Calcutta High Court (Appellete Side)
Uluberia Coke Oven Plant & Ors vs Corporation Bank & Ors on 3 August, 2015
Author: Shivakant Prasad
Bench: Shivakant Prasad
IN THE HIGH COURT AT CALCUTTA
CIVIL REVISIONAL JURISDICTION
APPELLATE SIDE
Present :
The Hon'ble Justice Shivakant Prasad
C.O. No. 1316 of 2014
Uluberia Coke Oven Plant & Ors.
Vs.
Corporation Bank & Ors.
For the Petitioners : Mr. Surajit Nath Mitra
Mr. Aniruddha Roy
Mr. Nirmalya Dasgupta
For the Opposite Parties : Mr. Pankaj Kumar Mukherjee
Mr. Prabhat Kumar Srivastawa
Ms. Smruti R. Mishra
Heard On : 29.06.2015 & 01.07.2015
Judgment On : 03.8.2015
SHIVAKANT PRASAD, J.
The instant revisional application arises from the portion of the impugned judgment and order dated March 13, 2014 (hereinafter referred to as 'the impugned order') passed by the Learned Presiding Officer, the Kolkata Debts Recovery Tribunal-I (hereinafter referred to as 'the said DRT') in S. A. No. 74 of 2013 (hereinafter referred to as 'the said SARFAESI application') insofar as the learned DRT has held that the land in question being the security interest in respect whereof the opposite parties have invoked the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the said SARFAESI Act') is not a land within the meaning of 'agricultural land' despite the subject land being shown in the records of the Land Revenue that the same is entirely an agricultural land.
The petitioner No. 1 is a registered partnership firm of which the petitioner Nos. 2 and 3 are the partners. The petitioner No. 1 at all material time is engaged, inter alia, in the business of manufacturing of Cokes, which is an essential raw material for the purpose of manufacturing Pig Iron.
The financial facilities have been provided by the opposite party No. 1 to the petitioner No. 1, the petitioner Nos. 2 & 3 and proforma respondent Nos. 3 to 6 stood guarantors and extended their respective guarantees to secure the said financial facilities.
It is contended that due to business loss being suffered by the petitioner No. 1, it was in difficulty to make payment to the opposite party No. 1 in respect of its loan accounts.
The opposite party No. 1 on July 16, 2013 issued a notice to the petitioner Nos. 1, 2 and 3 intimating that due to the alleged non- servicing of interest in the Cash Credit account and the development of Letter of Credit and Bank Guarantee accounts, the accounts of the petitioner No. 1 turned as "Non-Performing Asset" (NPA) since August 23, 2012 and, therefore, the petitioner No. 1 was proposed to be classified as 'wilful defaulter'. However, an opportunity was given to the petitioner Nos. 1, 2 and 3 to make representation before the Grievance Redressal Committee within 15 days from the date of receipt of the said communication. The petitioners received the impugned possession notices dated August 16, 2013 purported to have been issued under Rule 8(1) of the said Rules.
Contention of the petitioners is that the land on which the coke manufacturing plant of the petitioner no.1 is situated consists of a land measuring about 7 bighas 'Sali land' i.e. an agricultural land. Out of the said 7 bighas of land, a portion thereof, i.e. about 142 decimals of land, has been converted to factory land. Therefore, save and except the above 142 decimals of land, the balance portion of land admeasuring about 89 decimals is an agricultural land.
Learned Counsel for the petitioner vehemently argued that under the provisions of the SARFAESI Act, no SARFAESI action can be taken against an agricultural land. So, the Bank in violation of said provision has taken action under Section 13(4) of the SARFAESI Act by taking symbolic possession of the said land by virtue of said impugned notice dated August 16, 2013 and thereby acted illegally and without jurisdiction.
On being aggrieved by and dissatisfied with the impugned possession notices both dated August 16, 2013, under Section 13(4) of the SARFAESI Act, 2002, the petitioners instituted an application under Section 17 of the SARFAESI Act, 2002 for setting aside the said possession notices, as void, illegal and not binding upon the applicants and further prayed for an order of injunction restraining the respondents their men, agents, servants, representatives and assigns from taking any step or to give any effect to the said purported possession notices both dated August 16, 2013.
The petitioners also filed an application u/s. 31(i) of the SARFAESI Act, 2002 in the pending Sarfaesi application being registered as I.A. 848 of 2013 praying for injunction in terms thereof restraining the respondents their men, agents, servants, assigns, officers from taking physical possession of the lands mentioned in Serial Nos. 1(A) to 1(D) of the impugned notice dated 16th August, 2013 until disposal of the main SARFAESI application.
The Learned DRT appointed a Special Officer to inspect the property and to report regarding the two plots near the factory to ascertain whether the petitioner No. 1 is carrying on agricultural operation or not by an Order dated October 17, 2013.
It is pertinent to note that in terms of the portion of the order under which the redemption was allowed, the petitioners made correspondence with the bank and sought for redemption of the properties which are different properties.
It is contended on behalf of the petitioners that the Learned DRT-1 in passing the said impugned order has failed to appreciate the ratio of the judgment in the matter of Gajula Exim Pvt. Ltd. Vs. Authorized Officer, Andhra Bank reported in AIR 2008 184 as the said judgment is not apposite to the facts and circumstances of this case as the decision was passed on the basis of the local land law prevailing in the State of Andhra Pradesh being A.P. Agricultural Land (Conversion for Non Agricultural Purposes) Act, 2006, whereas the law prevailing in the State of West Bengal is the West Bengal Estate Acquisition Act, 1953 and the West Bengal Land Reforms Act 1955.
The ratio laid down by the Supreme Court in the judgment reported in AIR 1961 Supreme Court 1346 has also not been appreciated while passing the impugned order. Legal point raised by the petitioners is that DRT has not adhered to the provision of Section 31(i) of the SARFAESI Act which provides that this Act shall not apply to any security interest created in agricultural land.
It appears from the said impugned Order that the Presiding Officer, the Kolkata Debts Recovery Tribunal -I framed the issues viz,
(i) Whether the account of the Borrower has been classified as NPA in terms of RBI guide line?
(ii) Whether this Tribunal has jurisdiction to entertain the SARFAESI Application?
(iii) Whether the part of the factory premise at Uluberia is agricultural property?
(iv) Whether the Applicant has a right to redeem their respective shops and residential premise?
In this revisional application, the petitioners have assailed the finding in a portion of the order impugned on the score that the land in question is an agricultural land in respect of which the learned DRT invoked the provision of SARFAESI Act. It would reveal from the observation made in Para-3 of the impugned order that out of four plots aggregating about an area of 231 decimals, only one plot was converted for non-agricultural use before creation of the mortgage and other plots were subsequently converted for non-agricultural purpose. The record of right passed in service by the petitioner goes to show that the land is in the nature of agricultural land but no agricultural activities is carried out. In order to ascertain the actual user of the land in question a receiver was appointed by DRT. The report of the Receiver is placed at Pages 590-592 of the Paper Book which depict that there is no agricultural activity going on over the land.
In this context, the learned Counsel for the petitioners argued that the learned DRT is not a Court and it cannot go into the title to ascertain the character of the land and thereby, the learned DRT has exceeded its jurisdiction by appointing a receiver to ascertain the character of the land.
Mr. Pankaj Kumar Mukherjee, learned Counsel for the opposite parties submitted that the order of DRT was not challenged by the petitioners and adverted to the provision of Section 19 (18) of the Act contending that the Tribunal may appoint a receiver where it appears to the Tribunal to be just and convenient, whether before or after grant of certificate for recovery of Debt.
I am in agreement with the submissions of the learned Counsel for the opposite parties that having regard to the above provisions of law and it cannot be held that the learned DRT passed the Order appointing learned Receiver to ascertain the nature of the user of land, as claimed by the petitioners to be one being Agricultural land, ergo, the argument advanced by the learned Counsel for the petitioners that DRT cannot proceed by virtue of the provision as embodied under Section 31(i) of SARFAESI Act in respect of the land in question is untenable.
Undoubtedly, the copies of Record of Rights in respect of the land appertaining to Khatian No. 463 placed at Page 566 -569 prima facie show the classification of the land as 'Sali' land i.e. agricultural land but at same time it is recorded in the name of Uluberia Coke Oven Plant. Admittedly, the petitioner is engaged at all material time in the business of manufacturing cokes, an essential raw material for the purpose of manufacturing pig iron. The land in question though recorded as 'Sali' land being the paddy land but no paddy is grown in the said land on the contrary the user of the land is for the non- agricultural purpose.
It is the clenched position of law that presumption of accuracy of the entry in the Record of Rights does not create or extinguish the title but only raises a presumption which again is not conclusive and can be rebutted by evidence. (see 70 CWN 1066). On the basis of the user of the land prima facie, Record of Rights is created.
Basically the land in question was an agricultural land which has been converted by the petitioner for the purpose of manufacturing cokes and is used for business purpose. It is obvious that the financial institution has rendered loan facility to the petitioners on the basis of mortgage in respect of the land in question on being satisfied as to the user of the land. Since controversy was raised as to the user of the land, Mr. Chandan Pandey, Advocate was appointed a Special Officer by the Tribunal by Order dated 17.10.2013 to visit the factory premises of the petitioner situated at Uluberia and to submit report to ascertain as to whether the petitioner is carrying on agricultural operation on the land. The report as I have perused goes to show that the petitioner carries on his business for manufacturing coke and there is no agricultural activities inside the premises and in the surrounding.
Learned Counsel for the petitioners refers to the definition clause of Agricultural land under West Bengal Estate Acquisition Act, 1953. Section 2(b) of the said Act defines 'agricultural land' means land ordinarily used for the purpose of agriculture or horticulture and includes such land, notwithstanding that it may be lying fallow for the time being. The premises in which the term agriculture is used an understood is cultivation of the field which means tilting of the land sowing of the seed, planting and similar operation on the land.
Order impugned shows that the Presiding Officer, DRT, Kolkata referred to the case of K. P. Mohd. Basheer Vs. Deputy General Manager and Authorised Officer and Another, reported in AIR 2010 Kerala 118as relied on the learned Counsel for the petitioner wherein it has been held--
"that the inexcusable conclusion is obvious; that the clear legislative intention is that the terms 'agricultural land' in Section 31(i) of the Act would be applied without culling out any exemption from that term on the basis or nature of crop or the cultivation that is made on that land. All that is required is that it should be an agricultural land."
On the contrary, the learned Counsel for the respondent has referred to a decision in Rangildas Varajdas Khandwala Vs. Collector of Surat and others reported in 1961 AIR 291, in regard to user of the land for non-agricultural purpose and also to a decision of Commissioner of Income-tax West Bengal of Calcutta Vs. Benoy Kumar Saha Roy reported in AIR 1957 S.C. 768 which would be profitable to understand the meaning of agriculture. In case of Rangildas (Supra) the appellant's land was not being used for agriculture and was being used for non-agricultural purposes, namely, for the purpose of building. In this set of fact, the Hon'ble Court held that the land has to be assessed as non-agricultural.
In case of Commissioner of Income-tax West Bengal of Calcutta (Supra), it has been observed by the Hon'ble Apex Court as under--
"The term "agriculture" in various dictionaries has been used both in the narrow sense of the cultivation of the field and the wider sense of comprising all activities in relation to the land including horticulture, forestry, breeding and rearing of livestock dairying, butter and cheese-making, husbandry etc......".
"Agriculture is the basic idea underlying the expressions "agricultural purposes" and "agricultural operations"
and it is pertinent therefore to acquire what is the connotation of the term "agriculture." The primary sense in which the term agriculture is understood is ager-- field and cultural cultivation, i.e. the cultivation of the field and if the term is understood only in that sense, agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, filling of the land, sowing of the seeds, planting and operations on the land. They would be the basic operations and would require the expenditure human skill and labour upon the land itself............"
" The term "agriculture" cannot be confined merely to the production of grain and food products for human beings and beasts but must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, casuarinas plantations, tendu leaves, horranuts etc. I.L.R. 24 Mad. 421 & AIR 1915 Mad. 781(2), Criticised.
The mere fact that an activity has some connection with or is in some way dependant on land is not sufficient to bring it within the scope of the term and such extension of the term "agriculture" is unwarranted. The term "agriculture", cannot be dissociated from the primary significance thereof which is that of cultivation of the land and even though it can be extended both in regard to the process of agriculture and the products which are raised upon the land, there is no warrant at all for extending it to all activities which have relation to the land or are in any way connected with the land. The use of the word agriculture in regard to such activities would certainly be a distortion of the term."
In respectful consideration of the above cited decision, I am of the view that although the facts and circumstances are distinguishable from the instant case, nevertheless, the ratio of decision is well-nigh within the facts of the present case in so far as the user of the land in question being non-agricultural.
Since there was no agricultural activities or allied activities relating to agriculture, the land cannot be considered as agricultural land. Whether the land was ordinarily used for agriculture has to be ascertained in each of the cases and in the present case the learned Special Officer has categorically stated in his report that no agricultural activities have been or could have been conducted in the said land and accordingly the finding that the action taken by the Bank in respect of two plots at Uluberia cannot be assailed, on the contrary the action taken is in accordance with the law.
In the case in hand, there is no dispute with regard to the land being used by the petitioner not for agricultural purpose rather the same is being used for non-agricultural purpose namely, for the purpose of manufacturing of coke used as raw material for manufacture of pig iron. This fact is also evident from the record of right in respect of the land in question in the name of Uluberia Coke Oven Plant. Petitioner has admitted that for all purposes and at all material time, the petitioner carried on business in manufacturing of coke as the raw material for pig iron.
Thus, I am of the considered view that although the land in question stands recorded in the Record of Rights depicting agricultural land, nevertheless the same has been duly converted for the manufacturing purpose of the coke by the petitioners which was mortgaged with the financial institution to avail loan accommodation. In this context, analogy may be drawn from the fact that the city of Kolkata has expanded to this extent that Salt Lake City, New Town, Rajarhat Town have been developed on the lands which were not in true sense the urban land. Therefore, the learned DRT was rightly of the view that the land was never used for the agricultural activities the word "ordinarily" as defined in the Section has to be given meaning that in most of the cases in agricultural activities is carried out.
In the context of the above discussion, it cannot be held that portion of impugned order as passed by the learned DRT-I suffers from jurisdictional error or with material irregularity in holding that SARFAESI action is maintainable in respect of the land in question being the security interest, ergo, there is no ground to interfere with the findings of the learned DRT-I under the schedule of Article 227 of the Constitution of India.
The C.O. No. 1316 of 2014 is accordingly dismissed, however, without any order as to costs.
The Office to supply Photostat certified copy of this order to applicant, if applied for, on urgent basis.
(SHIVAKANT PRASAD, J.) C.O. No. 1316 of 2014 Later____.
03.8.2015 After pronouncement of judgment, learned Counsel for the petitioners prays for stay of this Order.
Stay is refused.
(SHIVAKANT PRASAD, J.)