TMI Blog2021 (1) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would not be sound exercise of discretion to relegate the parties to the remedy by way of an appeal. This is particularly so, when a constitutional right, such as Article 300A of the Constitution is involved and the applicability of the SARFAESI Act to coffee estate in the context of whether it is an agricultural land or not would be an important question which has to be decided in the first instance before deciding on the legality of the action otherwise. The writ petitions filed under Article 226 of the Constitution in the instant case were maintainable. This is particularly so, having regard to the issue raised in these writ petitions as it involves interpretation of law. It also touches upon the applicability of the SARFAESI Act and the jurisdiction on the respondent/bank to take measures under Section 13 of the said Act vis- -vis the subject lands, which are coffee plantations. Hence, the question is answered in favour of the appellants. Whether coffee plantation is an agricultural land under Section 31(i) of the SARFAESI Act? - HELD THAT:- Under the Land Reforms Act the definition of 'agriculture' is an inclusive one which also includes the raising of cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n favour of a bank or a financial institution and also sale of any land or interest therein mortgaged to any financial institution for enforcement of the security for any loan or other facility for agricultural purposes. The coffee, being a plantation crop within the meaning of Section 2(A)(25) of the Land Reforms Act, is exempted from the provisions of Sections 79-A, 79-B and 80 as per Section 104 of the said Act. Also, under Section 81 of the said Act, the bar under Section 79-A, 79-B and 80 of the said Act would not apply in the case of mortgage of any land or interest therein to any financial institution as security for any loan or other facilities given by such financial institution for agricultural purposes. Hence, any land used for raising a plantation crop, if mortgaged to a financial institution, even if for non-agricultural purposes, could also be sold for enforcement of the said security. Having regard to Section 104 and Section 81 of the Land Reforms Act, lands on which the plantation crops are grown, being exempt from the restrictions pertaining to agricultural land mentioned in Section 79-A, 79-B and 80, in view of Section 104 and Section 81 of the said Act, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Latha S. Shetty and H.R. Katti, Advocates JUDGMENT Nataraj Rangaswamy, J. 1. Though these appeals were listed for preliminary hearing, with the consent of learned counsel on both sides, they were heard finally. 2. Writ Appeal No. 538 of 2020 arises from Writ Petition No. 12461 of 2020 (GM-RES) disposed of on 13.11.2020, while Writ Appeal No. 545 of 2020 arises from Writ Petition No. 13932 of 2015 (GM-RES) disposed of on 14.10.2020. In both the writ petitions, respective learned Single Judges have declined to entertain the writ petitions on the ground of availability of an alternative remedy of appeal available under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) ('SARFAESI Act' for the sake of convenience). Hence, these appeals. 3. Since common questions of law and facts arise in these appeals, they have been connected together, heard and disposed of by this common judgment. 4. The quintessential question that arises for consideration in these appeals is, whether, coffee plantation is agricultural land within the meaning of Section 31(i) of the SARFAESI Act and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of Watekhan Estate. Thus, the loans were sanctioned under the Corporate Kisan Cash Credit Scheme (KCCS). The Record of Rights (RTCs) in respect of the lands in Schedule 'A', Schedule 'B' and Schedule 'C' are as per Annexures 'D' to 'D16', 'E' to 'E20' and 'F' to 'F3' respectively. The aforesaid documents would clearly indicate that the Schedules 'A', 'B' and 'C' lands were being utilized for the purpose of Coffee plantation as on the dates when the respective loans were sanctioned. Further, the nature of the loan was also for the purpose of improvement of the Coffee plantation and also to pay off the share of the retiring partner of the firm engaged in cultivation of coffee. It is evident that the schedule lands were being used for coffee cultivation on the date of the sanction of the respective loans. 8. Since, the writ petitioners did not repay the debt, demand notice dated 28.05.2019 was issued under Section 13(2) of the SARFAESI Act calling upon petitioner No. 1 to pay a sum of Rs. 18,81,45,558/-. A reply or representation was made in response to the said notice on 06.07.2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em No. 1 of the petition schedule property. Petitioner No. 2 on behalf of petitioner No. 1 had signed a Letter of Undertaking regarding creation of mortgage of item No. 1 of the schedule property on 21.11.2008. In addition, petitioner No. 2 created charge on immovable property, i.e., coffee estate situated at Kolagave village of Chickamagalur District in favour of the respondent/Bank which is referred as item No. 2 of the schedule property. Item Nos. 1 and 2 of the schedule property were mortgaged for creating credit facilities aggregating to Rs. 210 crores under bank guarantee/letter of credit account/short term loan. Thus, equitable mortgage agreements were entered into in respect of schedule item Nos. 1 and 2 of the immovable properties. Two apartments which form part of item No. 1 of the Schedule property were auctioned under the SARFAESI Act, but when it came to dealing with item No. 2, it was contended by the appellants herein that the said land being coffee plantation and agricultural land, could not be proceeded against, under the provisions of the SARFAESI Act having regard to Section 31(i) of the said Act. 12. The petitioners in this case assailed notices dated 14.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation to the expression coffee plantation was sought by the appellants/writ petitioners in the writ petitions in order to determine whether the respondent/Banks had any jurisdiction to initiate action in respect of the coffee plantations. 15. It was further submitted that, learned Single Judges have failed to appreciate the said aspect of the matter which goes not only to the jurisdiction of the Banks to initiate any action or take any measure under the SARFAESI Act in respect of the coffee plantation which is agricultural land, but also failed to appreciate that the SARFAESI Act does not apply to any agricultural land. 16. In this context, learned senior counsel for the appellants relied upon certain judgments to contend that coffee plantation is just like any other plantation and the Madras High Court and Kerala High Court have held that the lands on which cardamom, coca, turmeric, cinnamon and rubber are grown, are plantation crops. The lands on which the said crops are grown are agricultural lands and therefore, on the basis of the said interpretation, in the instant case, the schedule lands on which coffee is grown must be declared to be agricultural land, in which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions, learned senior counsel for the appellants relied upon the following judgments on the issue of maintainability of the writ petitions despite Section 17 of SARFAESI Act: (i) Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others, [(1998) 8 SCC 1], (Whirlpool Corporation); (ii) State of H.P. and others vs. Gujarat Ambuja Cement Limited and Another, [(2005) 6 SCC 499], (Gujarat Ambuja Cement Limited); (iii) Embassy Property Developments Private Limited vs. State of Karnataka, (Embassy Property Developments). 21. It was contended that since, there is no decision till date which answers the question, as to, whether, the coffee plantation is an agricultural land within the meaning of Section 31(i) of the SARFAESI Act, it was necessary that the writ petitions were considered on merits. 22. In the above context, learned senior counsel drew our attention to the dictionary meaning of the expression 'agricultural land', the definition of 'agriculture' under the Karnataka Land Reforms Act, 1961 (Land Reforms Act, 1961); Karnataka Land Revenue Act, 1961 (Land Revenue Act, 1964) and other enactments where the expression 'agricultural land&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el contended that in the case of coffee plantation, which is the subject matter in Writ Appeal No. 538 of 2020, there is provision made for home stay and residence and therefore, the lands are no longer coffee estate as there is change of user and therefore, it has ceased to be a coffee plantation and would not come within the scope and ambit of the expression 'agricultural land'. Therefore, Section 31(i) of the SARFAESI Act would not apply in the instant case. Hence, the measures taken by the respondent/Banks are just and proper and the same would have to be taken to their logical conclusion and it would have been so but for the writ petitions filed by the petitioners in the instant case. 27. Learned senior counsel contended that there are huge outstanding dues payable to the respondent-Bank and instead of taking steps to repay the loan amount as well as the interest thereon by the writ petitioners/debtors to the Bank, appellants herein, are only procrastinating the matter by filing the writ petitions before this Court. That the learned Single Judge was right in dismissing the writ petitions on the premise that there was an alternative remedy available for the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper publication was made. That no prejudice has been caused to the appellants, as the appellants had, for the purpose of seeking the loan, mortgaged the coffee estate and in the absence of repayment, the Bank was justified in recovering the outstanding dues by taking recourse under the provisions of the SARFAESI Act, even in respect of the coffee plantation. The said land does not come within the purview of agricultural land under Section 31(i) of the SARFAESI Act. 32. He submitted that the learned Single Judge was right in upholding the plea of alternative remedy urged on behalf of the Bank and relegating the writ petitioners to the DRT. In this regard, learned counsel for the Banks drew our attention to the various definitions of the expression 'plantation' and contended that the coffee plantation does not come within the scope and ambit of agricultural land under Section 31(i) of the Act. He submitted that even if the land in question is a coffee plantation, action was rightly initiated against the same under Section 13(4) of the SARFAESI Act and symbolic possession has been taken on 01.04.2015. 33. Learned counsel for the respondent/Bank submitted that O.A. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari will lie in lieu of or as a substitute for an appeal, if it is shown to be in addition to such cause, a meritorious case. However, to be a bar, the other remedy must be adequate. Adequate remedy is one which is equally beneficial, speedy and sufficient and not merely one, which at sometime in the future, will bring about relief. Where the exigencies of the case are such that the ordinary methods of appeal or error may not prove adequate either in point of promptness or completeness, so that a partial or total failure of justice may result, then certiorari may issue. When an appeal does lie, however, in order to quash a proceeding by certiorari, it is necessary that there be lack of jurisdiction appearing on the face of the record. 38. In a case where there is the want of jurisdiction disclosed on the face of petition that is, when it clearly appears the authority had no jurisdiction with the subject-matter or of the parties, then writ may issue notwithstanding the availability of alternative remedy and as already noted, existence of alternative remedy to be a bar must be adequate. 39. On the general principles that ought to regulate the exercise of judicial discretion whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers of the legislature which enacted it and as such void, vide Bengal Immunity Co. vs. State of Bihar [AIR 1955 SC 661]. (c) Similarly, when a fundamental right is infringed, the bar for entertaining the writ petition and granting relief on the ground of alternative remedy would not apply, vide State of Bombay vs. United Motors Ltd. [AIR 1953 SC 252] and Himmat Lal vs. State of M.P. [AIR 1954 SC 403]. (d) The rule of alternate remedy being a bar to entertain a writ petition is a rule of practice and not of jurisdiction. In appropriate cases, High Court may entertain a petition even if the aggrieved party has not exhausted the remedies available under a statute before the departmental authorities, vide State of West Bengal vs. North Adjai Cool Company [1971 (1) SCC 309]. (e) Further, alternative remedy must be effective. An appeal in all cases cannot be said to have provided in all situations, where an appeal would be ineffective and writ petition in such a case is maintainable, vide Ram and Shyam Company vs. State of Haryana [AIR 1985 SC 1147]. (f) Where an authority has acted without jurisdiction, High Court should not refuse to exercise its jurisdiction under Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court observed as under: Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. In the said case (Whirlpool Corporation), it was also observed that the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show cause notice issued to the appellant was wholly without jurisdiction. In the said case, the Registrar of Trade Marks issued to the appellant therein a notice under Section 56(4) of the Trade and Merchandise Marks Act, 1958 to show cause against the proposed cancellation of appellants' Certificate of renewal. It was held that the issuance of such a notice by the Registrar was without authority and it was quashed by the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But, normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. But, if the High Court had entertained a petition despite availability of an alternative remedy, it would not be justifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies, unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition. In the said case, the question was liability to pay purchase tax on the royalty paid by the respondents, i.e., the holder of mining lease, where there was a price for removal of minerals and thus, attracted liability to pay purchase tax. The Hon'ble Supreme Court in the said decision rejected the plea that the High Court should not have entertained the writ petition. Thereafter, the question relating to liability to pay purchase tax on royalty paid was taken up for consideration by discussing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions at issue and (ii) the power to grant the relief asked for. Ultimately, in paragraph 24, it was observed as follows: Therefore, insofar as the question of exercise of the power conferred by Article 226 of the Constitution, despite the availability of a statutory alternative remedy, is concerned, Anisminic cannot be relied upon. The distinction between the lack of jurisdiction and the wrongful exercise of the available jurisdiction should certainly be taken into account by High Courts, when Article 226 of the Constitution is sought to be invoked bypassing a statutory, alternative remedy provided by a special statute. In the said case, the question was, as to, whether, the NCLT lacked the jurisdiction to issue a direction in relation to a matter covered by Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Statutory Rules issued thereunder; or, there was mere wrongful exercise of a recognised jurisdiction, for instance, asking a wrong question or applying a wrong test or granting a wrong relief. On a detailed discussion, it was held that the NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept in cases falling within the well defined exceptions as observed in Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal, [(2014) 1 SCC 603], (Chhabil Dass Agarwal). In the latter decision, it has been held that the exceptions to the rule of non-interference when efficacious, alternative remedy is available are as under which are illustrative and non-exhaustive: (i) where remedy available under statute is not effective but only mere formality with no substantial relief; (ii) where statutory authority not acted in accordance with provisions of enactment in question, or; (iii) where statutory authority acted in defiance of fundamental principles of judicial procedure, or; (iv) where statutory authority resorted to invoke provisions which are repealed, or; (v) where statutory authority passed an order in total violation of principles of natural justice. (e) In United Bank of India vs. Satyawati Tondon and others, [(2010) 8 SCC 110], (Satyawati Tondon) it was observed that it is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deprived of his property save by authority of law. Even though the right to hold property has ceased to be a fundamental right under the Constitution of India, but only a constitutional right, yet, an aggrieved individual has the remedy to move the High Court under Article 226 for any violation of Article 300A of the Constitution. The protection of Article 300A is available not only to any person, including legal or juristic person, and is not confined only to a citizen. The expression property under Article 300A means only that which can by itself be acquired or disposed of or taken possession. It includes private property in all its forms, and understood, both movable and immovable, corporeal and incorporeal, such as, intellectual property rights. When a person has right or interest in property, the same cannot be deprived except by authority of law. Deprivation of property may take place in various ways, such as seizure of goods or immovable property from the possession of an individual, but in a manner known to law. Deprivation means, the rights constituting property rights taken away, also deprivation by authority of law means, by or under a law made the competent l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has to be decided in the first instance before deciding on the legality of the action otherwise. 47. Hence, in our view, the writ petitions filed under Article 226 of the Constitution in the instant case were maintainable. This is particularly so, having regard to the issue raised in these writ petitions as it involves interpretation of law. It also touches upon the applicability of the SARFAESI Act and the jurisdiction on the respondent/bank to take measures under Section 13 of the said Act vis- -vis the subject lands, which are coffee plantations. Hence, we answer point No. 1 in favour of the appellants. Re: Point No. 2: Whether coffee plantation is an agricultural land under Section 31(i) of the SARFAESI Act? 48. This would take us to the next point which is to decide, as to, whether, coffee plantations are agricultural lands within the meaning of Section 31(i) of the SARFAESI Act. Before proceeding further, it would be necessary to understand the object of the SARFAESI Act and allude to the background of the said enactment. In this regard, it would be useful to refer to the judgment of the Hon'ble Supreme Court in Mardia Chemicals vs. Union of India, [(2004) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce; (b) a pledge of movables within the meaning of section 172 of the Indian Contract Act, 1872 (9 of 1872); (c) creation of any security in any aircraft as defined in clause (1) of section 2 of the Aircraft Act, 1934 (24 of 1934); (d) creation of security interest in any vessel as defined in clause (55) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958); (e) * * * * * (f) any rights of unpaid seller under section 47 of the Sale of Goods Act, 1930 (3 of 1930); (g) any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act) or sale under the first proviso to sub-section (1) of section 60 of the Code of Civil Procedure, 1908 (5 of 1908); (h) any security interest for securing repayment of any financial asset not exceeding one lakh rupees; (i) any security interest created in agricultural land; (j) any case in which the amount due is less than twenty per cent of the principal amount and interest thereon. 51. Thus, the question to be determined is whether the provisions of SARFAESI Act would apply to any security interest created in agricultural land , vide Section 31(i). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to interpret the expression 'agricultural income', the Hon'ble Supreme Court delineated on the meaning of 'agriculture' and 'agricultural purpose' and fell back upon the general sense in which they have been understood in common parlance. The dictionary meaning of agriculture was referred to and also the meaning as given in Wharton's Law Lexicon. Ultimately, the Hon'ble Supreme Court observed that the primary sense in which the term 'agriculture' is understood as ager-a field and culture-cultivation i.e., cultivation of field which, in the strict field sense of the term means tilling of the land, sowing of the seeds, planting, or similar operations on the land. After the produce sprouts from the land, other operations, such as weeding, digging of the soil around the growth, removal of undesirable under-growths, tending, pruning, etc. have to be done. Thereafter, harvesting and running the produce for the market are operations which have to be carried out. The latter would all be agricultural operations when taken in conjunction with the basic operations above described and it would be futile to say that they are not agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the test enunciated in this judgment was that the basic idea in the expression agriculture is cultivation of land in the sense of tilling of land, sowing of seeds, planting and similar work done on the land itself. The basic conception is the essential sine qua non of any operation performed on the land. If the basic operations are there, the rest of the operations which are consequent thereto, namely the subsequent operations, are also part of agriculture, but if the basic operations are wanting, the subsequent operations do not acquire the characteristic of agricultural operations. That, the human labour and skill spent in the performance of subsequent operations cannot be said to have been spent on the land itself, though it may have the effect of preserving, fostering and regenerating the products of the land. The Hon'ble Supreme Court further observed that the distinction is not important in cases where the agriculturist performs these operations as a part of his integrated activity in cultivation of the land. Where, however, the products of the land are of spontaneous growth, unassisted by human skill and labour, and human skill and labour are spent merely in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t products. (d) Reference was also made to the Commissioner of Wealth Tax, Andhra Pradesh vs. Officer in charge (Court of Wards) Paigah, [AIR 1977 SC 113], with regard to the relevant test to determine the issue as to whether a particular property is agricultural in nature. The Supreme Court in the aforesaid case observed that the determination of the character of land according to the purpose for which it is meant or set apart and can be used is a matter which ought to be determined on the facts of each particular case. The Supreme Court opined, what is really required to be shown is the connection with an agricultural purpose and user, and not the mere possibility of user of land by some possible future owner or possessor, for an agricultural purpose. It was also observed by the Madras High Court that when the available materials are sufficient to arrive at a clear finding that the secured asset is an agricultural property, there is no point in directing the borrower/guarantor to approach the DRT. When the very initiation of SARFAESI proceeding is under challenge on the ground of statutory bar, and the available materials are sufficient to decide the issue, it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties on the date on which the security interest was created. (g) In the said decision, there is a reference to ITC Limited vs. Blue Coast Hotels Limited, [(2018) 15 SCC 99], (Blue Coast Hotels Limited). In this decision, the facts were that the Industrial Financial Corporation of India (IFCI), the secured creditor, in the capacity of a financial institution, had entered into a corporate loan agreement with Blue Coast Hotels (debtor) for a sum of Rs. 150 crores. The agreement included creation of a special mortgage to secure the corporate loan. The mortgaged property comprised of the whole of the debtor's hotel property including agricultural land on which the debtor was to develop villas. The debtor defaulted in repayment of the loan and the debtor's account became a Non-Performing Asset (NPA). Notice under Section 13(2) of the SARFAESI Act was sent by the creditor calling upon the debtor to pay the amount overdue within a period of sixty days. This was followed by a notice issued under Section 13(4) whereby the symbolic possession of the hotel was taken over by the creditor and subsequently, there was a sale by a public auction. A notice of sale by a public auc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of much assistance in interpreting the phrase 'agricultural land' under Section 31(i) of SARFAESI Act. For that, it is necessary to deduce the meaning and connotation of the said expression from State laws relating to 'agriculture' and thereby unravel the meaning of 'agricultural land' in Section 31(i) of the SARFAESI Act. Also, in these appeals, learned senior counsel for the appellants has placed reliance on Land Reforms Act, Land Revenue Act and the Dictionary meaning of the expression 'agricultural land' in Section 31(i) of the SARFAESI Act. It becomes necessary to consider the aforesaid enactments as SARFSESI Act does not define the said expression. The reason being, Parliament was conscious of the fact that, the subject 'agriculture' along with its connotations is a State subject (List II of Seventh Schedule of the Constitution) and therefore, did not define the expression 'agricultural land' under Section 31(i) of the SARFAESI Act. 56. Before proceeding further, it would be useful to refer to Articles 246 of the Constitution. Article 246 deals with subject matter of laws made by Parliament and by the Legislatures of States. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment or a provision thereof, due regard must be had to the enactment as a whole and to its scope and objects. It is said that the question of invasion into another legislative territory has to be determined by substance and not by degree. (e) In case of any conflict between entries, in List-I and List-II, the power of Parliament to legislate under List- I will supersede when, on an interpretation, the two powers cannot be reconciled. But if a legislation in pith and substance falls within any of the entries of List-II, the State Legislature's competence cannot be questioned on the ground that the field is covered by Union list or the Concurrent list, vide Prafulla Kumar vs. Bank of Commerce, Khulna, [AIR 1947 P.C. 60] (Prafulla Kumar). 57. The entries in List I and List II to which the laws are under consideration are as under: (a) Entry 45 of List-I of the VII Schedule deals with 'Banking'. SARFAESI Act, 2002 is also relatable to Banking. The object of the SARFAESI Act is to regulate Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest and for matters connected therewith or incidental thereto. Thus, the SARFAESI Act being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (18) Land means agricultural land, that is to say, land which is used or capable of being used for agricultural purposes or purposes subservient thereto and includes horticultural land, forest land, garden land, pasture land, plantation and tope but does not include house-site or land used exclusively for non-agricultural purposes; x x x (25) Plantation crops means cardamom, coffee, pepper, rubber and tea; x x x 79-A. Acquisition of land by certain persons prohibited.- (1) On and from the commencement of the Karnataka Land Reforms (Amendment) Act, 1995, no person who or a family or a joint family which has an assured annual income of not less than rupees twenty five lakhs from sources other than agricultural lands shall be entitled to acquire any land whether as land owner, landlord, tenant or mortgagee with possession or otherwise or partly in one capacity and partly in another. (2) For purposes of sub-section (1).- (i) the aggregate income of all the members of a family or a joint family from sources other than agricultural land shall be deemed to be income of the family or joint family, as the case may be, from such sources; (ii) a person or a fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Act, except as otherwise provided in this Act.- (a) no person other than a person cultivating land personally shall be entitled to hold land; and (b) it shall not be lawful for.- (i) an educational, religious or charitable institution or society or trust, other than an institution or society or trust referred to in sub-section (7) of Section 63, capable of holding property; (ii) a company; (iii) an association or other body of individuals not being a joint family, whether incorporated or not; or (iv) a co-operative society other than a cooperative farm, to hold any land. (2) Every such institution, society, trust, company, association, body or co-operative society.- (a) which holds lands on the date of commencement of the Amendment Act and which is disentitled to hold lands under sub-section (1), shall, within ninety days from the said date, furnish to the Tahsildar within whose jurisdiction the greater part of such land is situated a declaration containing the particulars of such land and such other particulars as may prescribed; and (b) which acquires such land after the said date shall also furnish a similar declaration within the prescribed per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the price paid for the land, if such price is less than eight times the net annual income of the land. (2) Nothing in sub-section (1) shall apply to lands granted under Section 77. 81. Sections 79-A, 79-B, and 80 not to apply in certain cases.- (1) Nothing in Section 79-A or Section 79-B or Section 80 shall apply to.- (a) the sale, gift or mortgage of any land or interest therein in favour of the Government: the Karnataka State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950 (Central Act LXIV of 1950), the Karnataka Power Transmission Corporation Limited constituted under the Companies Act, 1956 the Karnataka Housing Board constituted under the Karnataka Housing Board Act, 1962 (Karnataka Act 10 of 1963), the Industrial Areas Development Board constituted under the Karnataka Industrial Areas Development Act, 1966 (Karnataka Act, 18 of 1966), the Karnataka Slum Clearance Board established under the Karnataka Slum Areas (Improvement and Clearance) Act, 1973, (Karnataka Act 33 of 1974) the Bangalore Development Authority constituted under the Bangalore Development Authority Act, 1976 (Karnataka Act 12 of 1976), a Nagarabhivruddhi Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything to the contrary in this Act or in any other law for the time being in force the lessee shall not be entitled to any right other than as such lessee in the land. (3) Any sale by the institution under this section shall be subject to the other provisions of this Act. x x x 104. Plantations.--The provisions of Section 38, Section 63 other than sub-section (9) thereof, Sections 64, 79-A, 79-B and 80, shall not apply to plantations. Explanation.--In this section 'Plantation' means land used by a person principally for the cultivation of plantation crop and includes.-- (i) any land used by such person for any purpose ancillary to the cultivation of such crop or for preparation of the same for the market; and (ii) agricultural land interspersed within the boundaries of the area cultivated with such crop by such person. not exceeding such extent as may be determined by the prescribed authority as necessary for the protection and efficient management of such cultivation. B. The relevant provisions of the Land Revenue Act are as under: 2. Definitions.--In this Act, unless the context otherwise requires.-- x x x (8) 'Class of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a storehouse, or other out-building, and (ii) the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated-- (A) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (B) in any area within the distance, measured aerially,-- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect to which, or the produce of which, any operation mentioned in paragraphs (ii), and (iii) of sub-clause (2) is carried on: Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator or the receiver of the rent-in-kind by reason of his connection with the land requires as a dwelling house or as a store-house or other out-building; Explanation.--Income derived from any building means the receipts by way of rent from the building or portion thereof let out for rent. F. The relevant definition and provisions of the Karnataka Agricultural Produced Marketing (Regulation) Act, 1966 (APMC) are as follows: 2. Definitions:-In this Act, unless the context otherwise requires,- (1) Agricultural produce means the produce or goods specified in the Schedule. SCHEDULE VIII PLANTATION CROPS AND SPICES 13. Coffee seeds to the extent of free sale quota:- (i) raw coffee (cherry coffee) (ii) cured coffee seeds (iii) uncured coffee seeds G. The relevant definition and provisions of the Karnataka Town and Country Planning Act, 1961 are as given below: 2. Definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d means land on which a plantation crop i.e., cardamom, coffee, pepper, rubber and tea can be grown. 61. Thus, under both the Land Reforms Act and Land Revenue Act, plantation crops and plantation land refer to only cardamom, coffee, pepper, rubber and tea. 62. Under 2013 Act, 'agricultural land' means land used for the purpose of raising or crops. Crops would include plantation crops referred to above. 63. Under Karnataka Agricultural Income Tax Act, 1957, 'Agricultural Income' means any revenue derived from land situated within the State and used for growing plantation crops. On an analogy, the expression plantation crops would include coffee. Under the APMC Act also, under Schedule 8, coffee is included as a plantation crop. In all the aforesaid enactments, coffee has been defined to be a plantation crop 64. Thus, the need to interpret the expression agricultural land under the SARFAESI Act can be on the basis of the following tests: (I) That the word Agriculture , which is inherent in the expression Agricultural Land in Section 31(i) of the SARFAESI Act, must be given a contextual interpretation and not an expansive one. (II) That the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Land Reforms Act defines 'agriculture' to include the raising of crops. The expression 'plantation crops' is defined to mean cardamom, coffee, rubber, pepper and tea as per sub-Section (25) of Section 2(A) of the said Act. This implies that all other crops are non-plantation crops. 68. Chapter VIII of the Karnataka Land Reforms Act deals with exemptions. Section 104 deals with plantations. The said section states that the provisions of Section 38, Section 63 other than sub-section (9) thereof, Sections 64, 79-A, 79-B and 80 shall not apply to plantations. For the purpose of that section, plantation means the land used by a person principally for the cultivation of plantation crop and includes (i) any land used by such person for any purpose ancillary to the cultivation of such crop or for preparation of the same for the market; and (ii) agricultural land interspersed within the boundaries of the area cultivated with such crop by such person, not exceeding such extent as may be determined by the prescribed authority as necessary for the protection and efficient management of such cultivation. 69. As already noted the expression plantation crops is defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -B and Section 80. Therefore, there could be a mortgage of any land or interest therein in favour of a bank or a financial institution and also sale of any land or interest therein mortgaged to any financial institution for enforcement of the security for any loan or other facility for agricultural purposes. This would imply that the land on which coffee plantation is raised is no doubt agricultural land on a plain interpretation, but, such land is exempted from the provisions contained in Sections 79A, 79B and 80 of the said Act. Thus, when an agricultural land is mortgaged to a bank and the mortgage is for agricultural purposes and if the outstanding dues to the financial institution are not paid, the same could be enforced for realization of the debt. Thus, irrespective of whether the land on which plantation or other crops are grown, Section 80 enables mortgage of such land for obtaining a loan for agricultural purpose. 72. Then, the question would arise, as to, what would be the position if the land on which plantation crop grown, is mortgaged to any financial institution for a non-agricultural purposes, i.e., as security for any loan or other facility for non-agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural purposes, could also be sold for enforcement of the said security. 77. In Shankar Bhairu Bamane vs. Syndicate Bank and others, [ILR 1998 KAR 3028], (Shankar Bhairu Bamane), Sections 80 and 81 of the Land Reforms Act were considered and it was observed, a reading of Section 81 makes it clear that there is no bar for even financial institutions to acquire agricultural properties; a bank can also bid and purchase agricultural properties. This is on account of the exemption under Section 81 of the said Act. 78. The Karnataka State Legislature has been very cautious in exempting only lands on which plantation crops are grown from the purview of Sections 79-A, 79-B and Section 80 of the Land Reforms Act, which means that, the bar contained in those sections would apply in the case of lands on which crops which are not in the nature of plantation crops are raised. Such lands only i.e., lands on which plantation crops are not raised, in our view, are agricultural lands for the purpose of Section 31(i) of the Act. This means the bar contained under Sections 79-A, 79-B and 80 of the Land Reforms Act, do not apply as per Section 104 of the said Act to plantation lands or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of Section 104 and Section 81 of the said Act, would not come within the scope and ambit of the 'agricultural land' under Section 31(i) of the SARFAESI Act. In this regard, we find much force in the argument of Sri. Katti appearing for respondent-Bank. 83. Thus, on a contextual interpretation, land on which plantation crops are grown is not agricultural land within the meaning of Section 31(i) of the SARFAESI Act. 84. In this context, we also place reliance on the judgment of the Madras High Court in D. Ravichandran vs. The Manager, Indian Overseas Bank and another, CDJ 2006 MHC 789, (Writ Petition No. 250/2006 disposed of on 02.02.2006), wherein it has been observed that clause (i) of Section 31 of the SARFAESI Act states that the provisions of the Act shall not apply to any security interest created in agricultural land. The Act does not define the term Agricultural Land . The object of the Act is to improve the recovery process by vesting the powers with the banks and financial institutions 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 object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 31(i) of the SARFAESI Act only as the lands in these cases concern plantation crops. We have not ventured to consider the matter in the context of non-plantation crops. 88. Hence, in the instant case, the securities created in the coffee plantations can be enforced for the realization of the debts as coffee plantation would not come within the scope and ambit of agricultural land under Section 31(i) of the SARFAESI Act insofar as State of Karnataka is concerned. Conclusions: 89. In view of the aforesaid discussion, the following conclusions are arrived: (i) That in these cases, the writ petitions were maintainable under Article 226 of the Constitution of India; (ii) That the expression 'agricultural land' in Section 31(i) of the SARFAESI Act, does not include land on which plantation crops are grown namely, cardamom, coffee, pepper, rubber and tea as defined in Section 2(A)(25) of the Land Reforms Act. Therefore, the measures initiated by the respondent banks in relation to the coffee estates in these appeals are not hit by Section 31(i) of the SARFAESI Act, as the said Act is applicable to land on which plantation crops are grown, including coffee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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