Dismissed

Sibi N K v. State Bank of India

DRT30 Oct 2023SA/203/2023

Case brief

AI extract

What is this about?

S.A.No.203 of 2023 was dismissed. The Tribunal held that the property was not agricultural on the date of security creation, the SA was filed beyond the 45-day limitation period, and the underlying orders were not challenged.

What did the court decide?

Application stood dismissed. No costs awarded to the respondents.

What the court decided

Sibi N K versus State Bank of India — Contract and Commercial Disputes | DRT (2023)

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Fair Order

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IN THE DEBTS RECOVERY TRIBUNAL - 1 AT ERNAKULAM

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DATED THIS 30^th DAY OF OCTOBER, 2023

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PRESENT: Su. WILLYAHM, B.Sc., M.L. [DISTRICT JUDGE - Retd] PRESIDING OFFICER

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S.A No. 203 of 2023

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Between

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Sibi N.K., S/o. Kumaran, Contractor, Naduparambil House, Velamkode P.O, Kodencherry, Kozhikode – 673 580.

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Frankline George, S/o. Varkey K.V., Karuvanplackal House, Kodencherry, Kozhikode – 673 580.

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Shimna Thomas, W/o. Frankline George, Karuvanplackal House, Kodencherry, Kozhikode – 673 580. --- Applicants

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And 1. The Authorised Officer, Asset Recovery Management Branch, State Bank of India, R.S. Building M.G. Road, Ernakulam-682 011.

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State Bank of India, Thamarassery Branch, Thamarassery P.O., Kozhikode -673 573 Represented by its Branch Manager. --- Defendants

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SA No.203 of 2023

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This Securitization Application coming on 24.08.2023 for final hearing before me in the presence of Ms. Jefrin Jose, Advocate for the Applicants and Mr. C.N. Baby, Advocate for the defendants and upon hearing arguments of learned Counsels for both the parties and upon perusing the material on records, this Tribunal delivered the following:

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O R D E R

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This Securitisation Application was filed on 06.04.2023 seeking to set aside Annexures-A1 and A5 and to declare that the secured assets fall under the category of agricultural property as defined under Section 31 (i) of the SARFAESI Act, 2002 and direct the defendants to grant time for payment of the due amount.

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The averments of the applicants in the SA in brief are as follows:

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The 1^st applicant is an agriculturist and a Contractor by profession. On 08.06.2016 the 1^st applicant availed Agricultural Term Loan (KGC) to the tune of Rs10 Lakhs on 08.06.2016 and a housing loan to the tune of Rs.30 Lakhs on 26.07.2016 respectively. Further, the 2^nd and 3^rd applicants availed Agricultural Term Loan (KCC) to the tune of Rs.20 Lakhs on 17.8.2016.

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Later, on 09.09.2016 the Cash Credit facility of the 1^st applicant was enhanced by Rs.1 Crore and on 27.09.2016 the 2^nd and 3^rd applicants availed another Agricultural Term Loan (KCC) to the tune of Rs.18 Lakhs.

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The property having a total extent of 133.7574 Ares out of which an extent of 40.47 Ares of land in Resurvey No.16/1 (Old Sy.No.80) in Koodathai village, Thamarassery Taluk and an extent of 34.80 Ares in Resurvey No.16/1 (Old Sy.No.80) in Koodathai village, Thamarassery Taluk, an extent of 16.9974 Ares of un-surveyed in Kodenchery Village in Kozhikode Taluk and an extent of 41.49 Ares of land in Resurvey No.4/5 of Kodenchery Village in Thamarassery Taluk were mortgaged with the bank.

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On 19.12.2018 the 1^st applicant renewed cash credit to the tune of Rs.1 Crore and the 2^nd and 3^rd applicants availed other agricultural loan to the tune of Rs.20 Lakhs on 30.12.2018 and another agricultural loan to the tune of Rs.21,01,075/-. Thereafter, the 1^st applicant reduced the Cash Credit limit to Rs.95 Lakhs.

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Initially the applicants were regularly making the payments. However, due to the recent COVID 19 pandemic and consequent

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Page 2 of 9

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SA No.203 of 2023

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lockdown, there was huge price fall in the agricultural crops and the 1^st applicant was under huge financial crisis due to non payment of bills due to him from the PWD. Consequently, the bank initiated recovery proceedings under the provisions of the SARFAESI Act. The 1^st applicant approached the 2^nd defendant bank and requested to grant him some time for repayment. However, the defendant bank was not inclined to accept the said request and initiated recovery proceedings and issued possession notice dated 09.08.2022, Annexure-A1 under the SARFAESI Act.

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The said property was assigned for agricultural activities under the provisions of the Kerala land Assignment Act, 1962. A true copy of the certificate dated 17.2.2023 issued by the Vice President, Kodenchery Grama Panchayat along with its English translation is produced herewith as Annexure-A2. A few photographs evidencing the fact that the properties mortgaged with the defendant bank are agricultural properties is produced herewith as Annexure-A3.

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Thereafter the 1^st applicant deposited an amount of Rs.79,96,817/- on 01.02.2023. A true copy of the relevant page of the account statement evidencing the remittance of Rs.79,96,817/- is produced herewith as Annexure-A4. Without considering the said fact the Advocate Commissioner appointed by the learned CJM court, Kozhikode issued a notice, Annexure-A5 to the applicants informing that the Advocate Commissioner will take possession of the secured assets at 11 am on 23.03.2023.

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Challenging Annexure-A5, the 1^st applicant approached the Hon'ble High Court of Kerala with W.P (C) No. 9519/2023 and the Hon'ble High Court was pleased to dispose of the same vide judgment dated 21.3.2023, Annexure-A6 by staying all proceedings pursuant to Annexure-A5 for a period of two weeks and directed the petitioner to approach this Hon'ble Tribunal.

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As per Section 31 (i) of the SARFAESI Act, the provisions of the Act shall not be applied or invoked in case of security interest created in agricultural lands. In the aforesaid facts and circumstances, the applicants prefer this S.A. under Section 17 of the SARFAESI Act.

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The defendants came on record and filed Written Statement inter-alia contending as follows :

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Challenge as against possession notice dated 09.08.2022 is barred by limitation as the SA has not been filed within 45 days. Further, the SA is not maintainable since the order dated 09.05.2017

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Page 3 of 9

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SA No.203 of 2023

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passed by the Chief Judicial Magistrate, based on which the Advocate Commissioner issued the notice also has not been challenged.

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By the notice dated 03.03.2023 the Commissioner has informed that she would take possession of the property in Kodenchery village at 11.00 am on 23.03.2023. Possession was not taken on that day and no fresh notice has been issued by the Commissioner. As such the SA has become infructuous as far as the said notice is concerned and is liable to be dismissed on that ground.

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Further, when the Advocate Commissioner, visited one of the secured assets situated in Kodenchery village on 03.03.2023 for taking possession of the same, Smt.Sheeja Sibi, wife of the 1^st applicant on behalf of the 1^st applicant has submitted a letter to the Commissioner, requesting time till 15.03.2023 for payment of the dues amounting to Rs.1,96,00,000/- and undertaking that on default, the keys of the residential house would be handed over to the Commissioner. Now the applicants cannot go back and claim that the property is agricultural land. A copy of the letter given by Mrs.Sreeja Sibi, wife of the 1^st applicant to the Commissioner on 03.03.2023 and English translation thereof are produced herewith as Annexure-R1.

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Contents of para 5 & 6 relating to availment of Cash Credit limit of Rs.50,00,000/- and Agricultural Term Loan (ATL) of Rs.15,00,000/in 2014 and closure of the ATL is not fully correct. Though the applicants were making payments, the accounts were not regularly operated. Repayment into the term loans were not at all regular. The statement that the accounts went irregular due to Covid 19 pandemic and consequent lockdown is not at all correct. Covid 19 was affected as a pandemic only in March 2020 whereas the agricultural accounts turned irregular much before. The allegation that the financial crisis was due to non-payment of bills due to him from PWD is not correct and not supported by any material. The allegation that he could not repay the dues because of the financial crisis on account of falling price of agricultural crops due to the lockdown cannot be accepted. In view of the account becoming irregular and Non-Performing Assets, the defendant bank issued lawyers notice to the applicants on 19.02.2022 but there was no response from the defendants. Therefore, O.A. No.462 of 2022 was filed before this Hon'ble Tribunal against the applicants on 11.4.2022 for recovery of Rs.2.48,64,496/- the amount due as on 10.04.2022. Further in the absence of any response to the lawyers notice from the part of the applicants, the defendant bank also initiated proceedings under SARFAESI Act, on 19.05.2022 by issuing demand notice under Section 13(2). The applicants have not raised any objection to the notice. In the circumstances, symbolic

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Page 4 of 9

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SA No.203 of 2023

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possession of the properties was taken by issuing possession notice dated 09.08.2022.

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The allegation that the property in question is an agricultural property is denied as incorrect. It is denied that the property was assigned for agricultural activities under the provisions of Kerala Land Assignment Act, 1962. The certificate issued by the Vice President, Kodenchery Grama Panchayath produced as Annexure-A2 by the applicants is not at all a valid document. Vice Presidents of Grama Panchayaths have no power or authority to issue such a certificate. Further the photograph produced as Annexure-A3 would only show that no agricultural operations are being carried out in the property. The 1^st applicant has never intended to treat the property as agricultural land at the time of creating the mortgage. He has sworn to an affidavit wherein, it is declared that the properties mentioned therein (mortgaged properties) are non-agricultural lands. A copy of the said affidavit dated 18.03.2020 is produced herewith as AnnexureR2. Further, Annexure-R1 also shows that the property in question is residential property and not agricultural land.

¶41

The statement that the 1^st applicant with his earnest efforts had deposited an amount of Rs.79,96,817/- on 01.02.2023 is false. The credit entry of 79,96,817/- appearing in the accounts on 01.02.2023 actually represents the amount received by the defendant bank from the Kerala Public Works Department. Under a Power of Attorney, Annexure-R3 executed by the 1^st defendant while availing the cash credit limit for the purpose of his profession as a contractor, the defendant bank was authorized to collect all payments to be made to him by the PWD.

¶42

A Commissioner appointed by the Chief Judicial Magistrate Court, need not look into any other fact and his only duty is to act as per the order issued by the Court. Therefore, the notice, Annexure-A5 issued by the Advocate Commissioner is perfectly in order. The applicants did not raise any objections to the 13(2) notice or make many submission or representation on receipt of 13(4) possession notice. Section 31(i) of the SARFAESI Act, is not applicable to the property in question, as no portion of the secured asset is an agricultural land and the applicants are stopped from contending that it is an agricultural land in view of the affidavit (Exhibit R1) sworn to by the 1^st applicant. The defendant bank is entitled to proceed against the property of the 1^st applicant under SARFAESI Act, as the relative accounts were classified as Non-Performing Asset. Hence it is prayed that this Hon'ble Tribunal may be pleased to dismiss the S.A with costs to the defendants.

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SA No.203 of 2023

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The point arising for consideration is as to whether the applicant is entitled to get the reliefs sought for in this S.A.

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Point: Availment of credit facilities from the 2^nd defendant Bank upon creation of security interest by deposit of title deeds over the immovable properties having a total extent of 133.7574 Ares out of which an extent of 40.47 Ares of land in Resurvey No.16/1 (Old Sy.No.80) in Koodathai village, Thamarassery Taluk an extent of 34.80 Ares in Resurvey No.16/1 (Old Sy.No.80) in Koodathai village, Thamarassery Taluk, an extent of 16.9974 Ares of un-surveyed in Kodenchery Village in Kozhikode Taluk and an extent of 41.49 Ares of land in Re-survey No.4/5 of Kodenchery Village in Thamarassery Taluk in favour of the 2^nd defendant and default in repayment of the outstanding loan due is admitted by the applicants. Issuance of possession notice dated 9.8.2022 Annexure-A1 and receipt of the same is also admitted by the applicants.

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It is submitted by the Counsel for the applicants that the secured assets were assigned for agricultural activities under the provisions of the Kerala Land Assignment Act, 1962 and that since secured assets are agricultural properties, as per the provisions of Section 31(i) of the SARFAESI Act, 2002 SARFAESI measures cannot be initiated in respect of security interest created over the agricultural properties.

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The Counsel appearing for the defendants submitted that secured assets are not agricultural properties and that when the Advocate Commissioner visited the secure asset on 03.03.2023, Smt.Sheeja Sibi, wife of the 1^st applicant submitted a letter to the Advocate Commissioner requesting time till 15.03.2023 for payment of the dues and that she also gave undertaking that if default is committed, the keys of the residential house would be handed over to the Advocate Commissioner and that therefore the applicants cannot claim now that the secured assets are agricultural properties and that for the demand notice dated 19.5.2022, the applicants did not raise any objection stating that secured assets are agricultural properties and that the secured assets were not assigned for agricultural activities under the provisions of Kerala Land Assignment Act, 1962 and that Annexure-A2 certificate issued by the Vice President of Kodenchery Grama Panchayat is not a valid document, since he has no power or authority to issue such certificate and that Annexure-A3 photographs would show that no agricultural operations were being carried out in the property and that the applicants had never intended to treat the property as agricultural property at the time of creation of

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Page 6 of 9

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SA No.203 of 2023

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security interest and that sworn affidavit Annexure-R2 given by the 1^st applicant shows that the property is residential property and that Annexure-A5 notice issued by the Advocate Commissioner is perfectly in order and that filing of the S.A challenging the possession notice dated 09.08.2022 beyond the period of 45 days is not maintainable and that the S.A is not maintainable on the ground that the order dated 09.05.2017 passed by the learned Chief Judicial Magistrate, Kozhikode was not challenged by the applicants and that possession of the property was not taken on 23.03.2023 though the Advocate Commissioner issued notice dated 03.03.2023 and that therefore the S.A has become infructuous.

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The applicants rely upon Annexure-A2, copy of certificate dated 17.02.2023 issued by the Vice President, Kodenchery Grama Panchayath and also Annexure-A3 photographs in order to prove their contention that secured assets are agricultural properties. In Annexure-A2/2 which is the English translated version of AnnexureA1, it is stated that the lands owned by Sri.Siby N.K., (1^st applicant herein) in RS Nos.16/1 and RS (un-surveyed), are agricultural lands and that there are cultivation of rubber, arecanuts and coconuts etc. having age of 15 to 35 years. There is no mention in Annexure-A2/2 as to whether personal verification of the above said properties was done before issuance of the certificate. Further, the above said Vice President of Kodencherry Grama Panchayath has no authority or locus standi to give this type of certificate. Further, there is no mention in Annexure-A2/2 as to whether the properties were the agricultural properties on the date of creation interest over the same. A perusal of Annexure-A3 photographs would show that there are a few areacanuts (4 Nos.) and plantain and other trees are seen in the property and that there is no sign of any kind of agricultural activities being carried on the secured asset. Thus it is evident that no reliance can be placed upon Annexure-A2 and A3 to accept the contention of the applicants that secured assets are agricultural properties.

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It is pertinent to mention herein that the applicants did not send any objection/representation to the demand notice dated 19.05.2022 stating that secured assets are agricultural properties and that in Annexure-R2 letter, the property is referred to as “House”.

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In order to claim exemption under Section 31(i) of the SARFAESI Act, 2002 the petitioners ought to have placed relevant material before this Tribunal to show that the secured asset was the agricultural property on the date of creation of security interest over the same, as laid down by the Hon’ble Supreme Court in Indian Bank and another Vs. K. Pappireddiyar and another - AIR 2018 SC 3540 - wherein it has been held as follows:

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SA No.203 of 2023

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“ 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.”

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In the present case on hand, the applicants have not produced any material before this Tribunal to show that the secured assets were agricultural properties on the date of creation of security interest over the same from the 2^nd defendant Bank.

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Annexure-A1 possession notice was issued as early as on 09.08.2022, but the applicants filed this S.A only on 06.04.2023. Therefore, the filing of the S.A beyond the period of 45 days from the date of issuance of the above possession notice is not maintainable as submitted by the Counsel for the defendants. On this ground alone the SA is liable to be dismissed.

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The applicants have not produced the copy of the affidavit filed by the defendants under Section 14 of the SARFAESI Act, 2002 before the Chief Judicial Magistrate Court,, Kozhikode. The applicants have also not produced copy of the Order passed by the learned Chief Judicial Magistrate Kozhikode. It is also not the contention of the applicants in the SA that the requirements contemplated under the proviso (i) to (ix) to the provisions of Section 14(1) of the SARFAESI Act, 2002 were not complied with by the defendants and that the Order passed by the learned Chief Judicial Magistrate Kozhikode also suffers from any infirmity. Without challenging the aforesaid measures, the challenge of Annexure-A5 Advocate Commissioner notice date 3.3.2023, is untenable since the above notice was issued by the Advocate Commissioner pursuant to the direction given to him in CMP No.1992/2022 by the Chief Judicial Magistrate Court, Kozhikode. Therefore, this S.A filed challenging Annexure-A5 notice is also not maintainable.

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In any event, the applicants have miserably failed to prove their case that they are entitled to get the reliefs sought for in the S.A. In the result, S.A No. 203 of 2023 stands dismissed. No costs.

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Dictated to Steno, taken down, transcribed, typed by him, corrected and pronounced by me in the open court on this the 30^th day of October, 2023.

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(Su. WILLYAHM) PRESIDING OFFICER

Mj/

Page 8 of 9

SA No.203 of 2023

List of documents filed by the Applicant along with the S.A.

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Sl. No.	Date	Particulars
1.	09.08.2022	True copy ofthe possession notice.	Annexure-A1
2.	17.02.2023	True copy of the certificate issued by the Vice President, Kodenchery Grama Panchayat along with its English translation.	Annexure-A2
3.	--	Photographs evidencing the fact that the properties mortgaged with the defendant bank.	Annexure-A3
4.	---	True copy of the relevant page of the account statement evidencing the remittance of Rs.79,96,817/-.	Annexure-A4
5.	03.03.2023	True copy of the notice issued by the Advocate Commissioner in CMP No.1992/2022 to the applicants.	Annexure-A5
6.	21.03.2023	True copy of the judgment passed by the Hon'ble High Court of Kerala in W.P (C)No.9519/2023.	Annexure-A6

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List of documents filed by the Defendants along with the Written Statement

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SL. No.	Date	Particulars
1.	03.03.2023	Copy of letter given by 1^stdefendant to the Advocate Commissioner and its Englishtranslation.	Annexure-R1
2.	18.03.2020	Copy of notarized affidavit sworn to by 1^st applicant.	Annexure-R2
3.	21.11.2018	Copy of Power of Attorney executed by 1^st applicant.	Annexure-R3
4.	28.11.2018	Copy of letter from Superintending Engineer, PWD, Roads, North Circle, Kozhikode to 2^nd defendant.	Annexure-R4
5.	30.05.2022	Copy of letter from the 1^stdefendant to the Executive Engineer, PWD Roads, NorthCircle,Kozhikode.	Annexure-R5
6.	28.04.2023	Copy of relevant portion of entries in A/cNo.57001257023.	Annexure-R6

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(Su. WILLYAHM) PRESIDING OFFICER

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Mj/

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Page 9 of 9

Sibi N K v. State Bank of India

Case brief

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What the court decided

Sibi N K v. State Bank of India

Case brief

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