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Judgment
R. Banumathi, J.—Petition filed for issuance of writ of certiorarified mandamus to quash the notice issued by the respondent u/s 13(2) of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, the SRFAESI Act) and forbearing
the respondent from taking possession of the house in Ward No. 4, Block No. 3 in T.S. No. 42, Rajenderan Road, Palani measuring 9248 sq. ft.
The petitioner and his mother - Sivakami (since dead) have availed the following loans from the respondent Bank:
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Nature of facility Limit
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Minor Irrigation .... Rs. 1,15,000
Sericulture .... Rs. 10,000
STPL - A/c K. Rajasckar ... Rs. 25,000
STPL - A/c K. Sivakami ... Rs. 25,000
Coconut Plantation ... Rs. 40,000
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The petitioner and his mother have executed the loan documents in respect of each of the said facilities. The operation of the account was not
satisfactory and the petitioner did not adhere to the repayment schedule.
O.S. No. 202/1998
The respondent/Bank has filed the suit before the Sub-Court, Palani on 27.8.1998 claiming a sum of Rs. 5,60,934.25 and the subsequent
interest. The Mortgage Suit was Decreed and a Preliminary Decree was passed on 2.4.2002.
Show-cause notice u/s 13(2) of SRFAESI Act
Even after the passing of the Preliminary Decree, the petitioner and his mother have not repaid the loan amount. Hence the respondent/Bank had
issued Section 13(2) notice calling upon the petitioner to pay the amount within sixty days from the date of the notice. Challenging the notice issued
u/s 13(2) of SRFAESI Act, this writ petition is filed.
Case of the petitioner is that u/s 31 of the SRFAESI Act, the provisions shall not apply to any property not liable to attachment or sale under the
Proviso to Section 60(1), CPC. Notice is also challenged on the ground that u/s 31(i) any security interest created in agricultural land is exempted
from the operation of Section 31 of the Act. The learned Counsel for petitioner has submitted that the petitioner is an agriculturist, occupying the
house and the house is not liable for attachment or sale as per the provision of Section 60(1), CPC.
On behalf of the respondent/Bank, Counter Affidavit is filed pointing out earlier filing of writ petition W.P. No. 23607/2003 by the petitioner,
wherein the petitioner has taken time to settle the dues under compromise. Even after taking time, the petitioner has not paid the amount.
Alternative remedy is available to the petitioner and hence the writ petition is not maintainable. The contention of the petitioner that he is using the
house as residential is incorrect; the petitioner has constructed several shops and leased out the same for rental.
The learned Counsel for the respondent/Bank inter alia made the following submissions:
Section 60(1), CPC is not maintainable to the cases of mortgage since in mortgage there is no necessity for attachment of the properly mortgaged
A. Nabisa Beevi Vs. The Manager, Canara Bank, Nagarcoil, ;
The notice issued u/s 13(2) of the SRFAESI Act cannot be challenged in view of alternative remedy reliance placed upon Digivision Electronics
Ltd. Vs. Indian Bank, ;
The petitioner has to prove that he is an agriculturist within the meaning of Section 60(1)(c) and no materials are produced by the petitioner;
The house property measures 9248 sq. ft. situated in the heart of Palani Town and the petitioner has constructed number of shops and leased out
the same and the property is not a residential house.
The petitioner challenges the issuance of Section 13(2) notice. As per the provisions, on receipt of notice u/s 13(2), the debtor can raise
objection; the secured debtor has to pay the amount to the said creditor. If the secured creditor does not accept the objections raised by the
debtor, the reason has to be communicated to the borrower by the secured creditor. Thus the borrower can raise all objections legally and
factually in reply to the notice u/s 13(2) of the SRFAESI Act.
Elaborately considering the scope of notice u/s 13(2), in the light of the observations of the Supreme Court made in Mardia Chemicals Ltd. Vs.
Union of India (UOI) and Others Etc. Etc., , the Division Bench of this Court held that the writ petition filed challenging the notice issued u/s 13(2)
is premature. In the said judgment, the Division Bench has held:
In a sense the notice u/s 13(2) of the Securitisation Act is really is show-cause notice, and ordinarily this Court does not interfere with show-
cause notices, vide The Special Director and Another Vs. Mohd. Ghulam Ghouse and Another, Ulagappa v. Divisional Commissioner, Mysore
2001 (10) SCC 639 ; Executive Engineer, Bihar State Housing Board Vs. Ramesh Kumar Singh and others, . The notice u/s 13(2) of the
Securitisation Act really does not give any rise to a cause of action because by itself the notice does not affect any right or liability of the borrower.
Hence, challenge to the notice u/s 13(2) of the Securitisation Act is premature, since it is possible that the secured creditor may be satisfied with
the reply of the borrower to the aforesaid notice and may drop the proceedings. Hence, all the writ petitions challenging notice u/s 13(2) of the
Securitisation Act are dismissed on the ground that the writ petitions are premature, and the petitioners have an alternative remedy of raising all the
points which they are raising in these writ petitions in their reply to the notice u/s 13(2) of the Securitisation Act. As already stated above, the
secured creditor must decide the objection of the borrower to the notice u/s 13(2) of the Securitisation Act by a reasoned order, and if the
objection is rejected the rejection order must be communicated to the borrower.
The above observation squarely applies to the present case.
The learned Counsel for the writ petitioner has urged that in the instant case, there is flagrant violation of the provisions of law. It is contended
that unlike in other cases, in this case. Preliminary Decree was passed on 2.4.2002 and without due regard to such decree passed by the Civil
Court, the respondent/Bank has issued Section 13(2) notice as a threatening measure and hence the writ petition is maintainable. Though the writ
petition is premature, in view of the elaborate submissions made, this Court has also considered the merits of the contentions urged by the parties.
Notice issued u/s 13(2) is challenged mainly on the two grounds:
(i)The properly is a residential house, in the occupation of the agriculturist. u/s 13(1)(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);
(ii) Secondly, the property mortgaged to the respondent/Bank in T.S. No. 42, Rajendran Road, Palani measuring 9248 sq. ft. is the house in the
occupation of the agriculturist and security interest created in agricultural land.
Thus the notice is challenged mainly on the ground of Sections 31(g) and 31(i) of the SRFAESI Act.
This contention has no merits. By along catena of decisions, it is well settled that in respect of mortgage decrees, there is no need for any
attachment. Holding that mortgage decree is outside the purview of Section 60(1), CPC and proviso thereunder in AIR 1994 Mad 249, A. Nahisa
Beevi v. The Manager, Canara Bank, Nagercoil, this Court has held:
In the case of mortgage decrees in a suit for sale, as in this case, the Preliminary Decree directs the payment into Court of the amount due under
the mortgage decree on or before a particular date, failing which the decree holder is given the liberty to apply for a final decree for the sale of the
hypotheca. In a case where the money is not so deposited or paid, on an application made in that behalf, by the decree-holder, the Court passes a
final decree and the sale is directed by the decree itself. The decree itself having directed the sale owing to the non-payment of the amount, there is
no need or necessity to attach the property in execution of such a mortgage decree, but the property is sold though Court in satisfaction of the
decree. It would, therefore, be open to a decree-holder to bring to sale even the properties enumerated under the proviso to Section 60(1), Civil
Procedure Code, pursuant to the final decree for sale granted in his favour without resorting to attachment or sale. This establishes that in cases
where the sale of the property is directed by immediately appurtenant thereto and necessary for their enjoyment) belonging to [an agriculturist or a
labourer or a domestic servant] and occupied by him.
The relevant Explanation V to Section 60(1) reads as under:
For the purposes of this proviso, the expression ''agriculturist'' means a person who cultivates land personally and who depends for his livelihood
mainly on income from agricultural land, whether as owner, tenant, partner or agricultural labourer.
Drawing the attention of the Court to Section 60(1)(c) and Explanation V of CPC, the learned Counsel for petitioner contended that even
though the house property is covered under mortgage, house belonging to agriculturist is exempted u/s 60(1)(c), CPC and the same is to be
treated as security created under the agricultural land/house belonging to an agriculturist, falling outside the scope of Section 60(1)(c), CPC and the
operation of Section 31 of SRFAESI Act. To attract the scope of Section 60(1)(c), CPC, the petitioner must be in possession of the house for
agricultural purpose. As per the Explanation V, in order to attract Section 60(1)(c), CPC, the petitioner must show that his main source of income
is only from agriculture. In Damu Vs. Basavaraj Appayya Hiremath, , the Karanataka High Court has held:
In order to attract, Section 60(1)(c), judgment-debtor must show that his only and main somxe of maintenance is from agriculture. It is for him to
show that he was personally cultivating the land and he lives by the income derived from the lands. Even though he may not own lands, he must
shown that his main source of income is by working in the lands belonging to others. In the absence of any such evidence, it cannot be said that the
judgment-debtor would be an agriculturist or a labourer or a domestic servant within the meaning of Section 60(1)(c).
The petitioner has not produced any material showing that his main source of income is only from agriculture. When there is no evidence to
show that the petitioner is an agriculturist or any connection between such agricultural operations and the secured house property, the petitioner is
not entitled to immunity u/s 60(1)(c), CPC.
Exercising the writ jurisdiction, though the Court cannot go into the factual aspects, to appreciate the fallacy of the contention of the petitioner,
it is necessary to point out one aspect. The house property is in the heart of Palani Town comprised in nearly two grounds, measuring 9248 sq. ft.
It is said that the petitioner has constructed several portions and let out to tenants. The learned Counsel for respondent has produced the Demand
Notice issued to the petitioner in respect of five portions in assessment Nos. 4747,4748,4849,4850,4746. In the said Demand notices, the
petitioner had been called upon to pay the Property Tax from 2002-2003-1 upto 2004-2005-11. When the petitioner had put up construction in
such a vast extent and let out to several tenants, it is nothing but unjust on the part of the petitioner in contending that house in occupation of the
extensive area of 9,248 sq. ft. is for agricultural purpose.
The petitioner has not made out a case. The writ petition appears to have been filed only to delay the proceedings. No doubt, the Bank has
obtained decree in the Mortgage Suit in O.S. No. 202/1998. Even though the Civil Proceeding is pending, the Bank could call in aid the provisions
of the SRFAESI Act, 2002. In Abdul Azeez Vs. Punjab National Bank, , the Kerala High Court has held:
Section 13(1) of the Act confers power on the creditor for enforcement of security interest without the intervention of the Court or Tribunal. No
where it is stated in the statute that once the jurisdiction of the Civil Court has been involved the provisions of the Securitisation Act would not
apply. Before the coming into force of the Securitisation Act, the remedy open to the Bank was to approach the Civil Court or Debt Recovery, as
the case may be. The expression ''without the intervention of the Court or the Tribunal'' was used to show that the option is on the Bank to move
the Civil Court or the Tribunal under the Act, but there is no bar under the Statute that having approached the Civil Court Section 13(1) of the Act
be not invoked. The provisions of the Act or the rules made thereunder shall be in addition to, and not in derogation of, the other laws. So the
remedy provided under the Act is an additional remedy which is unless barred by the statute can be enforced at any point of time. This being the
legal position, we find no illegality in the Bank taking recourse to the provisions of the Securitisation Act, 2002 even though civil suits are pending
concerning the subject matter.
Thus the expression ""without the intervention of the Court or the Tribunal"" used in Section 13(1) of the Act, shows that the option is given to the
Bank to move the Civil Court or the Tribunal under the Act. There is no bar in invoking the provisions of the SRFAESI Act, after having
approached the Civil Court.
Averments made in the affidavit, ""Since I am an agriculturist, and occupying the above house, it is not liable for attachment and sale"" is false.
Only on the basis of the said averment, the petitioner appears to have obtained some order in W.P. No. 23607/2003, wherein certain directions
had been given to the respondent. The petitioner has not proved that the house property is a residential portion. On the other hand, available
materials clearly show that premises are being let out to tenants and the petitioner has knowingly made a false statement before the Court.
For the foregoing reasons, the petitioner is not entitled to the relief sought for and the petition is dismissed. The petitioner is directed to pay
cost of Rs. 5000 (Rupees five thousand only) to the respondent/Bank.