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Judgment
Ranjit Singh, J
This order will dispose of appeals, Appeal No. 239/2012 and Inward No. 382/2012, as a common order is under challenge in both these appeals. Facts have been taken from Appeal No. 239/2012.
Challenge in both the cases is to an order dated 29.5.2012 passed by DRT-I, Chandigarh. The appellant bank had advanced certain loan facilities to the respondents. The respondents defaulted in repayment and so the appellant bank initiated actions under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the SARFAESI Act). A demand notice under section 13(4) of the Act was issued on 2.11.2011. On receipt of the notice, the respondents submitted their reply through communication dated 29.12.2011. The respondents pleaded that the land mortgaged was an agricultural land as there was no building or structure built on that piece of the land which had been mortgaged. The respondents also disputed the description of the property which, according to them, was not correct. In support of the plea that the land in question was not a commercial and it is stated that the land was purely an agricultural land used for cultivation of crops. Reference is made to the khasra khatauni obtained from the revenue record to show that the property is described as agricultural property where two types of crops were grown. Plea further was that protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, the SICA) shall continue to remain and the respondent being one of the guarantors the appellant bank shall not have any right to claim the property of the respondent.
The appellant bank has highlighted that the amount due was over RS. 108 crores which according to the respondents was highly exorbitant and it was neither due nor payable. It is also urged that the order rejecting the plea raised in the reply to the notice would show the non-application of mind, which, as per the law laid down by various courts, is an essential requirement under the statute. The order passed is termed as illegal and unfair as it passed without considering the nature of the property.
Considering the rival submissions made by the parties before it, the Tribunal formulated the following questions which, according to it, required determination:
(i) Whether the representation of the applicant was disposed of by a speaking reply in terms of section 13(3A) of SARFAESI Act?
(ii) Whether the property in question is agricultural land?
(iii) Whether there is a violation of Rule 8(2) of the Security Interest (Enforcement) Rules, 2002?
(iv) Whether there was any bar on respondent bank to invoke the provisions of SARFAESI Act because of pendency of reference before BIFRF under Section 15(1) of Sick Industries Companies (Special Provisions) Act, 1985 (for Short SICA)?.
The Tribunal has dealt with the above noticed objection one by one. The first issue was regarding the plea of the respondent that the appellant did not dispose of their representation by a speaking order in terms of section 13(3A) of the Act, After noticing various judgments relied upon by the respective parties, the Tribunal below has held as under on this issue:
In my considered view, reply of the respondent bank as aforesaid to the representation is not in proper compliance of provision of Section 13(3A) of SARFAESI Act and Rule 3A(b) of the Rules, 2002 the law laid down by the Hon'ble Supreme Court as well as various Hon'ble High Courts as cited above is quite clear that disposal of all objections without proper application of mind and reasons is not a valid compliance.
Except for that is mentioned above, nothing else is found recorded in the impugned order by the Tribunal. As to how the reply showed non application of mind is not elaborated in any manner.
While dealing with the objection that the property in question was an agricultural land and was exempt in view of section 31 of the Act, it is pleaded that no commercial activity of any kind or nature was carried out and no structure was built on the property. Heavy reliance is placed on a report given by the Local Commissioner appointed by the Tribunal below itself. Local Commissioner report states that the property in question is an agricultural land. The Local Commissioner has also reported that there was nothing to show the land was used for commercial activity. As per Local commissioner, the land contained a water pump which was used for watering and ancillary purpose of crop cultivation.
Tribunal again placed reliance on various judgments and after noticing the Contentions raised by the appellant bank that the land was never used for agricultural purposes and was being used for stock yard and ancillary purposes related to plywood manufacturing activity, the Tribunal has held that there is sufficient evidence on record that different crops were sowed during different period. The Tribunal has also observed that sufficient evidence is available to show that there was no construction or commercial activity carried out on the land. After relying upon the report given by the Local Commissioner the Tribunal has held that the secured assets inherently was an agricultural land and was used for agricultural purposes, and so no proceedings under the SARFAESI Act could have been held in respect of this land.
While dealing with, the objection of the respondent regarding non-application of the provisions of section 8(2) of the Security Interest (Enforcement) Rules, 2002 (for short, the Enforcement Rules), the Tribunal has made reference to the notice which was published in newspapers Economic Times, Chandigarh and New Delhi editions in English as the same cover the entire region of Chandigarh, Delhi and Haryana. Reference is also, made to the affidavit filed by Chief Manager of the bank disclosing that the Delhi edition has Circulation of 1,12,100 in Delhi and Chandigarh edition has circulation of 3,807 copies, Delhi edition of Economic Times has circulation of 14,630 in Haryana and Chandigarh edition has circulation of 2481 in Haryana. The appellant pleaded that the possession notice was published even in Hindi in Dainik Bhaskar, Haryana edition having circulation of 85,737 copies in Rohtak' Region. On the basis of this evidence, it is pleaded that it would satisfy the requirement of carrying out publication of the notice in newspapers having wide circulation in the locality Where the property is located.
On the other hand, the respondent relied upon an affidavit of Mr. Jagmohan Kejrivval stating that the Economic Times had no circulation in village Dekhora, District Jajjar and on that basis had urged that rule 8(2) of the Enforcement Rules had been violated by the appellant bank, Even the respondents have a grievance that the Tribunal though had noticed the respective pleas raised before it by the parties regarding violation of Rule 8(2) of Enforcement Rules but has failed to give any finding in this regard. Respondents have filed appeal to challenge that part of the impugned order pleading that there is no finding recorded by the Tribunal on this issue.
So far the objection concerning the bar under section 22 of SICA is concerned, the counsel for the respondent submits that the same would not now be an issue as no proceedings are pending under the said Act.
I have heard the counsel for the parties and examined, the impugned order very minutely. The Tribunal has quashed the notice under section 13(2) of the SARFAESI Act and the possession notice dated 20.1.2012 by holding that the land in question is agricultural land. The finding is that the land in question being agricultural land would be exempt from being dealt with under the SARFAESI Act in view of section 31 of the Act The Tribunal has further held that the representation of the respondent was disposed of by non-speaking order violating the provisions of section 13(3A) of the said Act. It is noticed that Tribunal has not recorded any finding on the plea of violation rule 8(2) of the Enforcement Rules.
Counsel for the appellant was rather emphatic in his plea that the recovery of a huge amount due from the respondent has been set at naught by the Tribunal without appreciating the material placed on record. My attention is invited to an objection raised by the respondent in response to the notice served upon them under section 13(2) of the SARFAESI Act. In their representation dated 29.12.2011, the respondents herein had pointed out that the land in question was not a commercial land but was purely an agricultural and, It was also pleaded that on this land different types of crops were being cultivated and the claim that building was erected on that land was incorrect. It is further mentioned in the representation
In any case nothing can be said as the undersigned shall provide all the documents which relates that the property which has been claimed as factory, and is purely agricultural land and have been in other record which mentioned about agricultural property
To show the non-application of mind, the counsel for the appellant has referred to the reply of the bank, dated 10.1.2012. It is averred therein that the contents of this para of the objections are incorrect and denied and that the property mortgaged is not agricultural land but is used for commercial activity. As per the counsel for the respondents this is clear indication of non-application of mind and hence would justify the finding of the Tribunal in this regard that the land in question was an agricultural land.
No doubt, there are precedents in plenty where it is viewed that assigning of reason while overruling the objection raised by the borrower is needed as an essential compliance of principles of natural justice and fairness in action. Cryptic reply without disclosing reasons would be in violation of the principles of natural justice as it would deprive any litigation of natural justice. There is no quarrel with this proposition of law noticed by the Tribunal. However, the law cannot be blindly applied to each and every case and it would depend on facts in each case. In response to a notice issued by the bank under section 13(2) of the SARFAESI Act, the respondents submitted their representation claiming that the land in question was an agricultural land. This claim is purely a bald assertion made by the respondents. No supporting documents to substantiation this plea were annexed or produced along with the representation. Rather, the respondents have clearly stated in the representation that nothing can be said in regard to the land and further said that they would provide all the documents which relate that property which has been claimed as factory is purely an agricultural land. Neither any document was annexed with reply nor was any document later provided to the bank. The plea by the counsel that the bank ought to have asked for such documents is nothing but an attempt to transfer burden which rested with the respondent. Once the plea is raised that the land in question is an agricultural land it was the respondent to substantiate the same and can not be permitted to plead that the Bank should have asked for the documents. Bank was under no such obligation under law. The respondent have conceded that nothing can be said in this regard and so were desirous of producing documents in support of their plea. They, however, never did so and made a bald assertion that the land in question was an agricultural land. The submission that subsequently these documents were produced before Tribunal below or this Tribunal would not cure the situation after Bank was required to respond to what was produced or said in the representation and nothing more. The bank could act on the material which was placed before it in the representation and was under no obligation to seek any further information. If the respondents were not interested in placing any material in support of their plea the responsibility rested on then in this regard. It was their duty to do so and the bank could not be expected to come to their aid while responding to the representation. Against the bald assertion made by the respondent in the objections/representation, the bank noticed that this contention was incorrect and that the property in question was not an agricultural land. Rather the Bank further stated that the same was used for commercial activities. Considering the plea of the respondent and the manner thereof nothing more could be expected from the bank. In my view, if the respondents would allege non-application of mind on the part of the bank, they certainly are found wanting in properly establishing their plea which was raised without the support of and material or document. Bald assertion could equally be rejected by a bald denial.
To be fair to the counsel for the appellant, he has drawn my attention to the copy of an insurance policy filed by the respondents (Annexure-A9) where the land in question has been insured for a sum of Rs. 3 crore. It is also mentioned in this policy that stock of wood and wooden logs in pond valued at Rs. 3 crore are the stock which has been insured. From this, the counsel would contend that the agricultural land measuring 32 kanals can under no circumstances would require insurance of Rs. 3 crores unless the same was being used for commercial activity.
I still could have considered this plea, but find that the Tribunal below has not recorded any reason in support of finding and has just recorded its ipse dixit, that there was no proper compliance of provisions of section 13(3A) of the Act and rule 3A(b) of the Rules. How there was non-compliance of the provision is not at all recorded in the impugned order. Noticing various judgments and then recording that the provisions have been violated would make the impugned order to be an order without reason. Recording of reasons for passing an order is not only desirable but necessary as well. Reasons recorded in the order impacts clarity and reduces the chances of arbitrariness in passing the order and enables the higher courts to find out whether the decision was arrived at in a just and fair manner after cue consideration of the facts having bearing on the matter uninfluenced by any other consideration. Right to reason is an indispensable part of judicial system and enable the affected party to know why the decision has gone against him. The order passed even by the High Court was set aside by the Apex Court where the court had refused appeal without assigning any reasons. The purposes for recording reason is to understand what had weighed with the Court or a tribunal to arrive at a particular conclusion. No reasons are found recorded on the basis of which the Tribunal below has held that there was non-compliance of provisions of section 13(3A) can not be made out from the impugned order.
The facts that no material was placed before the Bank by the respondents to show that the land in question was an agricultural land can also not be ignored. When confronted with this fact that the respondents themselves had pleaded in their representation that they would provide documents in this regard, which they never did and that the bank could not be expected to say anything more than what has been stated in the reply while rejecting the plea of the respondents, the counsel could not say much on this aspect.
Besides, the Tribunal has failed to adjudicate the issue with regard to the non-compliance of rule 8(2) of the Enforcement Rules. After having noticed this submission, the Tribunal did not return any finding on this issue.
Even the respondents are aggrieved by the part of the order whereby the Tribunal has not given any finding on rule 8(2) or violation thereof. Since the Tribunal has failed to record the finding on one of the pleas raised before it the parties can rightly make a grievance. Keeping the above noted pleas in view, it would be proper to remand this case back to the Tribunal for considering the issue afresh as the impugned order passed by the Tribunal is found to be without assigning any reason. It would, therefore, be appropriate for the Tribunal to consider all the pleas once again and dispose these by passing a speaking order giving reasons in support of finding. The impugned order is accordingly set aside and the case is remanded back to the Tribunal for deciding the same afresh in the light of the observations made above. The status quo as it exists today shall remain till the S.A. is decided by the Tribunal below. The Tribunal is directed to dispose of the S.A. within a period of three months from the date of receipt of a copy of this order.
Both the appeals are disposed of in the above terms.
Copy of this order be furnished to the parties as per law and be also sent to the DRT concerned forthwith.