IMPORTANT POINT
Possession notice and auction sale notice – Only in a case where secured property is actually put to use as agricultural land and solely on the basis of revenue records/Pattadar and once secured property is put as a security by way of mortgage and same was not treated as agricultural land, such properties cannot be said to be exempted from provisions of SARFAESI Act under Section 31(i) of SARFAESI Act.

JUDGMENT :

M.R. Shah, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 06.03.2020 passed by the High Court for the State of Telangana at Hyderabad in Writ Petition No.12081/2019 by which the High Court has allowed the said writ petition preferred by the debtor and has quashed and set aside the order passed by the Debts Recovery Tribunal – I (hereinafter referred to as “DRT-I”) in SA No.171/2016 as well as the Possession Notice dated 05.02.2016 and the Sale Notice dated 10.01.2017 issued by the Indian Bank (hereinafter referred to as “secured creditor”) and also the sale of Item No.8 property mentioned in the Sale Notice pursuant to the auction held, the auction purchaser as well as the secured creditor have preferred the present appeals.

2. The facts leading to the present appeals in nut-shell are as under:

2.1 That, the respondent No.1 herein – M/s. Raus Constructions Private Ltd. (hereinafter referred to as “Debtor”) availed financial assistance, credit facilities in the year 2012 from the Indian Bank i.e. the secured creditor. Due to defaults on the part of the borrowers in servicing the loan account, the same was classified as NPA. The secured creditor initiated the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) and issued the demand Notice to the borrowers including the mortgagors and the guarantors, calling upon them to pay the outstanding amount. As the amount of the Demand Notice was not paid, the secured creditor issued Notice to the borrowers/mortgagors/guarantors. That, the Possession Notice was issued with respect to Item Nos.1 to 8. The secured creditor on 05.02.2016 issued a consolidated Possession Notice detailing the possession of 12 items of properties and the dates on which the possession of the same was taken. The Possession Notice was published in newspapers. Thereafter, the secured properties including the property Item No.8 (property in question) was put to auction through e-auction notice dated 28.03.2016. That, the borrowers filed the writ petition before the High Court being aggrieved by the e-auction and sought stay of all further proceedings initiated by the secured creditor under the provisions of the SARFAESI Act and pursuant to the Possession Notice dated 05.02.2016, including e-auction Notice, till the disposal of SA No.171/2016 on the file of DRT-I, Hyderabad. That, the writ petition came to be dismissed by the High Court in view of the pendency of SA No.171/2016 before the DRT-I, Hyderabad. A fresh e-auction Notice was issued. That, the property Item No.8 was purchased by the auction purchaser (appellant herein) in Civil Appeal arising out of Special Leave Petition No.14695/2020 on 17.02.2017. The e-auction was conducted on 17.02.2017 in which the auction purchaser was declared the successful bidder. He was issued the Letter of Acceptance on 18.02.2017. The auction purchaser deposited 25% of the amount of sale consideration on 18.02.2017. The sale in favour of the auction purchaser came to be confirmed on 08.03.2017. On deposit of the entire/full sale consideration, the sale certificate came to be issued in favour of the auction purchaser on 23.03.2017.

2.2 By an order dated 16.05.2019, the DRT-I, Hyderabad dismissed SA No.171/2016 filed by the borrowers and confirmed the sale certificate issued in favour of the auction purchaser. At this stage it is required to be noted that before the DRT-I, it was the case on behalf of the borrowers that the property Item No.8 was the agricultural land and therefore, the same could not have been the subject matter of auction under the provisions of the SARFAESI Act. However, the DRT-I while dismissing the aforesaid SA No.171/2016 did not accept the same by observing that apart from the revenue records, the borrowers did not file any evidence to prove that the agricultural activity was going on in the land mortg