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2020 (5) TMI 750 - HC - Indian LawsInitiation of proccedings in respect of agriculture holding - Applicability of the SARFAESI Act, 2002 to agricultural land - order of Chief Metropolitan Magistrate or District Magistrate - remedy to approach the Debt Recovery Tribunal - HELD THAT - This Court in the case of Anil Karma and another Vs. State of M.P. and another 2019 (9) TMI 1734 - MADHYA PRADESH HIGH COURT has held 'It is true that there is a remedy available to the petitioners to approach the Debt Recovery Tribunal but the order passed by the District Magistrate is void abnitio in the light of Section 31(i) of SARFAESI Act, 2002 which categorically provides that the provisions of Act of 2002 are not applicable in respect of any security interest created in agricultural land and therefore, once the Act of 2002 was not applicable in respect of the agricultural land, the order passed by the District Magistrate is a nullity and there appears to be no justification in forcing the petitioners to file an appeal.' The impugned order dated 30.07.2019 is hereby quashed. However, the respondent No.2 / Bank shall be free to take recourse to other remedies available under the law for realisation of debts. The writ petition stands allowed.
Issues Involved:
1. Applicability of the SARFAESI Act, 2002 to agricultural land. 2. Validity of the District Magistrate's order under the SARFAESI Act. 3. Remedies available to the secured creditor for debt recovery. Issue-wise Detailed Analysis: 1. Applicability of the SARFAESI Act, 2002 to Agricultural Land: The central issue in this case is whether the provisions of the SARFAESI Act, 2002 apply to security interests created in agricultural land. The judgment highlights that Section 31(i) of the SARFAESI Act explicitly states that the provisions of the Act do not apply to "any security interest created in agricultural land." This exemption is intended to protect agriculturists from losing their source of livelihood and income, i.e., the agricultural land, under the drastic provisions of the Act. The High Court cited the Supreme Court's interpretation in ITC Limited Vs. Blue Coast Hotels Limited, where it was affirmed that agricultural land is exempt from the provisions of the SARFAESI Act, thereby preventing the enforcement of security interests created in such land without court intervention. 2. Validity of the District Magistrate's Order: The judgment examined the validity of the order passed by the District Magistrate under the SARFAESI Act. It was determined that the order was "void ab initio" because the Act does not apply to agricultural land. The High Court referred to its previous decision in Anil Karma and another Vs. State of M.P., which concluded that any order passed under the SARFAESI Act concerning agricultural land is a nullity. This is because the Act's provisions are not applicable to such land, rendering any enforcement action taken under the Act invalid. 3. Remedies Available to the Secured Creditor for Debt Recovery: While the SARFAESI Act does not apply to agricultural land, the judgment clarifies that the secured creditor, in this case, the bank, is not left without recourse. The Court emphasized that the bank is free to pursue other legal remedies available under the law to realize its debts. This implies that while the specific mechanism under the SARFAESI Act is unavailable, the creditor can explore alternative legal avenues for debt recovery, such as filing a suit in a civil court or pursuing arbitration if applicable. Conclusion: The High Court quashed the impugned order dated 30.07.2019, which was passed by the District Magistrate under the SARFAESI Act, due to its inapplicability to agricultural land. The writ petition was allowed, reinforcing the principle that agricultural land is protected from the provisions of the SARFAESI Act, while also ensuring that creditors retain the right to seek other legal remedies for debt recovery.
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