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TMI Blog2016 (5) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... ND MR. M.VENUGOPAL, JJ. COMMON ORDER SATISH K. AGNIHOTRI, J. For The Petitioner : Dr. T. Ramasamy For The Respondent : Mr. F.B. Benjamin George, Mr. S.R. Rajagopal for Mr. G. Sai Baba Assailing the order dated 11 September 2014 rendered by the Debts Recovery Appellate Tribunal, Chennai, in R.A. (SA) No.43 of 2014, the auction purchaser of the secured asset has preferred the writ petition being W.P.No.26633 of 2014 and the secured creditor, viz., Indian Bank, has preferred the writ petition being W.P. No.32208 of 2014. Since the order under assail in both these writ petitions are one and the same, both the writ petitions are considered and decided by this common order. 2.1 The facts in a nutshell, as projected by the petitioner bank are that N.K. Arumugham (now deceased), V. Sathish Raj and R. Nandagopal, Partners of Yelagiri Dairy Farm, availed a term loan of ₹ 17 lakhs in the year 1989 to set up a dairy farm in Peddakallupalli Village, Vaniyambadi, on mortgaging the land admeasuring 6.10 acres in S. No.203/2,3,4,5 and 202/1A in the said village. The property was mortgaged through the attorney holder viz., N.K. Arumugham, who was appointed as the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e The Schedule of properties in the OA shall form part of this order. Besides, a direction was given to prepare the Recovery Certificate. 2.2 Accordingly, Recovery Certificate for a sum of ₹ 74,31,233.14 was issued on 10 February 2011. Assailing the order dated 11 June 2010 passed by the Debts Recovery Tribunal-III in TA No.93 of 2007, the partnership firm, viz., Yelagiri Dairy Farm, N.K. Arumugham, his wife Santha and Pappi Reddiar, the first respondent herein, preferred an appeal before the Debts Recovery Appellate Tribunal in R.A. No.120 of 2011, which is still pending consideration. 2.3 The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (for brevity the SARFAESI Act ), came into force with effect from 21 June 2002. The petitioner bank issued a fresh demand notice under Section 13(2) of the SARFAESI Act on 02 August 2011 demanding a sum of ₹ 85,41,662/- as stated to be outstanding on 31 July 2011. N.K. Arumugham, Partner of the firm-cum-Power of Attorney holder of the first respondent herein, objected to issuance of notice vide letter dated 27 September 2011, which was rejected by the petitioner ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aser. 3 The main plank of contention of the learned counsel for the petitioner bank is that the secured asset is not an agricultural land, inasmuch as, it is a dry land, which is cultivable only occasionally and it is not a wet land as contended by the first respondent-mortgagor and no document is also produced by the first respondent/mortgagor to fortify his stand that the secured asset is an agricultural land. Even if the secured asset is classified in the revenue records as an agricultural land, non-conversion of the same into non-agricultural land does not make it an agricultural one. In support of the said contention, the learned counsel relies on the judgment of the Supreme Court in Sarifabibi Mohmed Ibrahim (Smt.) and others vs. Commissioner of Income Tax, Gujarat 1993 Supp (4) SCC 707. 4 Referring to and relying on Clause 2(m) of the Statement of Objects and Reasons of the SARFAESI Act, he would submit that the rationale behind Section 31(i), ibid, is only to exempt security interest in the agricultural land and hence, the said provision cannot be given a meaning to contend that the nature of the land at the time of creation of security interest is relevant and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2014 supports the contentions advanced by the learned counsel for the Bank. 9. Per contra, Mr.S.R.Rajagopal, learned counsel appearing for the first respondent Mr.K.Pappireddiyar would contend that incontrovertibly, the land was an agricultural land at the time of creation of security interest. The change of usage subsequently would not change the classification and nature of the land, which was at the time of its mortgage. The learned counsel would further contend that the aim and object of the SARFAESI Act is to recover the defaulted amount expeditiously by way of enforcement of security interest as contemplated under Section 13, ibid. In the event, the provisions of the SARFAESI Act are not applicable in case of agricultural land, the Bank is not remediless. Though the bank had already obtained Recovery Certificate in the proceedings initiated under the RDDBFI Act, but, the said Recovery Certificate may not form the basis to classify the loan as a Non Performing Asset for the purpose of invoking the provisions of the SARFAESI Act. It is pertinent to point out that against the order passed by the Debts Recovery Tribunal in T.A. No.93 of 2007 under the RDDBFI Act, an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im no right of hearing in these appeals. 14. The second question which needs adjudication is whether the land in question which was indisputably an agricultural land at the time of mortgage, i.e., creation of security interest, is exempted, even if subsequently the usage of the land has changed and the land was thereafter sold for residential purposes by creation of plots. 15. To appreciate the ambit and scope of the provisions of the SARFAESI Act, which does not apply in certain cases, including any security interest created in agricultural land, it is apt to extract the relevant provisions. 16. Security interest is defined under Section 2(zf) of the SARFAESI Act, which reads as under: (zf) security interest means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31. 17. Section 13 of the SARFAESI Act provides for enforcement of security interest. Section 13(1) of the SARFAESI Act reads as under:- 13. Enforcement of security interest. -(1) Notwithstanding anything contained in section 69 or section 69-A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proposed legislation to security interests in agricultural lands, loans not exceeding rupees one lakh and cases where eighty per cent of the loans are repaid by the borrower. Thus, it is manifest that the legislation, i.e., SARFAESI Act will have no application to the security interest created in agricultural land and loans not exceeding rupees one lakh and cases where eighty per cent of the loans are repaid by the borrower. 23. On a bare perusal of the object read with the relevant provisions, as aforestated, it is luculent that the nature of the property at the time of creation of security interest is the relevant consideration for the purpose of application of the provisions of the SARFAESI Act. 24. The word agriculture is defined under the Tamil Nadu Patta Pass Book Act, 1983, as under: 2. x x x x x x x x x (1) agriculture includes, -- (a) horticulture; (b) the raising of crops, grass or garden produce; (c) the use by a agriculturist of land held by him, or part thereof, for grazing; (d) the use of any land for the purpose of raising manure crops ; (e) dairy farming; (f) poultry farming; (g) livestock breeding; (h) growing of tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to residential property and hence, the provisions of Section 31(i) of the SARFAESI Act are not applicable. On the date of issuance of notices under Section 13(2) and 13(4) of the SARFAESI Act, the nature of the land is to be seen. The aforestated observation was made without examining the exemption clause in proper perspective and as such, the same is not applicable to the facts of this case. 29. Referring to the ratio laid down in Sankalchand Himatlal Sheth (supra), the learned counsel for the Bank places heavy reliance, seeking interpretation of the provisions of Section 31(i) of the SARFAESI Act to construe the word in such a manner, wherein, the basic purpose of recovery of money may be compatible. The Constitution Bench of the Supreme Court of India, in the said mater, in the context of interpreting the provision of Article 222 of the Constitution of India, observed as under: 54. Now, it is undoubtedly true that where the language of an enactment is plain and clear upon its face and by itself susceptible to only one meaning, then ordinarily that meaning would have to be given by the Court. In such a case the task of interpretation can hardly be said to arise. But lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by reading the statute as an organic whole, with each part throwing light on the other and bearing in mind the rule in Heydon case which requires four things to be discerned and considered in arriving at the real meaning: (1) what was the law before the Act was passed; (2) what was the mischief or defect for which the law had not provided; (3) what remedy Parliament has appointed; and (4) the reason of the remedy. There is also another rule of interpretation which is equally well settled and which seems to follow as a necessary corollary, namely, where the words, according to their literal meaning produce an inconsistency, or an absurdity or inconvenience so great as to convince the Court that the intention could not have been to use them in their ordinary signification , the Court would be justified in putting on them some other signification, which, though less proper, is one which the Court thinks the words will bear . Vide River Wear Commissioners v. Adamson. It is in the light of these principles of interpretation that I must proceed to consider what is the true meaning and effect of clause (1) of Article 222: whether it permits transfer of a Judge from one High Court to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omalous results which could not have been intended by the legislature. 'An intention to produce an unreasonable result', said Danckwerts, L.J., in Artemiou v. Procopiou (All ER p. 544 I), 'is not to be imputed to a statute if there is some other construction available'. Where to apply words literally would 'defeat the obvious intention of the legislation and produce a wholly unreasonable result', we must 'do some violence to the words' and so achieve that obvious intention and produce a rational construction. [Per Lord Reid in Luke v. IRC where at AC p. 577 he also observed (All ER p. 664 I): 'This is not a new problem, though our standard of drafting is such that it rarely emerges.'] 34. Further, it is well settled that words should not be read into an Act, unless it is absolutely necessary to do so and it is wrong to proceed by substituting some other word for a word which has clear, unambiguous meaning, as has been held by the Supreme Court in Great Offshore Limited vs. Iranian Offshore Engineering and Construction Company (2008) 14 SCC 240. The relevant paragraphs of the said judgment read as under:- 53. x x x x x x Where the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being agricultural land, was dismissed for default. The dismissal of a suit for default without any adjudication would not create res judicata, particularly, when the suit was filed in the Civil Court, the jurisdiction of which is barred under the provisions of the SARFAESI Act. The Supreme Court, in Bajranglal Shivchandrai Ruia v. Shashikant N. Ruia and Others (2004) 5 SCC 272, while examining the principle of res judicata, in a case, where the suit was dismissed for default, held as under:- 41. It is not possible to accept that the principle of res judicata will apply to bar the appeal. Section 11 CPC would bar the court from trying any suit or issue in which the matter directly and substantially in issue between the same parties or between the parties under whom they or any of them claim, litigating under the same title in a court competent to try such subsequent suit or suit in which such issue has been subsequently raised, has been heard and finally decided by such court . In the present case, Bajranglal and Shyamsunder were defendants in Original Suit No. 118 of 1973. The suit was dismissed and the plaintiff Satyavati carried an appeal to the Division Bench. In the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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