To invoke Section 31(i) of the SARFAESI Act for protecting agricultural land, the burden of proof lies with the borrower to establish the land's agricultural status at the time of mortgage.

J U D G M E N T

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The 1st petitioner availed agricultural loan facility from the South Indian Bank Limited for multiple crop cultivation. The land was offered as a collateral security. As the petitioners were servicing the loan account properly, the 2nd respondent enhanced the loan facility from ₹25 lalkhs to ₹75 lakhs.

2. In the year 2017, the petitioners suffered suffered crop failure. The year was followed by floods and thereafter Covid-19 pandemic. The petitioners could not maintain the loan account properly. Consequently, the loan account was classified as NPA. The respondents initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 . The respondents sought to take over possession of the agricultural land of the petitioners.

3. The petitioners state that the respondents are prohibited from taking possession of and selling their agricultural land for enforcing security interest, in view of Section 31 (i) of the Act, 2002. The petitioners therefore challenge Ext.P1 Section 13(2) notice, Ext.P2 communication, Ext.P3 demand and Ext.P4 possession notice.

4. The counsel for the petitioners urged that the loan facility sanctioned to the petitioners is an agricultural loan for doing cultivation in the secured property. In the light of Section 31 (i), the respondents are legally debarred from taking over possession of the agricultural land. The counsel for the petitioners pointed out that the 1st petitioner was maintaining the loan account properly. It was crop failure, floods and outbreak of Covid-19 pandemic which made the loan account NPA. The respondents therefore ought to have restructured the loan. The classification of the loan account as NPA is in violation of the provisions contained in the Master Circular of the Reserve Bank of India. Exts.P1 to P4 are therefore liable to be quashed, contended the counsel for the petitioners.

5. The 1st respondent resisted the writ petition filing counter affidavit. On behalf of the respondents, it is stated that the 1st petitioner was granted an overdraft facility of ₹20 lakhs by the respondent-Bank for meeting expenses for slaughter tapping. The limit was later enhanced to ₹75 lakhs. Petitioners 1 and 2 were granted Kissan Credit Card facility of ₹20 lakhs. Petitions 1 to 3 were granted a Mobi loan of ₹68,000/- for purchase of motor bike.

6. When the natural calamities occurred, the petitioners' account was eligible for restructuring as per SLBC guidelines. However, the petitioners submitted a declaration that they had not incurred any loss in their agriculture and that they are not interested in restructuring. No grounds are made out warranting interference by this Court under Article 226 of the Constitution of India, contended the Standing Counsel.

7. I have heard the learned counsel for the petitioners and the learned Standing Counsel representing the respondents.

8. The prime ground urged by the petitioners is that the secured asset is an agricultural land and therefore in view of Section 31 (i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 , the land cannot be proceeded against. It is true that some of the loans sanctioned to the 1st petitioner were related to agricultural activities. The other loans include a vehicle loan also.

9. For the petitioners to claim exemption under Section 31 (i), the petitioners have to establish that the land was an agricultural land at the time of mortgaging. The documents produced by the petitioners would not in any manner indicate that the land was agricultural land at the time of mortgaging. Therefore, the petitioners cannot rely on (i) to escape from enforcement of security interest by the respondents.

10. Going through the pleadings in the writ petition, I find that the Bank has given notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Secur