Point of Law : Section 17 of SARFAESI Act reads application against measures to recover secured debts.

JUDGMENT :

The petitioner challenges the proceedings initiated against her by the respondent, the Federal Bank Ltd., Sultan Bathery branch, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFEASI Act).

2. The relevant facts are extracted below:

2.1. M/s. Thara Coffee Pvt. Ltd., a partnership firm, availed a credit facility from the respondent-Bank. The petitioner stood as guarantor for the said credit facility availed by the firm. An extent of 3 acres of land in Resurvey No.549/2 along with a processing unit owned by the petitioner and another extent of 5.90 cents of land with a residential building in Resurvey No.214/15 and a further extent of 36 cents of land with a residential building in Resurvey No.240/4 of Sultan Bathery village were mortgaged for availing the credit facility.

2.2. The partnership firm availed a credit facility of Rs.1,95,40,000/- from the bank.

2.3. The borrowers defaulted in repaying the loan availed. On 14.06.2022, the bank classified the account of the borrowers as Non-Performing Asset (NPA). The bank initiated the proceedings under the SARFAESI Act. A demand notice under Section 13(2) of the SARFAESI Act was served on the petitioner on 13.7.2022. The bank obtained symbolic possession of the properties as per proceedings dated 11.11.2022. After that, the bank filed a petition before the Chief Judicial Magistrate Court, Kalpetta, seeking assistance for taking physical possession of the properties. The Court appointed an Advocate Commissioner who issued notice for taking possession of the properties. The borrowers challenged the same in a proceeding in S.A No.137/23 before the Debts Recovery Tribunal, Ernakulam. The bank proceeded to sell the mortgaged properties. The entire proceedings initiated under the SARFAESI Act are under challenge in this writ petition.

3. The challenge of the petitioner is essentially on the ground that the properties sought to be auctioned are agricultural lands and, therefore, the same is protected under Section 31 (i) of the SARFAESI Act.

4. Heard Sri.Madhu Radhakrishnan, the learned counsel appearing for the petitioner and Sri.Mohan Jacob George, the learned Standing Counsel for the respondent-bank.

5. The learned counsel for the petitioner contended that the materials placed before this Court would reveal that the properties sought to be sold are agricultural lands as defined in Section 31 (i) of the SARFAESI Act.

6. The learned Standing Counsel for the bank submitted that a Writ Petition under Article 226 of the Constitution of India is not maintainable to challenge the present proceedings and that no writ is maintainable against the bank, a private scheduled bank.

7. The foundation of the challenge raised by the petitioner in the writ petition is the pleading that the properties in question are agricultural lands. This plea is resisted by the Bank, contending that the security interest was created in respect of several parcels of land meant to be a single unit and the parties did not treat any of them as agricultural land at the time of mortgage.

8. These are questions of facts to be adjudicated in a proceeding before the statutory Tribunal.

9. The foremost challenge of the bank is that the writ petition is not maintainable. This challenge is based on the rule of alternative remedy.

10. The SARFAESI Act was enacted in 2002 to overcome the poor working of the Recovery of Debts Due to Banks and Financial Institutions Act 1993. The intention of the Statute is to give an impetus to the financial sector, which remained at a slow pace in the then-existing legal framework relating to commercial transactions, and to meet with the change in the commercial practices and financial sector in force. The slow pace of recovery of defaulting loans and mounting levels of Non-Performing Assets of the bank and financial institutions resulting from the inadequate legal framework, was sought to be revamped on the recommendation of Narasimh