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2012 DIGILAW 137 (UTT)

SAHARA INDUSTRIES v. STATE BANK OF INDIA

2012-03-30

B.S.VERMA

body2012
JUDGMENT By means of this writ petition, the petitioners have sought the following reliefs : I. To issue a writ, order or direction in the nature of certiorari to quash the notice dated 9.11.2011 (Annexure No. 1) issued by the respondent Bank u/s 13(2) of the SARFAESI Act, 2002. II. To issue any other writ, order or direction or grant such other further relief in favour of the petitioners, which this Hon’ble Court may deem fit and proper in the facts and circumstances of the case. III. Award the cost of the petition to the petitioners. Both the learned counsel for the parties have submitted that since pleadings have been exchanged, the writ petition may be disposed of finally at the admission stage. 2. Brief facts giving rise to the present writ petition, according to the petitioners, are that petitioner no. 1 is a partnership firm and is engaged in the business of processing of seeds and Mr. Vijay Singh son of Mr. Babu Singh is its partner. In the year 2010, petitioner no.1 firm took a loan from the respondent Bank under Cash Credit Limit facility to the tune of Rs. 65 lacs and a term loan of Rs. 5 lacs, which were paid to the petitioners on 6.6.2010. On 9.11.2011, the respondent-Bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (for short SARFAESI Act, 2002) of sixty days informing that the accounts of the petitioner company have been classified as non-performing asset (NPA) in accordance with the directive/guidelines relating to asset classifications of the Reserve Bank of India as mentioned in paragraph no.4 of the writ petition and demanded the payment of the secured debt from the petitioners. The total outstanding amounts of the two loans have been mentioned to the tune of Rs. 69,52,680.00. The petitioner no.1 filed objection/representation to the notice and also sent reply of the letter dated 9.11.2011 sent by the respondent Bank on 7.12.2011 mentioning therein that the respondent Bank has wrongly dassified the account of the petitioner no.1-firm as NPAand that too against the guidelines and directives of the RBI. The petitioner no.1 in reply to the letter of the respondent Bank has mentioned that the land of Plot no. The petitioner no.1 in reply to the letter of the respondent Bank has mentioned that the land of Plot no. 312/5 area 0.444 hectare situated at village Meghavala Tehsil Jaspur, District Udham Singh Nagar recorded in the name of Smt Ramesh Devi is an agricultural land and that the agricultural activities are going on over the said land. According to the petitioners the said land being agricultural land is beyond the purview of the SARFAESI Act, 2002 as per provision of Section 31(i), which provides that the provisions of this Act shall not apply to any security interest created in agricultural land. 3. The main ground of challenge advanced by the petitioners is that the respondent-Bank has wrongly classified the accounts of the petitioners as NPA and against the guidelines and directives of the Reserve Bank of India and no proceeding of recovery can be initiated under the SARFAESI Act 2002, since the land in question is an agricultural land. 4. On behalf of the respondent-Bank a short counter affidavit has been filed in this writ petition. In paragraph no. 13 and 14 of the counter affidavit, the following averments have been made:- “13. That after classified the account ofthe borrower NPA, admittedly on 9.11.2011 the respondent Bank served a notice on the petitioners and against the said notice the petitioners made a representation on 26.11.2011 to the Bank and the Bank vide notice dt 9.12.2011 decided and rejected the representation of the petitioners and there after no notice Under Sec. 13(4) was ever served to the petitioners but in anticipation to make a undue pressure on the Bank and with mala-fide intention and to create the hindrance for further action by the Bank Under Sec. 13(4) of the Act, on 22.12.2011 the petitioners filed the present writ petition on totally fale and frivolous grounds and succeeded interim measure upto 9.1.2012 from the Hon’ble Court. 14. That as far as the mortgaged property in the name of Smt. Ramesh Devi W/o Shri Vijay Singh bearing Khasra No. 312/5, Area 0.444 Hec. Situated at village Meghawala Tehsil Jaspur Distt. U.S.Nagar is concemed it is neither an agriculture land nor use an agriculture. The correct facts are that in the year 2008 the said Smt. Ramesh Devi applied before the competent authority under section 143 of the UPZA & Land Reforms Act, 1950 for declaration. Situated at village Meghawala Tehsil Jaspur Distt. U.S.Nagar is concemed it is neither an agriculture land nor use an agriculture. The correct facts are that in the year 2008 the said Smt. Ramesh Devi applied before the competent authority under section 143 of the UPZA & Land Reforms Act, 1950 for declaration. The said case was registered as case No. 22/31 of 2007-2008 Smt. Ramesh Devi Vs. State of Uttarakhand and vide order dt 21.6.2008 after adopting the legal formalities and procedure he gave a declaration that the said land is neither an agriculture land nor is use agriculture. A true photo copy of the order dt. 21.6.2008 is being filed herewith and marked as Annexure No.1 to this affidavit. 5. On behalf of the petitioner; rejoinder affidavit has been filed, wherein the averments made by the petitioner in the memo of writ petition have been reiterated. Along with the rejoinder affidavit, the petitioner has annexed ropy of the order dated 18-2-2012 passed under Section 144 of the U.P. Z.A and L.R. Act. (Annexure RA-1) by the Assistant Collector 1st ClasslUp Ziladhikari Kashipur/Jaspur, district Udham Singh Nagar, whereby the land of Plot No. 312/5, area 0.444 hectare, which was declared non-agriculturalland by order dated 21-6-2008, has been declared agricultural land. 6. I have heard learned counsel for the parties and have perused the entire material available on record including the memo of writ petition, the short counter affidavit and the rejoinder affidavit, filed by the parties along with its annexures. 7. Learned counsel for the petitioner has vehemently submitted that the land in question being an agricultural land, the provisions of the SARFAESI Act 2002 are not applicable, therefore, the notice issued under Section 13(2) of the said Act is illegal. 8. The first question to be considered in this writ petition is whether the land in question was an agricultural land on the date when the impugned notice dated 9-11-2011 was given by the respondent-Bank or not. 9. In the case at hand, the positive case of the petitioner is thatthe land in question, i.e. land of Plot No. 312/5, area 0.444 hectare of village Meghawala, Tehsil Jaspur, district Udham Singh Nagar is an agricultural land and the same cannot be treated as non-agricultural land. 9. In the case at hand, the positive case of the petitioner is thatthe land in question, i.e. land of Plot No. 312/5, area 0.444 hectare of village Meghawala, Tehsil Jaspur, district Udham Singh Nagar is an agricultural land and the same cannot be treated as non-agricultural land. On the other hand, the case of the respondent-Bank is that the petitioner had taken recourse to Section 143 of the U. P. Zamindari Abolition and Land Reforms Act, 1950 (for short the Act) and got the land in dispute declared as non-agricultural land. The respondent-Bank has annexed copy of the order passed in Revenue Suit No. 22/31 of 2007-2008, which was registered on the application dated 23-4-2008 moved under Section 143 of the Act for declaration. 10. From a bare perusal of the order dated 21-6-2008 passed by the Assistant Collector 1st Class concerned, it is evident that Smt. Ramesh Devi wife of the petitioner Vijay Singh had moved an application on 23.4.2008 under Section 143 of the Act to declare the land in dispute as non-agricultural. The leamedAssistant Collector directed the Tehsildar Jaspurto inquire and report The applicant got herself examined in oral evidence and stated that over the land in question, there is no agriculral activity going on. The Revenue Inspector Lalita Prasad in his testimony has deposed that there is no agricultural activity over the land in dispute and the applicant had placed building material for construction of seed plant on the spot and that the work of digging of plinth has been going on. It was mentioned that the nature of land has changed and Tehsildar Jaspur has reoommended the matter for declaration. Ultimately by order dated 21.6.2008, the land in question was declared to be non-agricultural land under Section 143 of the Act. 11. It is the own case of the petitioner that in the year 2010, the petitioner no. 1 approached the respondent Bank for financial assistance. The petitioner was sanctioned loan under the cash credit limit as well as a term loan as mentioned in the memo of writ petition. The petitioner has mortgaged the land in the name of Smt Ramesh Devi bearing Khasra No. 312/5, area 0.444 hectare situated at village Meghawala, Tehsil Jaspur, district Udham Singh Nagar, which has been mentioned in the Schedule C Part II in the notice under Section 13(2) of SARFAESI Act. 2002. The petitioner has mortgaged the land in the name of Smt Ramesh Devi bearing Khasra No. 312/5, area 0.444 hectare situated at village Meghawala, Tehsil Jaspur, district Udham Singh Nagar, which has been mentioned in the Schedule C Part II in the notice under Section 13(2) of SARFAESI Act. 2002. This much is evident from a bare perusal of the notice under Section 13(2) of the said Act that the petitioners have created mortgage by way of deposit of title deed of the land mentioned in the Schedule C with the respondent Bank creating security interest in favour of the respondent Bank. 12. In the case at hand, the impugned notice has been issued on 9.11.2011 to the petitioner and it was informed therein that your Cash Credit and Term Loan accounts have been classified as Non Performing Assets (NPS) w.e.f. 28.10.2011 on account of non servicing of interest/non-routing of transaction and request was made to liquidate the liability towards Bank. 13. On the other hand, it is the own case of the petitioner that by order dated 18-2-2011, the land in question was declared as agricultural land under Section 144 of the Act From a bare perusal of the order passed in Revenue Suit No. 22/11 of 2011-12, Smt Ramesh Devi Vs. State of Uttarakhand, it is obvious that the proceedings were initiated on the application dated 12-12-2011 moved by the applicant Ramesh Devi. In the application itself, the applicant had mentioned that the land in question was declared as non-agriculturalland by order dated 21-6-2008. 14. From the above discussion, it is evident that on the date of taking loan from the respondent-Bank as well as on the date of passing of the impugned order, the land in question, i.e. land of Khasra No. 312/5, area 0.444 hectare of village Meghawala, Tehsil Jaspur standing in the name of the wife of the petitioner was a non-agricultural land, as would appear from a perusal of the order dated 21-6-2008 passed by the Assistant Collector 1st Class/Up Ziladhikari, Kashipur/Jaspur. 15. This Court, while considering the question as to the applicability of the SARFAESI Act 2002, in the case of Hari Sagar Educational Trust Vs. Uttaranchal Gramin Bank [AIR 2012 Uttarakhand, Page 8] has observed in paragraph no. 9 as under:- “9. 15. This Court, while considering the question as to the applicability of the SARFAESI Act 2002, in the case of Hari Sagar Educational Trust Vs. Uttaranchal Gramin Bank [AIR 2012 Uttarakhand, Page 8] has observed in paragraph no. 9 as under:- “9. In the light of the aforesaid, the Court finds that a plea has been made that the Act is not applicable and no recovery could be made from the agricultural land of the petitioner. If the Act is not applicable, the notices issued under the said Act would be patently illegal and consequently, a writ would lie and a prerogative writ could be issued. The plea of alternative remedy will not be available in view of the fact that the petitioner should not be relegated to the mode of availing the altemative remedy under Section 17 of the Act when the basic plea is that the Act was not applicable. In the light of the aforesaid, the Court is of the opinion that the writ petition is maintainable to the extent as to whether the Act is applicable in the case in hand.” 16. The next question which arises for consideration of this Court is whether the accounts of the petitioner company are Non Performing Assets can be adjudicated by a writ court or not. 17. Learned counsel for the respondent Bank has contended that the question whether the accounts of the petitioner company are Non Performing Assets or not is not a subject matter of adjudication by a writ court. In support of his contention, the learned counsel has placed reliance upon a Division Bench of this Court Munshi Ram Gupta Vs. State Bank of India passed in Special Appeal No. 199 of 2011 decided on 6-9-2011 [AIR 2012 Uttarakhand, Page 4]. In that case, the Division Bench of this Court had an occasion to consider the provisions of Section 13 of SARFAESI Act 2002 and the question whether account of borrower had become non-performing asset or not. The Division Bench in paragraph 5 of the judgment inter alia has held as under.- “5. In that case, the Division Bench of this Court had an occasion to consider the provisions of Section 13 of SARFAESI Act 2002 and the question whether account of borrower had become non-performing asset or not. The Division Bench in paragraph 5 of the judgment inter alia has held as under.- “5. .....In the circumstances, whether the stand taken by a secured creditor within the meaning of the said Act that the credit facility granted by it to a borrower has become a non- performing asset or not, can only be adjudicated by the Tribunal when steps have been taken on such holding out by the secured creditor against its bon-ower by taking recourse to sub- Section (4) of Section 13 of the Act. In other words, these disputes, whether the credit facility has or has not become a non-performing asset, can not be gone in in the writ jurisdiction.” 18. Learned counsel for the petitioner on the other hand has relied upon a Division Bench of the Allahabad High Court in the case of M/s. Vijay Laghu Udyog and others Vs. Punjab National Bank and others [2004, All. L.J., 3737], wherein the Division Bench of the Allahabad High Court has held that notice under Section 13(2) of SARFAESI Act, 2002 issued by the secured creditor can be challenged in writ jurisdiction. In paragraph no. 39, theAliahabad High Court has observed as under.- “39. We, therefore, find that the petition under Art. 226 Constitution of India can be entertained in the matter of action being taken under the Act but ordinarily and normally the High Court would refrain from interfering with the action proposed to be taken under the Act unless of course it pricks the conscience of the Court and if it is found that the action is wholly arbitrary, without jurisdiction or smacks of mala fides which would result in gross miscarriage of justice.” 19. The ratio of the judgment cannot be disputed. In the case at hand, this Court is of the definite view that the question whether the accounts of the petitioners are non-performing assets is involved for adjudication, therefore, in view of the Division Bench judgment of this Court in the case of Munshi Ram Gupta Vs. State Bank of India (supra), the controversy can be resolved ~y the Debt Recovery Tribunal and not by the writ court. 20. State Bank of India (supra), the controversy can be resolved ~y the Debt Recovery Tribunal and not by the writ court. 20. So tar as the question whether the SARFAESI Act 2002 is applicable or not, as has been discussed in the former part of the judgment, on the date when the loan was given by the bank, the land in question was declared non-agricultural land and that the effect of declaration under Section 143 of the Act would be that the provisions of Chapter VIII of the Act shall cease to apply in view of the provision of sub-section (2) of Section 143 of the Act, which reads as under.- “(2) Upon the grant of the declaration mentioned in sub-section (1) the provisions of this Chapter (other than this section) shall cease to apply to the bhumidhar with transferable rights with respect to such land and he shall thereupon be governed in the matter of devolution of the land by personal law to which he is subject.” 22. It is pertinent to mention here that the wife of the petitioner no.2 Smt. Ramesh Devi got declared the land again as agricultural land under Section 144 of the Act, after initiation of the proceedings for recovery and issuance of notice under Section 13(2) of the SARFAESI Act 2002 and after rejection of representation, therefore, this Court is of the view that the proceeding for recovery under the SARFAESI Act 2002 could be initiated against the petitioner. 23. For the reasons and discussion made hereinabove, the writ petition being devoid of merit is liable to be dismissed outright. 24. The writ petition is dismissed. Costs easy. 25. Interim order dated 23.12.2011 is vacated.