Dama Seshadri Naidu, J.
1. A company borrows, and another company mortgages its property to secure the loan. Two NRI directors, wife and husband, own both the companies. Default committed, the Bank brings four secured properties for sale. The sale becomes the bone of contention.
2. The companies contend that the upset price in auction is ludicrously low; they also maintain that one property answers the description of agricultural land. So Section 31 of the SARFAESI Act bars its sale. We will examine both these contentions.
3. The 1st and the 2nd petitioners are the Private Limited Companies. The 3rd petitioner, an individual, is a Director in both the Companies. In fact, both the Companies are closely held family ventures. Of the respondents, the first respondent is the Bank; the second, the purchaser who purchased two of the four secured assets; and the third, the Tribunal.
4. The 1st petitioner-M/s.Sharada Flour Products Pvt. Ltd. initially took two term loans of Rs. 6 crores and Rs. 1.5 crores, besides a cash credit facility for Rs. 6.5 crores. When the loans were renewed, the cash credit was brought down to Rs. 5.5 crores. When Sharada took the loan, the second petitioner- M/s.Thekkemukkalil Properties Pvt., Ltd.,-mortgaged one among the four properties as collateral security. All the accounts turning Non-Performing Assets, the Bank began recovery proceedings. By 31.07.2017, the overdue amount stood at Rs. 10,80,58,608/-.
5. Neither the debtor nor the guarantor-that is, Sharada or Thekkemukkalil-responded to the Bank's notices, statutory or otherwise. So after completing the stages under Sections 13 and 14 of the SARFAESI Act, the Bank brought all the four secured assets for sale, through the auction notice dated 20.12.2017. In the sale held on 05.02.2018, it sold two items.
6. To claim the fourth item, that is 67.45 Ares of land, one Roy Cheriyan filed WP(C) No.2264 of 2018 in January 2018 and obtained an interim order. This Court held that the Bank may go ahead with the sale of the properties, but it should take up the fourth asset as the last item-only if the bank could not realise the loan amount with the sale of the other three items. In the end, the Bank tried to sell the last item, too; but no bidder came forward. True, the Bank also failed to sell both the third item.
7. First and second items, however, were sold to the 2nd respondent. All the three petitioners-the two companies and one Director-filed SA No.90 of 2018, taking various pleas. Principal among them are these: that the reserve price in the auction is abysmally low, that the sale consideration was woefully inadequate; that as the third item is an agricultural land, the SARFAESI Act cannot be invoked to sell it.
8. The Debt Recovery Tribunal-II, Ernakulam, through Ext.P5, a well-reasoned order, dismissed the SA. Though the petitioners have an efficacious alternative remedy-an appeal before DRAT-they filed this writ petition. True, the petitioners do plead that this writ petition is maintainable.
9. In the above factual background, both the petitioners and the respondents advanced their arguments.
10. Sri S. Sreekumar, the learned Senior Counsel for the petitioners, has assailed the Bank's action on two counts: (i) that the value of the properties brought for sale was fixed too low; and (ii) that the Bank brought to sale, among other properties, even the agricultural land, and this violated Section 31 of the SARFAESI Act.
11. First, the learned Senior Counsel contended that after pre-auction notice on 20.12.2017, the Bank sold the first item on 05.02.2018. In the sale the reserve price was fixed at Rs. 2,92,33,000/-. But the Bank's approved valuer earlier put the property value at Rs. 5,73,78,000/-. To have the breakup, the valuer estimated the land cost at Rs. 3,62,70,000/- and that of the WPC No.20494 of 2018 building at Rs. 2,11,000/-. The petitioners' grievance, according to the Senior Counsel, is that the sale was knocked down for Rs. 2,92,33,000/-, far below the valuer's estimate. He also submits that though the Bank tried to sell away the other three items, including the agricultural land, but it could not find purchasers. In this context, the learned Senior Counsel argues that the other items, too, had the reserve price fixed at the lowest level. The Bank clubbed both the agricultural and the non-agricultural lands, he also asserts, and brought them up for sale, through a composite sale notice; it violates the statutory scheme.
12. Second, the learned Senior Counsel, more elaborately, focused on item no.3 of the sale notice-that is, 241.70 ares of land. He asserts that it is agricultural land. He draws my attention to the Advocate Commissioner's report, dated 13.03.2018. He also contends that the report unmistakably reveals that the property is agricultural land. The revenue records describe the property as 'purayidam'. Then taking me through Section 31 of the Act, the learned Senior Counsel contends that the third item of sale notice ought not to have been brought to sale.
13. Faced with the alternative remedy, the learned Senior Counsel submits that the petitioners in this writ petition have raised a jurisdictional issue. According to him, the Tribunal ought to have interdicted the Bank's action in bringing the third item to sale. In other words, since SARFAESI Act does not apply to agricultural lands, it is essentially a question of jurisdiction-or the lack of it. So he contends that the writ petition against Ext.P5 order of the Tribunal sustains itself.
14. To support his proposition about undervaluation, about applying the SARFAESI Act to agricultural land, and about the jurisdictional justification, the Senior Counsel has relied on these judgments: Muhammed Basheer v. Deputy General Manager, Kannur District Co-op.Bank Ltd., 2010(2) KHC 385, Narayanan Nair v. Lokeshan Nair, 2014 (2) KLT 868, Authorized Officer, State Bank of Travancore v. Mathew, 2018(1) KHC 786 WPC No.20494 of 2018 Commissioner of Income Tax v. Chhabil Dass Agarwal, 2014 (1) SCC 603, Bhpinder Singh v. State of Bank of Patiala, AIR 2008 P&H 148 and Indian Bank v. K. Pappireddiyar.
15. And Sri Sreekumar has drawn my attention to ITC Limited v. Blue Coast Hotels Ltd, 2018(4) SCALE 628 Gajula Exim (P) Ltd. v. Authorised Officer, Andhra Bank AIR 2008 Andhra Pradesh 184 and Maheshwari Fish Seed Farm v. T.N.Electricity Board.(2004) 4 SCC 705 According to him, these judgments differ on facts and the ratio will not affect the petitioners' case.
16. Sri C.K. Karunakaran, the learned counsel for the respondent Bank, to begin with, has submitted that the writ petition must fail for the petitioners have an efficacious alternative remedy: Debt Recovery Appellate Tribunal. When I queried whether I should first enter a preliminary finding on the maintainability of the writ petition, he has, however, submitted that he could convince the Court on the merits, too. And he went on to address the case on other aspects as well.
17. First, Sri Karunakaran has drawn my attention to Muhammed Basheer v. Deputy General Manager, Kannur District Co-op.Bank Ltd.2010 (2) KLT 577, and State Bank of India v. Santosh Gupta, (2017) 2 SCC 538 WPC No.20494 of 2018 to highlight the legislative fields in Schedule VII under which the SARFAESI Act was brought about. Then, he has laid frontal emphasis on Blue Coast Hotels case, to contend that the issue raised here stands squarely covered.
18. Sri Karunakaran has contended that 'purayidam', as a revenue term, compels no conclusion that it is agricultural land. According to him, whatever is not 'nilam' is described generically as 'purayidam'; it is a residuary entry. He has also submitted that the petitioners themselves offered the property as security. They could not deny that the property was owned by a commercial entity and the security was offered for a commercial activity. So he would have the Court hold that the petitioners are estopped from contending that the land given in security is agricultural land.
19. I may place on record a development in the case: the respondent Bank, during arguments, relied on various documents which were not part of the record. When objected, Sri Karunakaran contended that the petitioners themselves gave to the Bank all the documents, when they had taken the loan. As these documents originate from the petitioners and their authenticity cannot be questioned, the objection at best could be technical.
20. Then. Sri S. Sreekumar for the petitioners submitted that if the Bank brought them on record through a proper petition, the petitioners would contest their, the veracity or relevance. So the first respondent filed a counter affidavit and brought on record the second set of documents. Arguments Continued:
21. Sri Karunakaran has referred to the Company's Memorandum and Articles of Association. Among the Company's many activities, agriculture is not one. He has also referred to the Company's Balance Sheet and Profit & Loss Account to emphasize that the Company had no income or even expenditure under the head "agricultural activities". In other words, in neither document is there a head 'Agriculture'.
22. About the valuation of the properties, Sri Karunakaran contends that the Bank, first, got the properties valued through one valuer. But it felt that the value was abnormal-on the higher side. So, later, it got the valuation redone by another valuer. Then, it has also called for the market value from the government records. After comparing all these values, the Bank has fixed the upset price. The Bank has taken utmost care to ensure that the property was valued properly. Indeed, Sri Karunakaran has elaborated on the petitioners' attitude in defaulting on repayment and refusing to even regularise the loan, despite many opportunities given. He then submits that the petitioners' effort is only to drag the proceedings.
23. To support his contentions, besides relying on Blue Coast Hotels, Sri Karunakaran refers to Muhammed Basheer and Remani Thomas v. Assistant General Manager Unreported judgment dated 06.06.2016 in W.A.980/2016 (Division Bench) an unreported judgment of a Division Bench of this Court dated 06.06.2016 in W.A. No.980 of 2016. In the end, Sri Karunakaran has urged this Court to dismiss the writ petition.
I. Do the petitioners have an efficacious alternative remedy to challenge the DRT's Ext.P1 order?
II. Does the alleged undervaluation affect the sale of the secured assets?
III. Did the Bank bring to sale any agricultural land, violating Section 31 of the Act?
Do the petitioners have an efficacious alternative remedy to challenge the DRT's Ext.P1 order?
24. The petitioners questioned the Bank's recovery proceedings in SA No.90 of 2018, before the Tribunal. Faced with an adverse order, they chose to file this writ petition, rather than invoke Section 18: filing an appeal before the Debt Recovery Appellate Tribunal. The petitioners defend their choice of forum, claiming that they have raised here a jurisdictional question. The alternative remedy, the petitioners maintain, does not affect the case prospects. This plea could have been probed, but the Bank came forward to repel the petitioners' case on merits, too. True, the Bank did take a plea about the alternative remedy-only after a fashion.
25. Much time spent on hearing the case on merits, I reckon it is imprudent for me to shun adjudication on this count: the alternative remedy. So this issue needs no answer.
Does the alleged undervaluation affect the sale of the secured assets?
26. Let us see how the Bank valued the secured assets before its bringing them for sale. For item No.1, the Bank fixed the reserve price: for land - Rs. 3,62,70,000/-; for land - Rs. 2,92,33,000/-; for the factory - Rs. 2,11,00,000/-. The borrowers contend that the land alone was undervalued by Rs. 2,81,37,000/-, for the land's actual market price must be Rs. 5,73,70,000/-. For item No.2, they plead a difference of Rs. 54,00,000/-; for item No.3, the difference is Rs. 1,78,76,000/-; for item No.4, Rs. 1,66,27,000/-.
27. As to the item No.1, not in dispute is the fact that when the borrowers availed themselves of the credit facility in 2014, the land, with incomplete structure and without machinery, was valued at Rs. 1.35 crore. In 2015, when the borrowers had the credit limits renewed, the value was Rs. 2.85 crore-with structures, as is evident from the Ext.R1(f). The account declared an NPA, the bank had its panel valuer determine the property's market value in February 2017; he valued it at Rs. 5.76 crore. The Bank contends that it noticed huge difference in the value. So it wanted to have a second opinion, so to say. Then, its another panel valuer, in May 2017, reckoned the value at Rs. 2,70,00,000/-. The Bank felt it reasonable. The Ext.R1(h) reflects this exercise. Yet the Bank secured the fair value fixed by the Registration Department, as seen from the Ext. R1 (i).
28. Finally, the Bank justifies its action, contending that it fixed the reserve price taking the highest of the three valuations that is the value prevailing in 2014, that in 2017 as fixed by the second valuer, and that as reflected in the Government records in 2017. It did admit that it refused to consider the valuation done in February 2017, for it felt it to be too high.
29. Indeed, in Bhpinder Singh, the Punjab & Haryana High Court wondered why the bank did not explain how the valuer in September 2005 valued the secured asset at Rs. 4,16,000/-, when the bank's another valuer, in June 2003, valued it at Rs. 6,14,294/-. The courts can always, asserted the Division Bench, take cognizance of the price escalation with the passing time. Here, I reckon, the Bank did give valid reasons.
30. Curious is the petitioners' plea. They pleaded, as noticed by the DRT, that they had sold all the mortgaged properties (4 items) to various persons for Rs. 1,52,35,000/-. So the DRT observed that the sale price of all the four properties by the petitioners themselves was very much below the Reserve Price of the 1st item in the auction. In the writ petition, too, this pleading remained unamended or explained, as rightly contended by the Bank's counsel. So I find this issue against the petitioners: the Bank did assign valid reasons for the upset price it fixed.
Did the Bank bring to sale any agricultural land, violating Section 31 of the Act?
31. Both the companies claim to be "manufacturing Wheat and Atta Products." The Bank repels this assertion. According to it, Sharada used to engage itself in wheat products; Thekkemukkalil undertakes the building contracts and various other construction activities, "including promoting commercial and residential buildings." The company's objectives unmistakably show in the Exhibit R1 (a) that it has no agriculture.
32. Thekkemukkalil is a closely held company, as is Sharada. It has two directors-both NRIs. And now they claim they hold agricultural property. Until the Bank brought the property for sale, nowhere did the Company take a plea that the property was agricultural land. The many documents the Company produced before the Bank, now placed here, would not refer to any agricultural income. The Auditors' report, the Audited Balance Sheet, and Profit and Loss Account till March 2015 are a few of them.
The Commissioner's Report:
33. The Tribunal, on the petitioners' request in I.A. No.445 of 2018, appointed an Advocate Commissioner, who inspected and submitted Ext.P2 report. The Advocate-Commissioner does note that he has verified the BTR (Basic Tax Register) helped by the Village officer. The property in the village records is 'purayidam.' The Agricultural Officer has opined that the WPC No.20494 of 2018 property is an agricultural land, where coconut is cultivated. He also records that the land owner, so far, has taken no subsidy for conducting agricultural activities. He finds "coconut groves" and records the average yield of 3000 coconuts every forty-five days an estimate, though.
What is an Agricultural Land?
34. What is an "agricultural land"? This question crops up often, but yields no definite answer. With no statutory definition to aid the Courts, the judicial efforts to define the term have fluctuated.
35. Section 31(i) of the SARFAESI Act mandates that it will not apply, among other things, to any security interest created in agricultural land. In fact, 'security interest' was defined, before its amendment, in Section 2(zf) as follows: 2(zf) "security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in Section 31; Clause (zf), substituted with effect from 1st September 2016, reads thus: (zf) "security interest" means right, title or interest of any kind, other than those specified in Section 31, upon property created in favour of any secured creditor.
36. In Muhammed Basheer, this Court, per a Division Bench, considered whether 'rubber plantation' is agricultural land. The question, to be precise, is this: Should a piece of land planted with rubber, be excluded from the term 'agricultural land', as mandated under Section 31(i) of the Act? Muhammed Basheer culled out the well-entrenched legal principles on interpretation and held that the Court read nothing into a statutory provision plain and unambiguous. A statute is an edict of the legislature, and the language employed in it determines the legislative intent. The first and primary rule of construction, it goes on to observe, is that the intention of the legislation must be found in the words used by the legislature itself. In other words, Muhammed Basheer applied the golden rule of interpretation: the principle of plain words. To sum up, I may WPC No.20494 of 2018 observe that for Muhammed Basheer, the legislative intent is not a matter of investigation; it is, on the contrary, a matter of plain meaning.
37. Then, Muhammed Basheer probed the semantic nuances of the term "agricultural land". It relied on R.D. Saxena v. Balram Prasad Sharma (2000) 7 SCC 264 and Diwan Bros. v. Central Bank of India (1976) 3 SCC 800 to hold that "where a statute does not define a term used in it, the legislature should be presumed to have used that word in its ordinary dictionary meaning." Thus, preferring the lexical meaning, Muhammed Basheer concluded that rubber plantation is agricultural land.
38. Section 31 of the Act, Muhammed Basheer acknowledges, exempts agricultural land "with the predominant thrust on matters attendant to livelihood and small items and that properties of commercial matters are not included therein." It notes the legislative fields of the Center and the State-Entries 86, 87 and 88 of the List I and Entry 18 of the List II-but steers clear, aptly, of constitutional considerations on the agricultural land getting exempted under Section 31. For Muhammed Basheer "it may not be a safe method of interpretation to look into the legislative wisdom unless such a course becomes inevitable." This observation proved prophetic because of the later precedential developments, especially, in Blue Coast Hotel case.
39. But a Division Bench of this Court in Remani Thomas v. Assistant General Manager, (Judgment, dated 06.06.2016), clarified Muhammed Basheer. And, fittingly, the clarification came from none other than the same learned judge who rendered Muhammed Basheer: Sri Justice Thottathil Radhakrishnan, the Ag. CJ., as his Lordship then was. In Remani Thomas, the petitioner took the same plea as did the borrowers here. She relied on Muhammed Basheer. The Division Bench observed that in Muhammed Basheer, the question was whether rubber plantation could be treated as agricultural land. It observes that the "decision is not decisive and is not applicable to the question on hand, i.e., as to whether a particular land is to be treated as agricultural land on the materials available and the facts of the particular case."
40. In Narayanan Nair, a learned Single Judge, in a different context, relies on the Oxford English Dictionary and the Black's Law Dictionary to define "agriculture" and allied terms. In Gajula Exim, the erstwhile High Court of Andhra Pradesh has found buildings and machinery on the property. But the petitioner contended that it was agricultural land because he had paid land revenue. As the petitioner was dealing in seafood, the High Court refused to accept the land as agricultural land just because the land revenue was paid. In Maheshwari Fish Seed Farm, the Supreme Court posed unto itself whether pisciculture is agriculture. It held it is not.
41. The Bank did rely on Synthite Industries Ltd. v. Commissioner of Income Tax  404 ITR (Ker.), to contend that once the land yields no income and stands included in "stock in trade" of the company, that land cannot be treated as agricultural land. But the facts here differ. So the holding of Synthite Industries does not apply here.
42. The High Court of Jammu & Kashmir held that the key provisions of the SARFAESI Act were outside the legislative competence of Parliament, for they would conflict with section 140 of the Transfer of Property Act of Jammu and Kashmir, 1920. On appeal, the Supreme Court in Santosh Gupta has ruled that the entire Act, in pith and substance, "is referable to Entry 45 List I read with Entry 95 List I in that it deals with recovery of debts due to banks and financial institutions, inter alia through facilitating securitization and reconstruction of financial assets of banks and financial institutions, and sets up a machinery in order to enforce the provisions of the Act." In other words, SARFAESI Act does not deal with "transfer of property".
43. In K. Pappireddiyar, the Supreme Court acknowledges that the lexical provision, Section 2, of the Act does not define the expression "agricultural land". And, then, it observes that "whether a particular piece of land is agricultural in nature is a question of fact." The Court tellingly observes that
[T]he classification of land in the revenue records as agricultural is not dispositive or conclusive of the question whether the SARFAESI Act does or does not apply. Whether a parcel of land is agricultural must be deduced as a matter of fact from the nature of the land, the use to which it was being put on the date of the creation of the security interest and the purpose for which it was set apart.
44. To conclude thus, K. Pappireddiyar continues its reasoning advanced in Blue Coast Hotels. So let us examine that decision, vigorously relied on both by the borrowers and by the banker.
45. In Blue Coast Hotels, the Supreme Court has examined the constitutional contours of the SARFAESI Act, especially Section 31. It has also adopted the purposive interpretation to unravel the statutory significance of "agricultural land." The purpose of enacting Section 31(i) and the meaning of the term "agricultural land", according to Blue Coast Hotels, assume significance. This provision, like many others, is "intended to protect agricultural land held for agricultural purposes by agriculturists" from the extraordinary provisions of this Act, which provides for enforcing the security interest without the court's intervention. The plain intention of the provision is to exempt agricultural land from the Act. In other words, the creditor cannot enforce its security interest in agricultural land without the intervention of the Court or Tribunal. "The exemption thus protects agriculturists from losing their source of livelihood and income i.e. the agricultural land, under the drastic provision of the Act."
46. Blue Coast Hotels also notes that the exemption deters the creation of security interest over agricultural land as defined in Section 2 (zf)31: "Thus, security interest cannot be created in respect of property specified in Section 31." Further significant is the observation: no security interest can be created in agricultural lands. Yet, if created, it goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security disregarding its nature.
47. On the legislative competence of the Parliament to engraft exemption under Section 31, Blue Coast Hotels repels the contention that the State Legislature alone is competent to legislate on "land" under Entry 18 of List II. Then, it holds that though Section 31(i) exempts agricultural land from the Act, "it is not possible to construe such a provision as a legislation on agricultural land. In fact, it is quite the contrary. Moreover, Section 31 (i) is one of the provisions in the Act which has been held by this Court as referable to Entry 45 of List I." It relies on Union of India and Anr. v. Delhi High Court Bar Association and Ors, (2002) 4 SCC 275.
48. Blue Coast Hotels, in the end, holds that the character of the land depends "on the purpose, for which it is meant, or set apart, or used". It ought to be determined on the facts of each case. One object of the exemption, it notes, seemed to be to encourage cultivation or actual utilis
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ation of land for agricultural purposes." If the condition of the land or the intention of its owners or possessors does not refer to an agricultural purpose, the land could not be treated as "agricultural land" to earn an exemption under the Act. The Impact: 49. All this said and done, we must, in the end, examine how the borrowers described the land when they offered it as security. Ext.P1 is their proposal to Bank to restructure the loan. It describes the property: Excess charge of EM of 597 cents of vacant land in the name of Thekkemukkalil Properties (P) Ltd., represented by Managing Director Mr. Krishnamurthy Nair, Muraleedharan Nair on the NH side, partly waterlogged at Karuvatta, Haripad, Alapuzha District, in Re Sy. No.12/1-2, 12/2-2, 12/1, 12/2-4, 12/2-3. 50. In fact, this was how the borrowers described the property throughout: from the date they took the loan till the date they property was brought for sale. The records the borrowers offered to the Bank do not whisper the land is agricultural. It is the defence the borrowers took only when the Bank brought the property for sale. 51. Indeed, the nature of land came to light, first, only through the Commissioner's report. Neither Company informed the Bank at any stage that the property is agricultural land. It is not even the borrowers' case that the Bank knew about land. 52. Going by the holding of Blue Coast Hotels, Section 31 intends to protect agricultural land held for agricultural purposes by agriculturists. It also notes that the exemption protects agriculturists from losing their source of livelihood and income that is, the agricultural land-under the drastic provision of the Act. 53. Regrettably, the borrower Companies have miserably failed to measure up to the exceptions engrafted in Blue Coast Hotels, to claim immunity for their property from the SARFAESI Act. 54. To sum up, Thekkemukkalil Company (a) does not answer the description of an agriculturist; (b) does not cultivate the land; (c) derives no income from agriculture; (d) does not have agriculture as an object; and (e) did not inform the Bank that the secured asset is an agricultural land. So it does not fit into the niche Blue Coast Hotels created to protect genuine agriculturists. 55. I may, to conclude, hold that the debtor's last gasp effort to save the property with endless excuses and plethora of pleas should wilt in the judicial gaze. A salutary provision aimed at protecting poor peasants cannot aid corporate concerns camouflaged as agriculturists. Here, the companies induced the Bank to lend, offered property, kept the Bank in dark about the alleged nature of the property, bargained with the Bank, borrowed time, and finally, driven to wall, cried foul. Meritless, the writ petition stands dismissed.