in nature & usage and shall continue to be in non agricultural usage until the full tenure of the loan. That I/We shall be precluded from taking any contrary view as to the nature and usage of the land at any time during the tenure of the loan so as to affect enforcement of the above property under any applicable law. 5) That I/We hereby declare that no charge or encumbrance over the property shall be created by me/us by way of sale, lease, exchange, gift, settlement, mortgage or in any other manner, during the subsistence of the loan from the bank”. 8. When, the above declaration was brought to the notice of the learned Counsel appearing for the petitioner, he then contended that the declaration was OP (DRT) NO. 220 OF 2023 7 executed under vitiating circumstances. Consequently, the declaration is void and not binding on the petitioner. ## 9. The Hon'ble Supreme Court in **Indian Bank & Anr. vs. K. Pappi Reddiyar & Anr.** [(2018) 18 SCC 252] has empatically 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 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** OP (DRT) NO. 220 OF 2023 8 **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.”** 10. Likewise, in **K. Sreedhar v. Raus Constructions Pvt. Ltd.** [2023 SCC OnLine SC 13], 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 that the secured properties in question were actually put to use as agricultural land and/or any OP (DRT) NO. 220 OF 2023 9 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] 11. Thus, when a contention is raised that the secured asset is an agricultural property, the pertinent point that needs to be looked into is whether the asset was an agricultural land as on the date of creation of the security interest. 12. In the instant case, dehors Exts.P2 and P3 certificates, which are dated on 18.10.2022, there is nothing on record to substantiate the nature of land as on the date of creation of the security interest. Furthermore, Ext.P5 declaration makes the petitioner's defence even more worse. Thus, I am of the definite view that Ext.P6 common order is perfectly legal and justifiable. 13. Nonetheless, if the petitioner has a case that Ext.P5 declaration was executed under vitiating OP (DRT) NO. 220 OF 2023 10 circumstances, which is a disputed question of fact, the onus of proof rests on his shoulders to prove that the declaration was not executed with his free will and consent. If the same is established to the satisfaction of the Tribunal, then it would be upto the Tribunal to decide whether an Advocate Commissioner is to be appointed or not. With the above observation, the original petition is dismissed. **Sd/C.S.DIAS JUDGE** rkc/31.05.23 OP (DRT) NO. 220 OF 2023 11 ## **APPENDIX OF OP (DRT) 220/2023** PETITIONER EXHIBITS - Exhibit p1 TRUE COPY OF THE RELEVANT PAGES OF THE S.A NO. 571 OF 2022 FILED BY THE PETITIONER HEREIN BEFORE THE DEBT RECOVERY TRIBUNAL, ERNAKULAM (WITHOUT ANNEXURES) - Exhibit P2 TRUE COPY OF THE CERTIFICATE DATED 18.10.2022 ISSUED BY THE AGRICULTURAL OFFICER, KRISHI BHAVAN, KOODARANJI - Exhibit P3 TRUE COPY OF THE CERTIFICATE DATED 05.04.2022 ISSUED BY THE PRESIDENT OF MARANCHATTY RUBBER PRODUCERS ASSOCIATION DATED 05.04.2023 - Exhibit P4 TRUE COPY OF THE I.A.NO.1255/2023 IN S.A.NO.571/2022 Exhibit P5 TRUE COPY OF THE THE DOCUMENT PRODUCED AS ANNEXURE B8 BY THE RESPONDENT BANK BEFORE THE HON'BLE DRT, ERNAKULAM IN SA NO. 571/ 2022 Exhibit P6 COPY OF THE IMPUGNED ORDER IN SA 571/ 2022 OF THE DEBT RECOVERY TRIBUNAL-2