RAHIYA P Vs. SOUTH INDIAN BANK LTD

JUDGEMENT

(1.) This Original Petition filed under Article 227 of the Constitution of India calls into question Ext.P6 order of the Debts Recovery Tribunal - 1, Ernakulam in I.A.No.1702 of 2022 in S.A.No.398 of 2022.

(2.) The facts of the case (to the extent necessary to adjudicate the issues raised), in brief, are that the petitioner availed a loan for business purposes from the respondent Bank. Among the items of the property, which were mortgaged for securing the repayment of the loan, was a property having an extent of approximately 44.60 cents. It is the case of the petitioner that the said property is agricultural land, against which proceedings cannot be initiated under the provisions of the SARFAESI Act. It is the case of the petitioner that the Tribunal wrongly relied upon an undertaking stated to have been obtained from the petitioner at the time of sanction of the loan that the property in question is non-agricultural land. It is submitted that the application for appointment of an Advocate Commissioner as well as the application for stay of proceedings under the SARFAESI Act, has been rejected by the Tribunal relying on the undertaking which is on record in this case as Ext.R1(b) along with a counter affidavit filed by respondents 1 and 2.

(3.) Adv. B.N.Shivsankar, the learned counsel appearing for the petitioner, would contend that Ext.R1(b) undertaking cannot be taken into consideration or acted upon since the undertaking would be contrary to the provisions of Sec. 31 of the SARFAESI Act. It is submitted that if the banks and financial institutions are allowed to act on such undertakings, this would mean that they would be allowed to defeat the provisions of Sec. 31 of the SARFAESI Act, which exclude agricultural land from the operation of the SARFAESI Act. It is submitted that the decision of the Supreme Court in ITC Limited v. Blue Coast Hotels Ltd. and others [2018 KHC 6194] and the decision of the Telangana High Court in M/s. Concern Readymix v. The Authorised Officer, Corporation Bank [Writ petition No.20729 of 2018], were rendered in entirely different fact circumstances and, therefore, cannot be taken as authority for the proposition that whenever an undertaking in the form of Ext.R1(b) has been taken, the borrower will be precluded from raising a defence that the property in question cannot be proceeded against under the provisions of the SARFAESI Act. It is submitted with reference to the facts in ITC Limited (supra) that the said case was a case where a substantial hotel building had been constructed on the land in question and where the promoters/borrowers had even filed an application for conversion of the land from agricultural to nonagricultural land. It is submitted that the undertaking is hit by the provisions of Sec. 23 of the Contract Act, and such a question was never considered in either of the decisions referred to above. It is submitted that the petitioner had applied for the appointment of an Advocate Commissioner to show that the land in question is actually a coconut garden consisting of coconut trees which are more than 30 years old. It is submitted that the mere fact that the property also houses the residence of the petitioner is no ground to hold that the property is not agricultural land. It is submitted that the land was obtained by the petitioner from a cultivating tenant, who obtained the land by virtue of the provisions contained under the Kerala Land Reforms Act and this by itself is sufficient to establish that the land in question is agricultural land. It is pointed out that the land in question was registered under the National Rural Employment Guarantee Act of 2005. Therefore, according to the learned Counsel, there cannot be any question regarding the nature of the land. It is also pointed out that the land tax receipts in respect of the land will show that the land is agricultural land. The learned counsel for the petitioner has also placed reliance on the judgment of the Supreme Court in Central Inland Water Transport Corporation Ltd. and Another v. Brojo Nath Ganguly and Another [1986 KHC 810] to contend that when the contract is between parties with unequal bargaining power, this Court must adopt the construction which would ensure that a valuable right vested in the borrower is not lost on account of an undertaking in the nature of Ext.R1(b). Reference is also made to the judgment of a learned single judge of this Court in Smart Security and Secret Service Agency v. State Bank of India [2016(3) KHC 409] to contend that where there are clauses in the agreement between the parties, which would authorize the Bank to take action which is opposed to public policy and public interest they cannot be enforced.