THAMPI Vs. KUNNATHUNAD TALUK PRIMARY CO OP

JUDGEMENT

(1.) The appellant borrowed funds from the 1st respondent, which is an Agricultural Rural Development Bank, and defaulted payment. The Bank referred the matter for arbitration and based on award passed, the 2nd respondent notified appellant's mortgaged property for sale against which Writ Petition was filed. The limited prayer made by the appellant before the learned Single Judge was to permit him to sell part of the mortgaged property and settle the debt due to the Bank so that he can retain balance property. In the first place, this is an equitable relief normally granted by this Court in writ proceedings filed under Art 226 of the Constitution of India, and invariably in every such case debt is cleared within the time granted and the debtors are able to save at least part of their property. Whenever we gave freedom to borrowers to sell mortgaged property on condition of settlement of liability due to the Bank before execution of sale deed, they were able to sell the property at market price, settle the arrears and retain some amount for themselves. In this case also identical relief was sought based on R. 11 of the Co-operative Agricultural Development Bank Rules, which was turned down by the learned Single Judge by holding that mortgagor is free to sell the mortgaged property in full. Even though the loan availed was for Rs. 5.70 lakhs and the appellant has already repaid Rs. 3 lakhs, the balance outstanding with interest is a little over Rs. 9 lakhs. According to him, the property mortgaged is 1.40 acres of land with a residential house therein and another 85 cents of garden land. The value of the mortgaged property under the current market rate is multiples of the loan amount and therefore by sale of a small portion of the mortgaged property, entire loan could be cleared. In these circumstances, we feel the prayer of the appellant needs to be considered humanly and not in a strict legal angle more so when we are sitting in the extraordinary writ jurisdiction conferred on us under Art. 226 of the Constitution of India. We have also heard learned counsel appearing for the 1st respondent Bank and learned Government Pleader.

(2.) Since learned counsel for the appellant has relied on R. 11 of the Co-operative Agricultural Development Bank Rules, we extract hereunder the said Rule for easy reference.

(3.) From the above Rule, what is clear is that recovery proceeding by sale of defaulter's property should not be made in a destructive manner to deprive him of his landed properties. On the other hand, it is for the Sale Officer to sell the minimum extent of land of the defaulter, the sale price of which will be sufficient to discharge the debt, so that defaulter is allowed to retain his balance property. The judgment of the learned Single Judge upholding proposal for sale of the entire mortgaged property in this case is against the letter and spirit of the above Rule. In our view, when any specific amount is to be recovered from the defaulter by the recovery authority, whether it be the Sale Officer under the Co-operative Societies Act or the Revenue Recovery authorities, the principle that should be followed is to ensure minimum harm to the defaulter i.e., by depriving of the minimum extent of land that is required to settle the liability and not to destroy him by selling his entire property in recovery proceedings.