INDIAN BANK & ANR. versus K PAPPIREDDIYAR & ANR.

Citation: [2018] 6 S.C.R. 611 · Decided: 20-07-2018 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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611
INDIAN BANK & ANR.
v.
K PAPPIREDDIYAR & ANR.
(Civil Appeal No. 6641 of 2018)
JULY 20, 2018
[DIPAK MISRA, CJI, A. M. KHANWILKAR AND
DR. D. Y. CHANDRACHUD, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 -  ss. 31(i), 2(zf) – Security
interest created in agricultural land – Applicability of SARFAESI
Act – Held: 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 – On facts, in the absence of a specific finding, the
holding of the High Court that the proceedings initiated by the bank
under the SARFAESI Act are nullity as the Act does not apply to
agricultural land, thus, security interest in agricultural land cannot
be enforced, set aside – Proceedings remitted back for being
considered afresh.
The issue arose whether the High Court was correct in
holding that the proceedings initiated by the bank under the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 are nullity.
Allowing the appeals, the Court
HELD: 1.1 The expression ‘security interest’, both before
and after the amendment, excludes what is specified in Section
31 of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act 2002. Clause (i) of
Section 31 stipulates that the provisions of the Act will not be
applicable to any security interest created in agricultural land.
The statutory dictionary in Section 2 does not contain a definition
[2018] 6 S.C.R. 611
 611
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612
SUPREME COURT REPORTS
[2018] 6 S.C.R.
of the expression “agricultural land”. Whether a particular piece
of land is agricultural in nature is a question of fact. [Para 8]
[615-G-H; 616-A]
1.2 The 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. [Para 9] [616-G]
1.3 The Division Bench failed to adjudicate on the basic
issue as to whether the land in respect of which the security
interest was created, was agricultural in nature. The DRT rejected
the objection of the debtor that the land was agricultural. In appeal,
the DRAT reversed that finding. Apart from referring to the
position in law, the impugned judgment of the High Court contains
no discussion of the material which was relied upon by the parties
in support of their respective cases; the Bank urging that the
land was not agricultural while the debtor urged that it was. Both
having regard to the decision in *Blue Coast Hotels Limited and
as explained, the question as to whether the land is agricultural
has to be determined on the basis of the totality of facts and
circumstances including the nature and character of the land, the
use to which it was put and the purpose and intent of the parties
on the date on which the security interest was created. In the
absence of a specific finding, it would be appropriate and proper
to set aside the judgment of the High Court and to remit the
proceedings for being considered afresh. The impugned judgment
and order of the High Court is set aside. [Paras 10, 11]
[616-G-H; 617-A-D]
*ITC Limited v. Blue Coast Hotels Limited (2018) SCC
Online SC 237 – referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6641
of 2018.
From the Judgment and Order dated 05.04.2016 of the High Court
of Judicature at Madras in W.P. No. 32208 of 2014
 WITH
Civil Appeal No. 6645 of 2018.
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613
P.S. Narasimha, ASG, Gautam Awasthi, Ayush Choudhary,
Devanshu Yadav, B. Karunakaran, S. Gowthaman, Siddharth Dave,
Sai Baba, S. Santanam Swaminadhan, Anil Kumar Tandale, Mrs. Aarthi
Rajan, Advs. for the appearing parties.
The Judgment of the Court was delivered by
DR. D. Y. CHANDRACHUD, J. 1. The Division Bench of the
High Court of Judicature at Madras has held that the proceedings initiated
by the appellant under the Securitisation and Reconstruction of Financia

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