@JUDGMENTTAG-ORDER
D. Murugesan, J.@mdashAn extent of 3 acres and 99 kundas of land in survey No. 255/1 of Hesarghatta, Bangalore North Taluk was permitted for conversion for as non-agricultural residential purpose in favour of the Petitioner by the Assistant Commissioner, Bangalore Sub-Division, Bangalore, in his proceedings dated 31 st March, 1993. One of the conditions for such permission to convert the land was that the land should be used for specific non-agricultural residential purpose within a period of two years from the said proceedings. Factually, the land was not put in use for residential purpose in a period of two years. While so ,the Petitioner deposited the title deeds in favour of Indian Bank, J.P. Nagar Branch, Bangalore and created a mortgage by memorandum of deposit of title deeds dated5th Sept.,2007. In the schedule of the property, it is stated that the property was converted for non-agricultural residential purpose by the above said order of the Assistant Commissioner, Bangalore. Thereafter, the Petitioner applied to the authorities concerned requesting that the permission granted for conversion of the land in question for residential purpose may be cancelled. Accordingly, such permission was granted on 20 th March, 2010. Questioning the order cancelling the earlier permission, the Indian Bank preferred an Appeal No. 438/2010 before the Karnataka Appellate Tribunal, Bangalore, u/s 49(c) of the Karnataka Land Revenue Act. That appeal is still pending.
2. In the meantime, the Bank proceeded to recover the amounts due to it and, accordingly, a provisional notice was issued after notice u/s 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (for short ''SARFAESI Act''). That was questioned by the Petitioner by preferring an appeal u/s 17(1) of the SARFAESI Act before the Debts Recovery Tribunal, Bangalore (for short ''DRT'') in S.A. No. 74/2010. Pending appeal, the Petitioner has also filed I.A. No. 313/2010 seeking for a direction to the Bank to furnish copies of the documents executed by the Petitioner as a guarantor and as a mortgagor by offering agricultural land, which was notified as ''Green Belt Area''. By order dated 24 th May, 2010, DRT, Bangalore, dismissed the appeal as such on the ground that on the date when the land was mortgaged it was only a land meant for residential purpose. Aggrieved by the said order, the Petitioner had preferred an appeal before the Debts Recovery Appellate Tribunal (for short ''Appellate Tribunal''). Along with the appeal, the Petitioner has also filed an application seeking for waiver of pre-deposit. By the impugned order dated 22 nd March, 2011, the Appellate Tribunal had directed the Petitioner to deposit 25% of the amount demanded u/s 13(2) of the SARFAESI Act. Apparently the said order was passed in terms of the provisions of Section 18 of the SARFAESI Act, wherein the Tribunal cannot exercise power to reduce waiver of deposit below 25%. Questioning the said order, the present writ petition has been filed.
3. Mr. G. Rajagopalan, learned senior counsel for the Petitioner would submit that inasmuch as the earlier permission granted for conversion of agricultural land for the use of residential purpose was cancelled, the secured asset should be treated as agricultural property and, hence, in terms of the provisions of Section 31(i), the Bank cannot invoke the provisions of the SARFAESI Act.
4. We are not inclined to accept the same for the following reasons.
It is true that prior to the proceedings of the Assistant Commissioner, Bangalore Sub-Division, Bangalore, dated 31 st March, 1993, the land was classified as agricultural land. By the above order, permission was accorded for conversion of the land for residential purpose, but, with a condition that the land should be used for residential purpose in a period of two years. One of the further conditions was that in the event the land is not put into use for residential purpose within the above period of two years, the permission is liable to be withdrawn. Factually, even before such withdrawal of permission, the Petitioner had deposited the title deeds in respect of the loan and created a mortgage as a guarantor to the loan availed from the Bank on 5th Sept., 2007. Further, when such a mortgage deed was executed, the Petitioner had specifically mentioned in the schedule that the Petitioner has been permitted for conversion of the land for non-agricultural residential purpose by the proceedings of the Assistant Commissioner dated 31 st March, 1993. Only on that representation, the mortgage was accepted by the Respondent Bank and the title deeds were also taken., since by the time no order withdrawing the permission for conversion was issued. After such creation of mortgage, it appears the Petitioner has applied to the authorities for cancellation of permission granted for conversion of that land and such a permission was granted only on 1 st March, 2010. The submission of the learned senior counsel for the Petitioner is that once the permission for conversion of the land was withdrawn, for all legal purposes the land should be treated as agricultural land and, therefore, the Tribunal ought not to have dismissed the petition, wherein the Petitioner has taken a ground that the provisions of the SARFAESI Act are not applicable in view of Section 31(i) of the Act, which cannot be countenanced.
5. It must be noticed that on the date when the security was created, the land was to be treated only as a land meant for residential purpose since the permission granted in the year 1993 was not cancelled. That apart, the Bank had invoked the provisions of the SARFAESI Act by issuance of notice u/s 13(2) on 3rd June, 2009, much before the cancellation of the permission granted in the year 1993, as the cancellation order was passed only on 20 th March, 2010. In fact, from the record, it is seen that after the proceedings under the SARFAESI Act were initiated, the Petitioner had approached the concerned authorities for cancellation of the earlier permission granted for conversion. Hence, the relevant dates for the Bank to invoke the provisions of the SARFAESI Act are, firstly, the date of mortgage and secondly the date of issuance of notice u/s 13(2). As both the above dates are much prior to the date of cancellation, merely because the subsequent of order of cancellation, which has been appealed by the Bank before the Appellate Authority, the Petitioner cannot claim that the land is an agricultural land and for that purpose Section 31(i) would not come into operation and, therefore, the Petitioner cannot be compelled to deposit the amount in the appeal filed before the Appellate Tribunal questioning the order of the DRT, Bangalore.
6. It has been repeatedly held by this Court as well as the Apex Court that the Tribunal has no authority or power to waive the deposit under second proviso to Sub-section (1) of Section 18 below 25%. Useful reference may be had to the judgment of a Division Bench of this Court in W.P. No. 12795/2010 dated 9th Aug.,2010inthisregard.
7. Recently, the Supreme Court in an unreported judgment in Narayan Chandra Ghosh -Vs - UCO Bank and Ors. has categorically held that the condition of pre-deposit being mandatory, the complete waiver of deposit by the Appellate Tribunal was beyond the provisions of the Act as evident from the2nd and3rd proviso to that section.
8. In view of the above and in view of the fact that we are not accepting the submission of Mr. Rajagopalan that Section 31(i) would come into operation, we find no infirmity in the order of the Appellate Tribunal in directing the Petitioner to deposit 25% of the amount demanded u/s 13(2) as it is well within the 2nd proviso to Sub-section (1)of Section 18.
9. For the reasons mentioned above, this petition fails and the same is dismissed. Consequently, connected miscellaneous petition is also dismissed. However, there shall be no order as to costs.
10. Mr. Rajagopalan, learned senior counsel would submit that the above observation should be restricted for the disposal of this writ petition and that may not affect the right of the Petitioner to canvass the point before the Appellate Tribunal. As the writ petition has been filed only in respect of direction relating to pre-deposit, the observation as well as the finding given above, at best, be considered only in respect of the pre-deposit as ordered by the Appellate Tribunal and the Petitioner can still canvass the point by producing relevant materials before the Appellate Tribunal on the above issue.
