Dismissed

Shri.Sajan K.Thomas v. the Authorized Officer

Kerala HC18 Dec 2023WP(C)/24401/2020

Case brief

AI extract

What is this about?

The Kerala High Court dismissed a writ petition challenging the bank's enforcement of security interest under the SARFAESI Act. The Court held that petitioners failed to prove the mortgaged land was agricultural at the time of the mortgage, thus invalidating their claim for exemption under Section 31(i).

What did the court decide?

The writ petition challenging the bank's notices and possession proceeding was dismissed with no orders of restructured loan or other relief.

Shri.Sajan K.Thomas Vs the Authorized Officer — Banking and Recovery | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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MONDAY, THE 18^TH DAY OF DECEMBER 2023/27TH AGRAHAYANA, 1945

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WP(C) NO. 24401 OF 2020

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PETITIONERS:

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1 SAJAN K.THOMAS, AGED 51 YEARS, S/O.THOMAS, RESIDING AT KORAVAKATTU HOUSE, PAINGOTTOR P.O., KULAPURAM, ERNAKULAM DISTRICT.

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2 DELLA SAJAN, AGED 47 YEARS, W/O.SAJAN, RESIDING AT KORAVAKATTU HOUSE, PAINGOTTOOR P.O., KULAPURAM, ERNAKULAM DISTRICT.

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3 ANJO SAJAN, AGED 27 YEARS, S/O.SAJAN, RESIDING AT KORAVAKATTU HOUSE, PAINGOTTOOR P.O., KULAPURAM, ERNAKULAM DISTRICT.

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BY ADV T.RASINI

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RESPONDENTS:

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1 THE AUTHORIZED OFFICER, THE SOUTH INDIAN BANK LTD., REGIONAL OFFICE, 1ST FLOOR, KAVIKUNNEL CHAMBERS, TB JUNCTION, MOOVATTUPUZHA - 686 661.

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2 THE BRANCH MANAGER, THE SOUTH INDIAN BANK LTD.,

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W.P.(C) No.24401/2020

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KOCHUKUDIYIL BUILDING, NO.96-A, KALLOORKAD, KALOOR, ERNAKULAM DISTRICT, PIN - 686 668.

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BY ADVS. SRI.ASISH K.JOHN, SRI.K.K.JOHN,STANDING COUNSEL,SOUTH INDIAN BANK

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C) No.24401/2020

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N. NAGARESH, J.

W.P.(C) No.24401 of 2020

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Dated this the 18^th day of December, 2023

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J U D G M E N T

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~ ~ ~ ~ ~ ~ ~ ~ ~

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The 1^st petitioner availed agricultural loan facility

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from the South Indian Bank Limited for multiple crop cultivation. The land was offered as a collateral security. As the petitioners were servicing the loan account properly, the 2^nd respondent enhanced the loan facility from ₹25 lalkhs to ₹75 lakhs.

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In the year 2017, the petitioners suffered suffered crop failure. The year was followed by floods and thereafter Covid-19 pandemic. The petitioners could not maintain the loan account properly. Consequently, the loan account was classified as NPA. The respondents initiated proceedings under the Securitisation and Reconstruction of Financial

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W.P.(C) No.24401/2020

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Assets and Enforcement of Security Interest Act, 2002. The respondents sought to take over possession of the agricultural land of the petitioners.

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The petitioners state that the respondents are prohibited from taking possession of and selling their agricultural land for enforcing security interest, in view of Section 31(i) of the Act, 2002. The petitioners therefore challenge Ext.P1 Section 13(2) notice, Ext.P2 communication, Ext.P3 demand and Ext.P4 possession notice.

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The counsel for the petitioners urged that the loan facility sanctioned to the petitioners is an agricultural loan for doing cultivation in the secured property. In the light of Section 31(i), the respondents are legally debarred from taking over possession of the agricultural land. The counsel for the petitioners pointed out that the 1^st petitioner was maintaining the loan account properly. It was crop failure, floods and outbreak of Covid-19 pandemic which made the loan account NPA. The respondents therefore ought to have

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W.P.(C) No.24401/2020

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restructured the loan. The classification of the loan account as NPA is in violation of the provisions contained in the Master Circular of the Reserve Bank of India. Exts.P1 to P4 are therefore liable to be quashed, contended the counsel for the petitioners.

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The 1^st respondent resisted the writ petition filing counter affidavit. On behalf of the respondents, it is stated that the 1^st petitioner was granted an overdraft facility of ₹20 lakhs by the respondent-Bank for meeting expenses for slaughter tapping. The limit was later enhanced to ₹75 lakhs. Petitioners 1 and 2 were granted Kissan Credit Card facility of ₹20 lakhs. Petitions 1 to 3 were granted a Mobi loan of ₹68,000/- for purchase of motor bike.

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When the natural calamities occurred, the petitioners' account was eligible for restructuring as per SLBC guidelines. However, the petitioners submitted a declaration that they had not incurred any loss in their agriculture and that they are not interested in restructuring. No grounds are made out warranting interference by this

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W.P.(C) No.24401/2020

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Court under Article 226 of the Constitution of India, contended the Standing Counsel.

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I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents.

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The prime ground urged by the petitioners is that the secured asset is an agricultural land and therefore in view of Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the land cannot be proceeded against. It is true that some of the loans sanctioned to the 1^st petitioner were related to agricultural activities. The other loans include a vehicle loan also.

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For the petitioners to claim exemption under Section 31(i), the petitioners have to establish that the land was an agricultural land at the time of mortgaging. The documents produced by the petitioners would not in any manner indicate that the land was agricultural land at the time of mortgaging. Therefore, the petitioners cannot rely on

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W.P.(C) No.24401/2020

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Section 31(i) to escape from enforcement of security interest by the respondents.

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Going through the pleadings in the writ petition, I find that the Bank has given notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before initiating proceedings. The petitioners had opportunity to reply to Ext.P1 notice. The petitioners were also informed as per Ext.P2 that due to declaration of the loan account as NPA, the rating of the 1^st petitioner has been downgraded to D category.

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Ext.P3 registered notice would indicate that the amount payable by the petitioners as balance outstanding is ₹1,00,25,452.49. The Bank had also issued possession notice on 27.08.2020 to the petitioners under Rule 8(1) of the Security Interest (Enforcement) Rules. Ext.P6 photographs produced by the petitioners cannot be relied on blindly to hold that it is an agricultural land. Exts.P6 to P8 photographs do not bear any date and it cannot be concluded from

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W.P.(C) No.24401/2020

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Exts.P6 to P8 photographs that the land was agricultural land

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at the time of mortgaging of the property. In the facts of the case, I do not find any legal reason to interfere with Exts.P1 and P4.

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The writ petition fails and hence it is dismissed.

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Sd/-

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N. NAGARESH, JUDGE

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aks/12.12.2023

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W.P.(C) No.24401/2020

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APPENDIX OF WP(C) 24401/2020

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PETITIONER'S EXHIBITS

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Ext.P1	TRUE COPY O ISSUED UNDER ACT, 2002.	F THE NO SECTION	TICE DATED 03/03/2020 13(2) OF THE SARFAESI
Ext.P2 Ext.P3	TRUE COPY OF TRUE COPY OF	THE NOTI THE NOTI	CE DATED 11/12/2019. CE DATED 6/1/2020.
Ext.P4	TRUE COPY O 27/08/2020.	F THE PO	SSESSION NOTICE DATED
Ext.P5	TRUE COPY 07/09/2020.	OF TH	E CERTIFICATE DATED
Ext.P6	TRUE COPY PROPERTY.	OF THE	PHOTOGRAPH OF THE
Ext.P7	TRUE COLOUR PROPERTY.	COPY OF	THE PHOTOGRAPH OF THE
Ext.P8	TRUE COLOUR PROPERTY.	COPY OF	THE PHOTOGRAPH OF THE

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RESPONDENT EXHIBITS

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Ext.R1(A)	COPY OF TH	E L	ETTER OF THE FIRST PETITIONER
	DATED NIL
Ext.R1(B)	COPY OF TH	E S	TATEMENT OF THE ACCOUNT OF THE
	KCC LIMIT	FOR	THE PERIOD FROM 1.01.2018 TO
	31.12.2018
Ext.R1(C)	PHOTOGRAPH	OF	THE PROPERTY
Ext.R1(D)	PHOTOGRAPH	OF	THE PROPERTY
Ext.R1(E)	PHOTOGRAPH	OF	THE PROPERTY

Shri.Sajan K.Thomas v. the Authorized Officer

Case brief

What is this about?

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Shri.Sajan K.Thomas v. the Authorized Officer

Case brief

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