Dismissed

B N Subraya v. Canara Bank

DRT29 Aug 2025SA/126/2024

Case brief

AI extract

What is this about?

Arbitrator dismissed the Securitization Application filed by the applicant challenging section 14 measures under the SARFAESI Act. The court held that security interest in a coffee plantation does not qualify as agricultural property exempt under subsection 31(i), thus validating the bank's actions.

What did the court decide?

Securitization Application No. 126 of 2024 stands dismissed; all pending applications in the matter are closed.

B N Subraya versus Canara Bank — Banking and Recovery | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II, BANGALORE

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Dated this Day of 29^th day of August, 2025

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PRESENT: SHRI T. RAJESH Hon’ble Presiding Officer

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S.A. No. 126 of 2024

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Sri. B. N. Subraya, S/o Late B. Nanjegowda, Aged about 64 years, R/at Byramudi Estate, Hirimande Village, Hanbal Hobli, Sakaleshpura, Hassan- 573134.

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. . . Applicant

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Versus

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The Authorized Officer/ Chief Manager, Canara Bank, Regional Office. Sakaleshpura Branch, Hassan- 573134. ---Respondent Ld. Counsels on record / appeared :- Counsel for Applicants :- M/s. Kumar & Kumar Counsel for Respondent :- Sri. Vignesh Shetty

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: - O R D E R - :

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The measures taken by the respondent, under the provisions of

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"Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 herein after been referred to as SARFAESI

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Act or the act, as the case be, culminated to the procurement of Annexure A10 order passed by the Chief Judicial Magistrate Hussan in

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SA 126/2024

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Crl.MC. 110 of 2023 under section 14 of the Act is assailed in this Securitization Application; herein after been referred to as the SA.

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The compendium of the applicant’s case as asserted in the SA is as follows. The applicant is the absolute owner of the scheduled properties, which the applicant claimed as agricultural one. It is also contended that the applicant had invested hard earned money for agricultural purpose and had availed agricultural and plantation development loan and also a vehicle loan for the purchase of a pickup vehicle. It is admitted that a facility for Rs.87,00,000/- was availed in the year 20142015 against the security of deposit of title deeds pertain to the schedule properties. The applicant also submits that the Schedule property, a Coffee Plantation had suffered due to climate and intrusion of wild animals. The further contention taken by the applicant is that the respondent had though enhanced the credit limit, the enhanced amount was adjusted to the loan account.

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The issuance of demand notice, possession notice and e-auction sale notice dated 18.12.2023 are admitted by the applicant. The applicant though challenged the above e-auction sale notice by filing a writ petition before the Hon’ble High Court, wherein the Hon’ble High Court had stayed the confirmation of sale subject to a deposit of Rs.20,00,000/- and as no sale took place pursuant to the said sale notice, the Writ petition was closed following which another sale notice

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SA 126/2024

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dated 5.1.2024 was issued fixing the sale on 29.3.2024, wherein also a Writ petition was filed. Even though the applicant had failed to comply with the interim order granted by the Hon’ble High Court, no sale took place pursuant to the said sale notice also. In the original pleadings to the SA the applicant had harped upon the contention that the property was Coffee plantation. It is also admitted that another sale notice was issued by the respondent bank which was though challenged before the Hon’ble High court, the applicant was relegated to this Tribunal.

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In the grounds to the SA, the applicant apart from putting forth the contention that the property is agricultural one is also putting forth a case that the entire exercise made by the bank is opposed to law.

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The applicant had sought for an amendment of the SA which stood allowed by the order dated 28.11.2024 consequential to which a new contention was allowed to be taken that the entire land is not Coffee Plantation as there are 2000 areca nut tree standing their in.

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Along with the SA the applicant had produced the following documents.

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i. E -auction sale notice dated 18.12.2023.

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ii. Interim order in WP.12925 of 2024.

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iii. Payment receipts

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iv. Final order in WP.2781 of 2024.

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v. Sale notice dated 5.3.2024

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vi. Copy of the order in WP.8684/2024

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vii. Copy of photographs

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viii. Copy of the sale notice dated 19.6.2024

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SA 126/2024

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ix. Copy of the case status of WP.18050 of 2024

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x. Copy of the website uploaded order in Crl.Mc.110 of 2023.

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By virtue of the amendment additional following documents were brought in

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Copy of the RTC extract of land bearing Survey no.110 of Hirimande village.

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Copy of the RTC extract of land bearing Survey no.118 of Hirimande village.

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Copy of the RTC extract of land bearing Survey no.124 of Hirimande village.

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Copy of the certificate of crop confirmation in respect of Survey no.110 of Hirimande village.

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Copy of the order in WP. 18050 of 2024.

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The respondent had filed their statement of objection denying the averments as made in the SA and contends that the property sought to be proceeded against is not agricultural one as contended by the applicant. The respondent had also narrated the facts about the disbursement of the loan, defaults committed therein, classification of account as NPA and the issuance of demand notice dated 21.4.2023. It is also stated that the demand notice is also published as required under the statute though the same were served on the borrowers. It is also stated that the possession notice dated 6.7.2023, is also issued published and affixed as required under the rules. The issuance of

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SA 126/2024

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various sale notices are also narrated in the statement of objection. The respondent had also stated that an amount of Rs.2, 46,02,727.90 is due as on 30.9.2024 apart from giving para wise rebuttal of the statement of facts as narrated in the SA.

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Along with the objection the following documents were produced.

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Memorandum of deposit of title deeds.

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Demand notice dated 21.4.2023

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Possession notice dated 6.7.2023.

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Order passed by the high court in WP.2881, 8684,12925 and 18050 of 2024.

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Statement of accounts.

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Copies of RTC for Survey.no. 118, 110,124

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Heard the counsel for both sides and considered the case setup by the applicant in light of pleadings and documentary evidence produced and also the rebuttal of the respondent as putforth in the statement, in the light of documents. In view of the admitted case of both sides as to the availment of credit facility, creation of security interest and the initiation of measures, leaves the only question that is to be gone into and decided is as to the legality of measures leading to the impugned order passed by the Magistrate. Moreover the lack of serious dispute as to the issuance of demand notice, possession notice and its service, the issue can be narrowed down to the legality of filing of the application under

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SA 126/2024

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section 14, procurement of the order and as to the maintainability of the measures.

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The 1^st and foremost contention taken by the applicant is that the property is exempted under section 31(i) of the Act. The applicant is not disputing the creation of security interest in lieu of the credit facility. Though a contention is taken that substantial repayment is made, no evidence in respect of the same is forthcoming leaving this Tribunal to reject said contention out rightly. The issuance of demand notice and possession notice, though the later is not sinequanon for the section 14 measures is also clearly admitted in the SA.

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In respect of the claim as to the nature of the property, it is to be noted that the SA is originally filed contending that the property is agricultural one as the same is a Coffee plantation. Though a subsequent effort was made to make out a contrary pleading that the property is not entirely Coffee plantation as 2000 areca nut trees are standing therein, the same has to be viewed only as an attempt to withdraw the clear admission made in the original pleadings as to the nature of the property. Even assume there exist 2000 areca nut trees in the property, the nature of the property would be governed by the fact as to what purpose the property is put to use. The Ld. Counsel for the applicant placed reliance on “Law and practice of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest

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SA 126/2024

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by R K Chathurvethi” wherein the Author had detailed the exemption of agricultural property from the proceedings under the Act. Reliance was also placed on “M/s Alka Ice and Cold Storages Pvt Ltd and others V/s. State of UP and others” ( 2012 SCC OnLine All 1021) and also the decision of Kerala High Court in “K.P.Mohammed Basheer V/s. Deputy General Manager(Authorized Officer, Kannur District co-operative bank Ltd and Anr”. (2010 SCC Online Kerala 538) wherein the exemption as to the proceedings against agricultural property is reiterated.

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The applicant had also placed reliance on the photographs purportedly evidencing the existence of areca-nut trees as claimed and also the RTC extract of the property wherein the property is shown as agricultural land. Even going by the documents produced by the applicant especially the photograph does not substantiate the case of the applicant that the property is primarily used for cultivation of areca -nut trees. The mear existence of areca-nut tree will not make the land and areca-nut cultivation. The RTC documents doesn’t support the case of the applicant that the property is used for areca-nut plantation. It is well settled that the revenue records without any supporting evidence does not conclusively prove the nature of the property. In considering the nature of the property, the pleadings as set up by the applicant when the SA is filed had to be viewed, wherein the plea was mainly that the property is Coffee plantation and the defaults occurred due to failure in

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SA 126/2024

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Coffee plantation. The applicant by way of the amendment had tried to take away the clear admission made in the pleadings that the property is Coffee plantation. The applicant cannot be allowed to approbate and reprobate as to the nature of the property which is admittedly pleaded as Coffee Plantation in the SA, when it was filed.

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In contra the respondent had placed reliance on “U M.Remesh Rao and Others V/s. Union Bank of India, (formerly corporation bank)”(2021 SCC Online Kar 6203) wherein the Hon’ble High Court of Karnataka had gone into the question whether Coffee Plantation raised will make the land agricultural one and answered the same in negative. In view of the above law as laid down by Hon’ble High Court of Karnataka (supra) it is settled that the security interest created in a Coffee plantation will not come within the scope of 31(i) of the Act and the contention of the applicant in that regard is also liable to be rejected.

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In view of the above discussions and findings, this Tribunal is of the view that the SA is bereft of any merit and is liable to be dismissed and accordingly

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i) SA .126 of 2024 stands dismissed.

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ii) As a sequel all pending IA’s stands closed. iii) No orders as to cost.

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SA 126/2024

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Issue copies in accordance with Rule 16 of the Debt Recovery Tribunal

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(procedure) Rule.

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(Dictated to Aj, directly on the computer, after its transcription, corrected, signed and pronounced by me in the open court on the 29^th Day of August, 2025)

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Sd/- (T. RAJESH) Hon’ble Presiding Officer DRT-II- BANGALORE

B N Subraya v. Canara Bank

Case brief

What is this about?

What did the court decide?

B N Subraya v. Canara Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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