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TMI Blog2006 (2) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties regarding the settlement of the outstanding loan amount did not fructify, the respondent-bank initiated action under the provisions of section 13(2) of the SARFAESI Act and issued the impugned notice. Aggrieved, the petitioner has filed the present writ petition. 3. Learned senior counsel for the petitioner submitted that the petitioner availed of the credit facility for poultry rearing. The petitioner has offered certain lands, which are agricultural lands, as collateral security. Learned counsel submitted that purpose of availing of the credit facility was for establishing a poultry farm, which is ancillary and supplementary to agricultural operations, and further the secured assets are agricultural lands, the nature of loan offered by the respondent-bank was nothing but "agricultural loan". Learned senior counsel, relying on section 31( i ) of the SARFAESI Act, submitted that since agricultural lands are exempted from the purview of the provisions of the SARFAESI Act, the respondent-bank was not justified in passing the impugned order. 4. On the other hand, learned counsel appearing for the respondent-bank submitted that since the challenge is to the notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner s loan account was treated as non-performing asset as on (31-3-2005) and the second respondent issued the impugned notice under section 13(2) of the SARFAESI Act calling upon the petitioner to pay in full and discharge the liabilities to the bank amounting to Rs. 46,26,893 failing which, the petitioner was informed, that action would be taken under section 13(4) of the said Act. 8. The main argument of learned counsel for the petitioner is that the secured asset is "agricultural lands", which, as per section 31( i ) of the Act, is exempt from the purview of the provisions of the SARFAESI Act and, therefore, the respondent-bank was not justified in issuing the impugned notice. 9. Placing heavy reliance on the Full Bench judgment of the Andhra Pradesh High Court in Officer-in-charge (Court of Wards) v. CWT [1969] 72 ITR 552 ; learned senior counsel vociferously contended that the term "agricultural land" does not necessarily mean the land wherein the agricultural operations such as raising of crops, etc., are actually being carried on; a land which is left barren but which is capable of being cultivated can also be agricultural land unless the said land is actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Statement of Objects and Reasons for enacting the SARFAESI Act, it is evident that the said Act was enacted to enable the banks and other financial institutions to realise the long-term assets, manage problems of liquidity, asset liability mis-matches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction. The object of the Act is to improve the recovery process by vesting the powers with the banks and financial institution powers to take possession of secured assets and sell them in case the borrowers commit default in repayment of the loan. If that is the subject of the enactment and the object of the statute, I am of the view that, in the facts and circumstances of the case, the term "agricultural land" cannot be given such a liberal and wide construction, as suggested by the learned senior counsel for the petitioner. Therefore, considering the facts and circumstances of the present case in the light of the provisions of the SARFAESI Act, the term "agricultural land" cannot be given the liberal and wide interpretation. 12. Secondly, the questions whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitions challenging notice under section 13(2) of the Securitisation Act are dismissed on the ground that the writ petitions are premature, and the petitioners have an alternative remedy of raising all the points which they are raising in these writ petitions in their reply to the notice under section 13(2) of the Securitisation Act. As already stated above, the secured creditor must decide the objection of the borrower to the notice under section 13(2) of the Securitisation Act by a reasoned order, and if the objection is rejected the rejection order must be communicated to the borrower." (p. 639) 14. The aforesaid judgment of the Division Bench of this court applies on all fours to the facts and circumstances of the present case. 15. In Mardia Chemicals Ltd. s case ( supra ), on the question of borrower approaching the courts at the interlocutory stage of the proceedings under the SARFAESI Act, the Supreme Court observed as follows : "It is also true that till the stage of making of the demand and notice under section 13(2) of the Act, no hearing can be claimed for by the borrower. But looking to the stringent nature of measures to be taken without interventio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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