(2012) 264 KLR 357 IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 16TH DAY OF JULY 2012/25TH ASHADHA 1934 WP(C).No. 9925 of 2012 (M) -------------------------- PETITIONER(S): ------------- BARRY SEBASTIAN, J.J.COTTAGE, MOONGODU P.O., OTTOOR THIRUVANANTHAPURAM. BY ADV. SRI.K.PAUL KURIAKOSE RESPONDENT(S): -------------- 1. BANK OF INDIA PUTHENCHANTHAI BRANCH REPRESENTED BY ITS BRANCH MANAGER THIRUVANANTHAPURAM-695 001. 2. THE DISTRICT COLLECTOR THIRUVANANTHAPURAM-695 035. 3. THE DEPUTY TAHSILDAR (RR) CHIRAYINKIZHU-695 304. BY ADV. SRI.P.P.JOYI (SC) BY GOVT PLEADER FOR R2 & R3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX: PETITIONER'S EXHIBITS:
RESPONDENTS' EXHIBITS:
TRUE COPY P.A. TO JUDGE. KP (CR) P.R. RAMACHANDRA MENON, J. --------------------------------------- W.P.(C). No.9925 of 2012 ---------------------------------------- Dated this the 16th day of July, 2012 Head Note:- Revenue Recovery Act, 1890 - Section 71 - Priority loan / development loan - Bank can initiate parallel proceeding by way of R.R. notwithstanding the pendency of civil suit. Revenue Recovery Act, 1890 - Section 71 - Priority loan / development loan - the loan sought for was of Rs. 8 lakhs, for the purpose of carrying out the business - This by itself shows that, it does not stand within the parameters prescribed, to be categorized as a 'priority loan/development loan' - As it stands so, the bank are not justified in resorting to the steps under the R.R. Act directly, before getting the liability adjudicated / quantified, by way of appropriate proceedings. J U D G M E N T The correctness and sustainability of the R.R. proceedings pursued by the respondent Bank, when, the civil suit instituted by the Bank is pending consideration before the Sub Court, Thiruvananthapuram for the purpose of quantification, is the subject matter of dispute involved in this writ petition. 2. The petitioner is a business man engaged in fish trading, who purchases fish and such other items by way of auction from the sea shore of Vizhinjam/ Thiruvananthapuram. In connection with the requirement of business, the petitioner sought for and obtained a loan of Rs.8,00,000/-(Rupees eight lakhs only) from the respondent Bank, on the strength of the hypothecation given over the equipments and the fish and such other items procured in the course of business. Ext.P1 is the application for the loan, after considering which, it was sanctioned as per Ext.P2. Admittedly, there occurred some default in repayment; under which circumstances, the Bank filed O.S. No.856/2011 before the Sub Court, Thiruvananthapuram as borne by Ext.P3 plaint. The trial is going on. The grievance of the petitioner is that, it is without any regard to the pendency of proceedings before the Civil Court, that the Bank has caused to move the machinery under the R.R. Act as well, by sending a requisition to the Revenue authorities leading to Ext.P4 and P5, which is under challenge in this writ petition. 3. The main contention put forth by the petitioner is that, there cannot be any parallel proceeding by way of R.R., when civil suit instituted by the Bank is pending and the amount satisfied by the petitioner is still to be quantified. Reliance is sought to be placed on the decision rendered by a Single Bench of this Court reported in Sheriff v. State of Kerala (2005(1) KLT 873). The next point is that, the loan availed by the petitioner is a 'business loan' and not an 'agricultural loan' or any loan under the 'priority sector/development scheme'. This being the position, though the first respondent is a notified authority under Section 71 of the R.R. Act, it is not open for the respondent Bank to pursue the proceedings for realization by deploying the machinery under the R.R. Act. 4. The respondent Bank has filed a counter affidavit stating that the materials produced by the petitioner do not disclose that it is not an 'agricultural loan'. The contention of the Bank is that the petitioner's business, forms part of 'Pisciculture' and hence the Bank is at liberty to proceed with steps under the R.R. Act; more so, in view of the definition of the term 'agriculture' as given under clause (b) of Ext. R1(b) of the notification No.SRO 797/79 issued in this regard. The Bank also contends that, the loan sanctioned to the petitioner being for more than Rs. 5 lakhs, it cannot be a bar to avail the remedy under the R.R. Act, in view of the law declared by a Division Bench of this Court reported in Dhanalakshmi Bank v. District Collector (2003 (1) KLT 1024). 5. The above contentions are sought to be rebutted by the learned counsel for the petitioner pointing out that the very loan sanctioned, as revealed from the pleadings and proceedings is a 'business loan' and it is in no way connected to 'pisciculture'; nor does it form part of any agriculture. The factual position involved in the case cited supra is stated as entirely different; more so, in view of the specific parameters prescribed under the scheme. The scope of said scheme was subsequently clarified as per the amended notification issued in the year 1999, which was considered and explained by the Apex Court in the decision reported in Jabbar v. Dhanalakshmi Bank Ltd. (2005(3) KLT 510), dealing with the very same enactment, i.e., the Kerala Revenue Recovery Act and Section 71 thereunder. The entries made in Ext.P1 application and the sanction given by the Bank vide Ext.P2 are specifically referred to, asserting that, there is absolutely no material to show that the loan sanctioned to the petitioner was under the 'agricultural sector' or under the 'priority/development scheme', so as to justify the invokation of power and procedure under Section 71 of the R.R. Act. 6. Coming to the first point of dispute, as to whether the Bank is justified in resorting to parallel proceedings by way of R.R. Act, notwithstanding the pendency of civil suit before the Sub Court, Thiruvananthapuram, this Court finds that there cannot be any dispute, in view of the law declared by the Apex Court report in M/s. Transcore v. Union of India and Another (AIR 2007 (SCC) 712). That apart, the decision rendered by the Single Bench of this Court in Sheriff v. State of Kerala (2005(1) KLT 873), has been admittedly overruled by the Division Bench in the decision reported in Syndicate Bank v. Sheriff(2007(1) KLT short note 63). This being the position, the first issue can answered only in favour of the Bank. 7. With regard to the remaining question as to whether the loan facility extended to the petitioner is an 'agricultural loan' or a loan under the 'priority/development scheme', it is more a question of fact. Ext.P1 application itself shows that it is an application for financial assistance for small business and the amount of advance required is shown as 'Rs. 8 lakhs'. The contention of the petitioner is that, there is only one common form, though the amount sought for is more than Rs. 5 lakhs, i.e., outside the small sector business. It is seen that the particulars of the business sought to be pursued by the petitioner are described against Column No.2, showing that it is a proprietorship business. The details of business are discernible from Column No.5 referring to the 'marine products' sought to be dealt with. Column No.6 states that the business activities are being pursued in a rented building. The particulars of Sales Tax given under Column No. 9B, mentioned that the 'fish trading' is exempted (in respect of the particulars call for in Sales Tax registration) Column 9H gives the particulars of the suppliers and customers, which reveals that 'fish' is mainly procured by way of auction from the auction centre and from the sea shore and that the major customers are Euro Marine Products and Oceanic Fisheries. It was after considering the said application, that the loan was sanctioned as per Ext.P2, which by itself shows that, it is a 'term loan', of Rs. 8 lakhs. 8. The respondent Bank attempts to contend in the counter affidavit that the loan sanctioned to the petitioner is an 'agricultural loan', referring to the petitioner's activity as something part of 'pisciculture'. It is however conceded in Ext.P3 plaint filed before the Sub Court that the petitioner is engaged in the business of fish and marine products and the particulars of hypothecation have been given in paragraph '3' of the plaint, referring to the stock of fish and marine products lying at borrower's premises. In other words, the reference made by the respondent Bank in Ext.P3 plaint itself is enough to conclude that the petitioner is not pursuing any 'pisciculture' activity to constitute or categorize it as an agricultural loan, it actully being trade/business in fish and marine products. The factual position becomes more clear from the admissions made by the first respondent Bank in paragraph '2' and '4' of the counter affidavit dated 6th June, 2012, referring to the business activity being pursed by the petitioner asserting that the petitioner is a 'trader', dealing in marine products. 9. True, there is a contention for the first respondent Bank in paragraph '3' that the loan was sanctioned under 'development scheme' through the priority sector lending. But for the bald averment, no materials are produced before this Court to arrive at any such inference. The term 'development scheme' as defined in SRO 1465/87, a copy of which has been produced as Ext.r1(b), reads as follows: "Development Scheme" shall include [all priority sector advances and] all financial assistance given through the banks under the schemes approved by the State/Central Government or other Government agencies or the schemes administrated by the Development Department with a view to improving the living conditions of the economically and socially weaker section of the community.(Notification No.54415/S3/86/RD dt. 13/10/1987, published in K.G. dt. 17/11/" It is also relevant to look into the definition of the term 'agriculture' as given in SRO NO. 797/79, which also forms part of the very same document - Ext.R1(b), which reads as follows: "agriculture" or "agricultural purposes shall include making land fit for cultivation, cultivation of land, improvement of land including development of sources of irrigation, raising and harvesting of crops horticulture, forestry, planting and farming, cattle breeding, animal husbandry, dairy farming, poultry farming [pisciculture including Marine Fisheries and Schemes under Integrated Rural Development Programme, Different rate of Interest Scheme and Self Employment], apiculture, sericulture, piggery and such other activities as are generally carried on by agriculturists, dairy farmers, cattle breeders, poultry farmers and other categories of persons engaged in similar activities including marketing of agricultural products, their storage and transport and the acquisition of implements and machinery, in connection with any such activity. (Notification No.26041/G1/79/RD dt. 26/06/1979, published in K.G. No.29 dt. 17/07/1979)" The attempt made by the respondent Bank to categorize the particular type of loan as 'agricultural loan', however, is not established by sufficient materials. On the other hand, the fact that it was a 'business loan', stands more conceded by the respondent Bank itself in Ext.P3 plaint and as discernible from the nature of the loan sought for as per Ext.P1 application, which in turn was sanctioned as per Ext.P2 sanction letter. 10. What are the characteristics of a loan under the 'development scheme', has been considered by the Division Bench of this Court with reference to the relevant notification, in the decision reported in Dhanalakshmi Bank v. District Collector (2003 (1) KLT 1024). Paragraph 10 of the said decision is relevant which reads as follows: "10. A development scheme has been defined in Cl.(b). It includes "all priority sector advances". Still further the petitioner has placed on record the Circular issued vide letter dated February 14, 2001 in which the details regarding priority sector have been given. The relevant provision reads as under: "At present, the priority sector broadly comprises the following: (i) Agriculture (ii) Small Scale Industries (iii) Other activities/borrowers (such as small business, retail trade, small transport operators, professional and self employed persons, housing, education loans, microcredit etc.)" "3.2 Retail Trade Advances granted to 3.2.1. retail traders dealing in essential commodities (fair price shops) and consumer co-operative stores, and 3.2.2. private retail traders with credit limits not exceeding Rs. 5 lakhs. (Retail traders in fertilisers will form part of indirect finance for agriculture and those to retail traders of mineral oils under small business.)" A perusal of the above shows that the priority sector advances are not confined to agricultural or small scale industries. Even persons engaged in retail trade are covered. The advances given to private retail traders with credit limit not exceeding Rs.5 lakhs fall within the ambit of the scheme" True, there is an observation in the said decision that, even if the loan amount exceeds the barrier of Rs. 5 lakhs, it is still open to be declared as an 'agricultural loan', to be proceeded under the relevant provisions of the R.R. Act. But, with regard to the factual position therein, it is to be noted that the loan involved was for a sum of less than Rs. 5 lakhs and by the passage of time, the due amount got mounted up, taking it beyond Rs.5 lakhs, which was sought to be recovered by resorting to the remedy under the R.R. Act. It was after considering the said factual position, that the Division Bench observed that, this cannot bar the way of the respondents in resorting to the remedy under the R.R. Act, as the loan was very much within the 'development scheme' for which R.R. Act could be pressed into service. 11. The scope of the said 'Scheme', particularly with reference to the amendment made in the year 1999 and the scope of Section 71 under the Kerala Revenue Recovery Act came to be meticulously analyzed by the Apex Court in the decision reported in Jabbar v. Dhanalakshmi Bank Ltd. (2005(3) KLT 510). It has been held therein, that the loans extended to the traders, fixing a ceiling up to Rs. 5 lakhs, will be liable to be declared as 'priority sector' and as such, deployment of machinery under the R.R. Act will stand sustained. Coming to the instant case, it is an undisputed fact that the loan sought for by the petitioner was of Rs. 8 lakhs, for the purpose of carrying out the business, which in turn was sanctioned as per Ext.P2. This by itself shows that, it does not stand within the parameters prescribed, to be categorized as a 'priority loan/development loan'. As it stands so, the respondents are not justified in resorting to the steps under the R.R. Act directly, before getting the liability adjudicated/quantified, by way of appropriate proceedings. 12. In the above facts and circumstances, this Court finds that, there is absolutely no justification to proceed with R.R. steps against the petitioner for the time being, till the issue pending consideration before the Civil Court is finalized. If the respondent Bank succeeds in getting a decree against the petitioner, of course, it is open for the respondents to proceed with the steps under the R.R. Act for realization of the due amount besides the right to pursue the matter by way of execution, in view of the ruling rendered by the Division Bench of this Court in Syndicate Bank v. Sheriff(2007(1) KLT short note 63). Exts. P4 and P5 are set aside and the writ petition is allowed, however, without costs. P.R. RAMACHANDRA MENON, JUDGE. Kp/- |
