Land had been pledged for collateral purposes
Picture used for representational purpose. (Photo: DC/File)
Chennai: Holding that mere description of land as agricultural would not suffice; it must be agricultural land, either actually used or ordinarily used or meant to be used for agricultural purposes and it must have a connection with an agricultural user or purpose, the Madras high court rejected the claim of a company in Kancheepuram district. SARFAESI proceedings were initiated by a bank against the company.
The company claimed that the secured asset was agricultural land and, therefore, had to be exempted from the purview of SARFAESI proceedings.
A division bench, comprising justices S. Rajeswaran and S. Vaidyanathan, dismissed the petition filed by Silicon Valley Auto Components Private Limited, challenging the recovery proceedings initiated by Indian Bank by invoking the provisions of SARFAESI Act.
The company had availed of a term loan in 2009 from the bank and gave the property situated in Neelankarai, Chennai, for collateral purposes. Since the company had not paid the outstanding amount of Rs 26 crore, the bank initiated recovery proceedings.
Writing the judgment for the bench, Justice Vaidyanathan said SARFAESI Act was a self-contained code and had been enacted to enable banks and financial institutions to recover outstandings without approaching courts and tribunals.
The land was situated in Neelankarai which had become a posh residential area in Chennai. In fact, the petitioner had constructed a huge bungalow with a swimming pool and a tennis court on it.
“Therefore, we do not find any justification on the part of the petitioner to contend that the secured asset is agricultural land. However, since it is a disputed question of fact which cannot be decided in the writ proceedings, we leave the issue to be decided by the concerned debt recovery tribunal (DRT),” the bench added.
( Source : dc )
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