SARFAESI Act Applicable To Coffee Plantations In State Of Karnataka : Karnataka High Court

The Karnataka High Court has ruled that securities created in 'Coffee plantations' can be enforced for the realization of debts as coffee plantations would not come within the scope and ambit of agricultural land, under the SARFAESI Act, insofar as the State of Karnataka is concerned. A division bench of Justice B V Nagarathna and Justice Nataraj Rangaswamy said: "The expression 'agricultural land' in Section 31(i) of the SARFAESI Act, does not include land on which plantation crops are grown namely, cardamom, coffee, pepper, rubber and tea as defined in Section 2(A)(25) of the Land Reforms Act." It added: "The measures initiated by the respondent banks in relation to the coffee estates are not hit by Section 31(i) of the SARFAESI Act, as the said Act is applicable to land on which plantation crops are grown, including coffee plantation, in the instant cases." The interpretation was made by the court while hearing two appeals filed by U.M. RAMESH RAO and M/S. SSJV PROJECTS PRIVATE LIMITED. The petitioners challenged the order of the single judge bench which declined to entertain the writ petitions filed by them on the ground of availability of an alternative remedy of appeal available under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Arguments made by the petitioners. Senior Counsel S.S.Naganand, appearing for the appellants, argued that writ petitions have been dismissed summarily without appreciating the fact that the petitioners raised the question of jurisdiction of the respondent/Banks in initiating action under provisions of the SARFAESI Act, on the schedule lands which are coffee plantations, as under Section 31(i) of the said Act, they, being agricultural lands, the Act does not apply. It was also contended that the jurisdiction of the respondent/Banks to take measures under the provisions of the Act in respect of the coffee plantations being agricultural lands was questioned by filing the petition under Article 226 of the Constitution of India. The writ petitions were maintainable as there is no definition of the expression "agricultural land" under the provisions of the SARFAESI Act. Therefore, it was necessary to interpret and give a meaning to the said expression. Further it was argued that coffee plantation is just like any other plantation and the Madras High Court and Kerala High Court have held that the lands on which cardamom, coca, turmeric, cinnamon and rubber are grown, are plantation crops. The lands on which the said crops are grown are agricultural lands and therefore, on the basis of the said interpretation, in the instant case, the schedule lands on which coffee is grown must be declared to be agricultural land, in which event, the provisions of the SARFAESI Act, would not apply in respect of the said lands. Bank opposed the plea. Senior Advocate Dhyan Chinnappa, appearing for Union Bank of India, contended that the Single Judge had rightly dismissed writ petition on the ground of maintainability in view of the availability of an alternative remedy under Section 17 of the SARFAESI Act. Further, he said that "DRT has the jurisdiction to consider the issue of the applicability of the Act to coffee plantations, which are the subject matter in the case. There is an efficacious, alternative remedy available before the DRT which could have considered the issues raised in these cases." It was also contended that "The use to which the agricultural land was put to, which is one of the major considerations to be taken note of while determining whether the SARFAESI Act applies to such lands or not. Court observations: On the issue of whether the writ petitions were rightly dismissed on the ground of maintainability in view of the availability of an alternative remedy before the Debt Recovery Tribunal (DRT). The bench said "In our view, in order to examine a challenge to an action initiated under the provisions of the SARFAESI Act, in respect of the agricultural land and as to, whether, the subject land is an agricultural land or not, the petitions filed under Article 226 of the Constitution of India, were maintainable. It added "In such a case, the High Court (Single Judge bench) cannot adopt a pedantic approach but has to decide the matter keeping in view the fact that right to property continues to be an important constitutional right and in terms of Article 300A, no person can be deprived of his property except by authority of law." The bench opined "In our view, the writ petition raised a question about applicability of SARFAESI Act to coffee plantation/estate on the ground that the same is an agricultural land, having regard to Section 31(i) of the SARFAESI Act. Whether the said provision is not applicable to agricultural land and therefore, the action initiated is illegal and contrary to the object and...

SARFAESI Act Applicable To Coffee Plantations In State Of Karnataka : Karnataka High Court

Mustafa Plumber

Protection for agricultural lands from SARFAESI proceedings not applicable to coffee estates.

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