The classification of land as agricultural or non-agricultural, once legally converted, is binding and cannot be contested in loan recovery proceedings, particularly when the borrower has represented the land's status to secure financing.

JUDGMENT

1. Petitioner, a private limited company incorporated under the provisions of the erstwhile Companies Act, 1956, is knocking at the doors of Writ Court for calling in question the loan repayment demand notice dtd. 4/5/2023 issued u/s 13(2) at Annexure-K, and the reply dtd. 20/6/2023 issued u/s 13(3) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 at Annexure-N. Both these communications have been issued by the respondent- financial institution, for coercing the loan recovery which is secured by the lands in question.

2. Learned Sr. Advocate appearing for the petitioner argues that the subject lands which are furnished by way of security for the repayment being agricultural in nature, the same are exempt from proceeded against in view of Sec. 31(i) of the Act. An application is also moved seeking leave of the court to amend the petition by adding two more grounds namely 12A and 17.5. The new ground 12A is an elaboration as to the subject land continuing to be agricultural despite there being conversion orders at Annexures-P, Q, R, S, T & U. The other ground at paragraph 17.5 is as to violation of principles of natural justice. Learned counsel for the petitioner presses into service the Apex Court decision in STATE OF KARNATAKA vs. SHANKARA TEXTILES MILLS LIMITED, (1995) 1 SCC 295, in support of his submission.

3. Having heard the learned counsel for the petitioner and having perused the Petition Papers, this court declines indulgence in the matter for the following reasons:

(a) There is absolutely no dispute about the subject borrowing of money in crores of rupees and the same remaining unrepaid; there is also no dispute as to the land in question having been mortgaged and the repayment of debt in question is thereby secured. Admittedly, all these lands have been converted to non- agricultural user by the orders of jurisdictional Deputy Commissioner made under the provisions of Sec.95 of the Karnataka Land Revenue Act, 1964. These Conversion Orders are dtd. 16/4/1992, 29/4/1992 (2 nos.), 15/5/2004 (2 nos.) and 19/7/2004; copies thereof are produced as Annexures-P to U to the Amendment Application, which is taken along with the main matter itself. It hardly needs to be stated that on the basis of these Conversion Orders, the subject lands cease to be agricultural in nature; it is not disputed by the learned Sr. Counsel appearing for the petitioner, amongst other, these Conversion Orders have been handed to the respondent- financial institution while mortgaging the property for securing repayment of the loan. It is a matter of common knowledge that the availability of security for repayment figures as a dominant factor whilst processing the loan applications. In fact, there are RBI Guidelines which to an extent shun lending sans securities. Thus but for the Conversion Orders, the subject lands would not have been taken by way of security for the repayment of loan.

(b) The vehement submission of learned Sr. Counsel for the petitioner that despite the Conversion Orders, lands have not lost their agricultural character since the conditions incorporated therein have not been complied with, is too farfetched an argument, and reasons for saying it are apparent: Firstly, it is not the case of petitioner that any inkling was given to the financial institution that these lands could still be agricultural, the subject Conversion Orders notwithstanding. Secondly, it is true that ordinarily such orders are conditioned; however, the object of incorporating the conditions is to bind the beneficiaries of such orders with some responsibility to put the land for to the purpose for which conversion is obtained; even if there is non-compliance of these conditions, the land does not get reconverted to agricultural character, on its own. Sub-sec. (2) of Sec.96 of the 1964 Act, supports this view. The same reads as under:

"(2) If any land assessed or held for the purpose of agricultur