Andhra HC (Pre-Telangana)
Gajula Exim (P) Ltd. vs Authorised Officer, Andhra Bank, Main ... on 2 May, 2008
Equivalent citations: AIR 2008 ANDHRA PRADESH 184, 2008 (5) ALL LJ NOC 1083, 2008 AIHC NOC 730, (2008) 4 BANKCAS 274, (2008) 3 ANDH LT 619, (2009) 1 BANKCLR 611, 2008 (5) ALJ (NOC) 1083 (A.P.) = AIR 2008 ANDHRA PRADESH 184, 2008 (6) AKAR (NOC) 922 (A.P.) = AIR 2008 ANDHRA PRADESH 184, 2008 (5) ABR (NOC) 1013 (A. P.) = AIR 2008 ANDHRA PRADESH 184, 2008 AIHC (NOC) 730 (A. P.) = AIR 2008 ANDHRA PRADESH 184
ORDER G. Yethirajulu, J.
1. This is a revision petition filed by the petitioner in S.A. No. 25 of 2006 on the file of the Debts Recovery Tribunal, Visakhapatnam, challenging the order dated 13-09-2007 passed by the said Tribunal.
2. The petitioner made an Application before the Debts Recovery Tribunal to set aside the possession notices, dated 10-03-2006, 25-03-2006 and 26-04-2006 issued by the respondent-bank, to declare that the said notices are illegal and contrary to law and to direct the respondents to pay compensation for illegally taking possession of the properties. The applicant is a private limited company having its administrative office at Visakhapatnam. It is engaged in the process of procuring and exporting seafood for various countries.
3. The company was sanctioned Rs. 275 lakhs under PC/PCFC running account facility and Rs. 150 lakhs under FDBP/FUBD/RVBA. The seafood industry suffered set back. Therefore, the industry faced serious problems. The company paid substantial repayments and kept the advance accounts as performing assets. The applicant also approached the bank several times for One Time Settlement in accordance with R.B.I. directives on O.T.S. The respondent bank issued a notice dated 14-12-2005 under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (For Short, 'the Act') demanding repayment of dues with interest within sixty days. Aggrieved by the notice, the applicant sent a reply seeking appointment of an Arbitrator. The Notice does not disclose the name of the mortgager of each property and also the amount covered by principal, interest and expenses. The offer for O.T.S. is under active consideration of the bank. The applicant offered to repay a sum of Rs. 160 lakhs. The applicant improved the offer to Rs. 170 lakhs and the respondent No. 1 again wrote on 23-03-2006 to improve the offer still further.
4. As per the possession notice, the respondent bank has taken possession of the properties, which include the factory shed and articles in the factory. No inventory of either movables or immovables is taken according to the provisions of the Act. Though the agricultural lands are exempted from the purview of the application of the Act, the respondent took possession of the agricultural lands under Sections 13(2) and 13(4) of the Act. The evidence was adduced by both parties and documents were marked. The Tribunal observed that as per the notice under Section 13(2) of the Act, the details of the property are mentioned and the factory is situated in an extent of Acs.7.81 cents with buildings, plant and machinery and other assets thereon situated at P.Dharmavaram, Visakhapatnam District. There is a bifurcation given in respect of Acs.7.81 cents of land, but there is no mention whether it is agricultural or non-agricultural land. The other possession notices were issued in respect of other properties. The contention raised by the Tribunal is whether the property of Acs.7.81 cents is an agricultural or non-agricultural land. As per the sale deeds, NCC Blue Water Products Limited sold the property to the applicant wherein it was mentioned as agricultural purpose. Ex.A16 is the licence given by the agricultural market committee, Visakhapatnam, for the purpose of market of the products. Ex.A23 is the letter of sanction wherein it was mentioned that the property covered by item No. 13 is described as land of an extent of Acs.7.81 cents with buildings, plant and machinery. The applicant filed cist receipts. Ex.B10 is the Memorandum of Understanding between M/s. NCC Blue Water Products Limited and the applicant for the purpose of conducting its business. By that time the plant and machinery were in existence in the land.
5. The Tribunal after perusing all the documents observed that the property was purchased for the purpose of running factory of processing of seafood and it cannot be treated as agricultural purpose and the entire land is being used for the purpose of construction of a plant and factory. The factory and buildings are constructed for the purpose other than agricultural purpose. Therefore, it cannot be treated as agricultural land. The Tribunal accordingly, dismissed the application as devoid of merits.
6. Being aggrieved by the order of the Tribunal, the petitioner filed the present revision petition by contending that the sale deeds clearly show that the land in question is an agricultural land and there is no document placed before the Court for a contrary conclusion. The documents would show that the land in question is an agricultural land and the activities that are being carried out are agricultural in nature. Therefore, the impugned notices are liable to be set aside.
7. In the light of the contentions of the petitioner the point for consideration is whether Acs.7.81 cents in which the buildings, plant and machinery is situated is an agricultural land and whether the order of the Tribunal is liable to be set aside?
8. Section 31(i) of the Act denotes that the provisions of the said Act are not applicable to any security interest created in agricultural land. On the basis of that Sri S.Ravi, the learned Counsel for the petitioner, submits that on the basis of the documents produced by the petitioner the land is being treated as agricultural land and it is exempted under the provisions of the Act. Therefore, the bank is not liable to take possession of the property through the possession notice under Section 13 (2) of the Act. The petitioner is a company incorporated under the Companies Act, 1956. The main object of the establishment of the company is to carry on the business of exporters, barters, sellers, suppliers, processors, stockiests, agents, merchants, distributors and dealers in sea water foods, river water foods and catch or arrange for the catch of all types of shell fish, fin fish and other crustacean for human or animal consumption and horticultural products, all types of vegetables, rice, all food grains, fruits, dry fruits, fast foods, pickles, raw food material, packed foods, value added products, sugar, tea, coffee, ayurvedic medicines, software, hardware, electronic equipments, computers, office automation, consumer goods, consumer durables and all type of machinery for manufacturing and sale.
9. The objects incidental or ancillary to the attainment of the main objects of the company are as follows:
1. (a) To construct, build equip, own and maintain and to carry on business as keepers of cold storages, storage chambers, ice plants, godowns, warehouses, refrigerators, freezing houses and room coolers for storing prawns, fish, sea foods, marine products and processed fish, sea foods and marine products and processed fish, sea foods and marine products and to act as transports of aforesaid sea food, substances and products.
(b) To manufacture, aid, assist, promote and develop hatcheries required for shellfish, finfish, seawater foods and other crustacean. To promote, establish, improve, develop, administer, own and run aqua cultural ponds for culturing all types of shell fish, fin fish, sea water foods and other crustacean and to carry on the business of Exporters, Sellers, Suppliers, Stockiests, Agents, Distributors, Manufactures, Merchants and Dealers in aqua feed and its allied products.
(c) To under take and carry on any of the trades or businesses of shippers, ship owners, ship breakaers, ship repairers, shipping agents, dry dockers and ship managers, tug owners, loading brokers, freight contractors, carriers by land, water transport and general contractors, barge owners lighter men, railways and clearing and forwarding agents, dock owners, engineers, ice merchants, refrigerators, storekeepers, stevedores, warehousemen, wharfingers, ship repairers and dealers in machinery, engines, nautical instrument and ship rigging gear fittings and equipments of every description, generally to carry on the side business either as principals or agents on commission or otherwise and many other things which the company is capable of undertaking.
10. under Section 31 (i) of the Act, its provisions are not applicable to any security interest created in agricultural land.
11. The "agricultural lands" is defined under Section 2 (b) of The A.P. Agricultural Land (Conversion For Non-Agricultural Purposes) Act, 2006 and it reads as follows:
(b) 'Agriculture lands' means lands used for agriculture;
12. The agricultural land is not defined under the present Act. It is an undisputed fact that there were buildings, plants and machinery in the land. The petitioner is said to have paid land revenue to the concerned authorities, but it does not mean that by mere paying land revenue the land shall be treated as an agricultural land. No evidence was adduced by the petitioner as to what is the extent of land on which the buildings are situated, the extent on which the machinery and the plants of the industry were erected and established. There is also no material placed by the petitioner to show that any agricultural operations are being conducted in any part of the land. In the absence of such material and in view of the petitioner undertaking business in seafood, the business may be treated as an industry ancillary to pessy culture, but it cannot be treated that the land is being used for agriculture.
13. The learned Counsel for the petitioner placed reliance on certain decisions, but those decisions are not directly applicable to the facts of the case.
14. In Commissioner of Wealth Tax, A.P. v. Officer-in-Charge (court of Wards), Paigah the Apex Court held as follows:
8. It is true that in Benoy Kumar Sahas Roy's case (supra) this Court pointed out that meanings of words used in Acts of Parliament are not necessarily to be gathered from dictionaries which are not authorities on what Parliament must have meant. Nevertheless, it was also indicated there that, where there is nothing better to rely upon, dictionaries may be used as an aid to resolve an ambiguity. The ordinary dictionary meaning cannot be discarded simply because it is given in a dictionary. To do that would be to destroy the literal rule of interpretation. This is a basic rule relying upon the ordinary dictionary meaning which, in the absence of some overriding or special reasons to justify a departure, must prevail. Moreover, it was held there that the dictionary meanings of the word "agricultural" were wider than what was meant by "agricultural income" as that term was used in the income-tax Act. Even if we could give a wider connotation to the term "agricultural" that the one it carries with it is the Income-tax Act, we cannot dispense with credible evidence of at least appropriation or setting apart of the land for a purpose which could be regarded as agricultural and for which the land under consideration could be reasonably used without an alteration of its character. This, we think, is the minimal test of "agricultural land" which should be applied in such cases.
9. In stating the facts of the case with regard to the Begumpet Property, which, according to a rather surprising agreement between parties, was to be used for reaching an inference applicable to all other lands in the case, the High Court said:
The property at Begumpet was known as 'Begumpet Palace, Hyderabad.' The buildings in this property were valued at Rs. 8,81,336/- while the vacant land comprising an area of about 108 acres was valued at Rs. 15,69,052/-. The entire plot of land was enclosed in a compound wall and the various buildings inside it had their own compound walls. The property is situated within the limits of the Hyderabad Municipal Corporation. The land had never been actually used for agriculture, in the sense, that it had never been ploughed or tilled. The property is situated adjacent to the tank known as 'Hussain Sagar' on the southern side, and there are two wells in the said land. The land was capable of being used for agriculture and land revenue was being assessed and paid in respect of the said lands. A portion of the land was acquired by the Government of Hyderabad on 15th September, 1955 and utilized by them for construction of buildings thereon.
10. The High Court then stated the views of the taxing authorities as follows:
On these facts, the Wealth Tax Officer, came to the conclusion that the lands could not be treated as "agricultural lands" as no agricultural operations were carried on, in the sense of ploughing and tilling the land and raising any crop thereon. The Appellate Assistant Commissioner confirms the order of the Wealth Tax Officer on this point. The assessee preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal also took the view that the said land was never intended to be used for agriculture and that the lands were never ploughed or tilled and that the lands were situated within the limits of the Hyderabad Municipal Corporation and that the presumption would be that they were not agricultural lands and that the presumption was not rebutted, as no agricultural operations were ever carried on in the said land. On this view, the Tribunal confirmed the order of the Appellate Assistant Commissioner on this point.
11. The High Court had discussed the various meanings of the term "agriculture" and pointed out how it had acquired a wide sweep. It also discussed a number of cases, including Sarojini Devi v. Srikrishna which had not been followed by a Division Bench of the Andhra Pradesh High Court in Smt.Manyam Meenakshamma v. Commr. of Wealth Tax. A.P. on the ground that the Madras view, that it was enough that the land was capable of being used for agricultural purposes, was no longer good law in view of the pronouncement of this Court in Benoy Kumar Sahas Roy's case . The Andhra Pradesh Division Bench had said, in Smt.Manyam Meenakshamma's case (supra) at p.544 of ITR) : at p.192 of AIR:
We are inclined to agree with the observation of Hegde and Ahmed Ali Khan JJ. in Sri Krishna Rao v. Third Wealth Tax Officer , that the present characteristics and not the potentialities of an land are the proper criterion. If a land is ordinarily used for purposes of agriculture or for purposes subservient to or allied to agriculture it would be agricultural land. If it is not so used, it would not be agricultural land. The question; how a land is ordinarily used would be one of fact depending on the evidence in each case. If, for instance, an agricultural land, as we have interpreted above, is left fallow in a particular year owing to adverse seasonal conditions or to some other special reason, it would not cease to be agricultural land.
15. The learned Counsel tried to impress upon this Court that the entries in the revenue records would also lead to a presumption that the land is being used for agricultural purpose, but, in the light of the judgment of the Supreme Court in Commissioner of Wealth Tax, A.P., v. Officer-in-Charge (Court of Wards), Paigah, I do not find any force in the contentions. After going through the entire material, I am of the view that the land on which the factory is situated cannot be treated as an agricultural land. Therefore, it is not exempted under the Securitisation Act. I do not find any merits in the revision petition.
16. Accordingly, the Civil Revision Petition is dismissed. No order as to costs.