The main legal point established in the judgment is the importance of the nature of the land and its usage in determining whether the land qualifies as agricultural, and the need for a connection with agricultural purpose and user to apply the exemption provision under Section 31(i) of the SARFAESI Act.

K.K. Sasidharan, J.

1. This Writ Petition at the instance of the borrower, challenges the Recovery proceedings initiated by invoking the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act") principally on the ground that the secured asset is an agricultural land and as such, the Bank not legally correct to invoke the provisions of SARFAESI Act.

The facts:

2. The Petitioner is a registered firm engaged in agricultural operations. The Petitioner made an Application before the Indian Bank, Coimbatore requesting grant of term loan for agricultural operations. The Petitioner offered their agricultural property as collateral security. The Bank sanctioned the loan characterising it as "Agricultural Loan". The Petitioner after obtaining the loan amount, engaged in various kinds of agricultural operations.

3. Since the Petitioner was not in a position to pay the entire loan amount within the time granted by the Bank, Application was given for One Time Settlement. However, the proposal was not considered by the Bank. Subsequently, the Bank initiated proceedings under Section 13(2) of the SARFAESI Act. The notice under Section 13(2), was issued on 26th April, 2011. The Petitioner submitted a reply on 23rd June, 2011, wherein, it was stated that the secured property is an agricultural land and as such, the SARFAESI Act has no application. The Bank overruled the objections as per letter dated 24th June, 2011. Subsequently, the Bank issued possession notice on 16th August, 2011. The notice under Section 13(4) is challenged by the Petitioner mainly on the ground that the loan in question was sanctioned for agricultural purposes and the security was created in their agricultural land and as such it is not open to the Bank to invoke the provisions of SARFAESI Act.

Defense:

4. The Chief Manager of Indian Bank, Zonal Office, Coimbatore filed a detailed Counter disputing the claim made by the Petitioner. According to the Bank, credit facilities were not sanctioned for agricultural purposes. The property is also not used for agricultural purposes. The Petitioner has offered their land at Bhavani as security wherein the activities pertaining to commercial/cash crops viz., Coconut, Sugarcane, Turmeric, Mango, Coco, etc., are carried out. Moreover, buildings like farm house, servant quarters, vermiculture sheds, cattle sheds, etc., were constructed in the said property and as such, it cannot be said that the property is still an agricultural property. The Bank challenged the very maintainability of the Writ Petition on the ground of alternative remedy.

Submissions:

5. The learned Counsel for the Petitioner submitted that the loan in question was given for agricultural purposes. The agricultural property owned by the Petitioner was given as security. Section 31(i) of the SARFAESI Act excludes the provisions of SARFAESI Act with respect to agricultural land. Therefore, the Bank was not justified in issuing notice under Sections 13(2) & 13(4) of the SARFAESI Act. The learned Counsel by placing reliance on the judgment of a Division Bench of this Court in J. Malliga & others. versus Union Rank of India & another, 2010 (4) CTC 710, contended that this Court has already made the position clear that even “cardamom plantation” should be treated as an agricultural activity and as such Section 31(i), would come into play, in case security is created in such land. According to the learned Counsel, large number of documents produced by the Petitioner including the extract of patta and the field registers clearly indicates that the property is nothing but agricultural land. Since there is no dispute with respect to the nature of the land in question, the Respondent cannot be heard to say that the Writ Petition is not maintainable.

6. The learned Counsel for the Respondent-Bank, by placing reliance on the judgments of Supreme Court in C.W.T. versus