Point of Law: Coffee plantation - 'agricultural land' -Measures initiated by the respondent banks in relation to the coffee estates in these appeals are not hit by Section 31(i) of the SARFAESI Act, as the said Act is applicable to land on which plantation crops are grown, including coffee plantation

JUDGMENT :

NAGARATHNA, J.

Though these appeals were listed for preliminary hearing, with the consent of learned counsel on both sides, they were heard finally.

2. Writ Appeal No.538 of 2020 arises from Writ Petition No.12461 of 2020 (GM-RES) disposed of on 13.11.2020, while Writ Appeal No.545 of 2020 arises from Writ Petition No.13932 of 2015 (GM-RES) disposed of on 14.10.2020. In both the writ petitions, respective learned Single Judges have declined to entertain the writ petitions on the ground of availability of an alternative remedy of appeal available under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) (‘SARFAESI Act’ for the sake of convenience). Hence, these appeals.

3. Since common questions of law and facts arise in these appeals, they have been connected together, heard and disposed of by this common judgment.

4. The quintessential question that arises for consideration in these appeals is, whether, coffee plantation is agricultural land within the meaning of Section 31(i) of the SARFAESI Act and therefore, the said Act does not apply to coffee plantation.

Brief facts of the case in Writ Appeal No.538 of 2020:

5. In this case, petitioner No.1 is the partner in petitioner Nos.2 and 3 partnership firms. Petitioner No.1 is the co-owner of Watekhan Estate. The petitioners are owners of 371 acres of coffee plantation / estate in Hirekolale, Yelagudige and Aldur villages of Chikkamagalur Taluk. Respondent/Bank (formerly, Corporation Bank) extended various credit facilities to the writ petitioners in the nature of agricultural cash credit loans, agricultural term loans and mortgage loans in relation to the coffee plantation.

6. There are three schedules, viz., Schedule ‘A’, Schedule ‘B’ and Schedule ‘C’ comprising of 212.04 acres, 136 acres and 23.17 acres respectively, situated at Hirekolale village, Kasaba Hobli, Chikkamagalur Taluk and District. The nature of loan in this case is an Agricultural Term Loan of Rs.490.00 lakhs and the purpose being to pay off the share of a retiring partner so as to acquire the absolute title over Yellikudige estate measuring 154.17 acres. The loan amount along with margin money of Rs.210.00 lakhs was released to the retiring partner Sri.K.R.Sethna of Yellikudige estate. There was a Coffee Crop Hypothecation Loan for 1998-99 season of Rs.10.00 lakhs under Planter’s Credit Card Scheme. That was to meet Coffee crop raising/estate maintenance expenses of 1998-99 season. The repayment was to be by the sale proceeds of 1998-99 season’s coffee crop estimated at 72 tonnes valued at Rs.54.00 lakhs. The equitable mortgage was of Yellikudige estate admeasuring 154 acres 17 guntas along with hypothecation of plant and machinery valued at Rs.700.00 lakhs. There was a collateral security by way of equitable mortgage of Watekhan Coffee Estate admeasuring 215.16 acres valued at Rs.662.95 lakhs. The personal guarantees of continuing partners in their individual capacity were also given. So also, coffee crop loans of the year 1997-98 in the names of the appellants herein were to be closed (as per Annexure ‘A’). There were loans taken in the season 2000-01 by hypothecation of coffee crops and mortgage of the Watekhan estate and Yellikudige estate (Annexure ‘B’).

7. Annexure ‘C’ is the sanction of the Coffee Crop Hypothecation Loan during the season 2004-05 for maintenance of Watekhan Estate. Thus, the loans were sanctioned under the Corporate Kisan Cash Credit Scheme (KCCS). The Record of Rights (RTCs) in respect of the lands in Schedule ‘A’, Schedule ‘B’ and Schedule ‘C’ are as per Annexures ‘D’ to ‘D16’, ‘E’ to ‘E20’ and ‘F’ to ‘F3’ respectively. The aforesaid documents would clearly indicate that the Schedules ‘A’, ‘B’ and ‘C’ lands were being utilized for the purpose of Coffee plantation as on the dates when the respective loans were sanctioned. Further, the nature of the loan was also for the purpose of improvement of t