IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.265 of 2011 ----------- M/s Hi-Tech Auto Mobiles a proprietorship firm situated at N.H.-19, Gandhi Setu Path, Hajipur through its Proprietor Amod Kumar, son of Sriu Ram Kailash Singh, resident of village Bagmusa, P.S. Hajipur, District Vaishali ……. Petitioner Versus 1. The Union Bank of India, Head Office Union Bank Bhawan, 239, Vidhan Bhawan Marg, Mumbai-400021 through its Chairman-cum- Managing Director. 2. The Assistant General Manager, Nodal Regional Office, Union Bank of India, Nasheman, Majharul Haque Path, Patna 3. The Chief Manager-cum-Authorized Officer, Union Bank of India, Regional Office, Nasheman, Majharul Haque Path, Patna 4. The Branch Manager, Union Bank of India, Hajipur Branch, District Vaishali. …… Respondents --------- For the Petitioner : Mr Gautam Kumar Kejriwal, Advocate For Respondents : M/s Aditya Sharan and Hemant Kumar Sharan, Advocates. -------- 15/ 25 .03.3011 This writ petition has been filed by the petitioner, which is a proprietorship firm established in the year 2001 for running a service centre of motor vehicles (Car) at Hajipur duly authorized by M/s Maruti Udyog Limited. Respondents are the Union Bank of India (hereinafter referred to as `the Bank’ for the sake of brevity) having its Head Office at Mumbai and Regional Office at Patna and its authorities. 2. Reliefs sought by the petitioner are for directing the respondents to release the balance amount of term loan sanctioned by the Bank as far back as in the year 2004 and to assist petitioner- Unit with adequate capital in order to commence its industrial activities and for quashing the entire proceeding under the Securitisation and Reconstruction of Financial Assets and 2 Enforcement of Security Interest Act, 2002 (hereinafter referred to as `the Act’ for the sake of brevity) initiated by the Bank for recovery of the part of sanctioned loan, which was paid to petitioner-Unit, including notices dated 23.08.2010 and 23.11.2010 (Annexures 10 and 13) issued under sections 13(2) and 13(4) of the Act by the Chief Manager-cum-Authorized Officer of the Bank (respondentno.3) and further to allow petitioner-Unit to reorganize and remanage its entire infrastructure and catch the industrial activities at the earliest as well as for other ancillary reliefs. 3. The claim of the petitioner is that petitioner-Unit had a term loan and cash credit account initially opened in State Bank of India, Hajipur and it functioned well during 2001-2004, but subsequently in the year 2004 the authorities of respondent-Bank, namely, Union Bank of India approached the petitioner and persuaded its proprietor to shift the entire banking from State Bank of India to respondent-Union Bank of India, Hajipur Branch, Vaishali and offered every assistance and co-operation at every required stages. Accordingly, the petitioner shifted its entire banking to respondent-Bank, which recommended for sanction of Rs. 18 lacs by way of term loan and Rs. 10 lacs by way of Cash Credit Limit in favour of petitioner-Unit vide letter dated 29.03.2004 (Annexure 2). Furthermore, respondent-Bank also sent two cheques of Rs.4,84,308.00 and Rs.1,66,232.00 in favour of State Bank of India, Hajipur along with letter dated 31.03.2004 (Annexure 3) for the purpose of taking over the existing loan account of petitioner-Unit. 3 4. It is further claimed that inspite of repeated persuasion of the petitioner, respondent-Bank disbursed only Rs.9 lacs between the period 31.03.2004 to 30.06.2004 of the term loan account, but failed to disburse the entire amount of sanctioned term loan. Inspite of repeated reminders, respondent-Bank maintained silence over the issue of release of balance amount of the sanctioned term loan, due to which the petitioner could not make payments to the supplier Company and hence Paint Booth System could not be established. The supplier, namely, M/s Neptune Equipment Private Limited, Ahmedabad pursued the Bank also but when respondent- Bank did not respond, the supplier cancelled the supply of the system causing huge loss to the petitioner due to the said inaction of the Bank. 5. However, despite non-cooperation and conservative approach of respondent-Bank, the petitioner claimed that it somehow managed to pay about Rs.3,64,500.00 between the years 2007 and 2009 towards outstanding dues. It is also stated that inspite of the aforesaid facts and circumstances, notice dated 23.08.2010 (Annexure 10) under section 13(2) of the Act was issued by the authorities of respondent-Bank and in reply to the said notice the petitioner sent letter dated 30.10.2010 (Annexure 11) persuading it to release further finance for revival of the industrial unit. Respondent-Bank vide letter dated 09.11.2010 (Annexure 12) denied the petitioner’s claim and directed it to discharge the loan liabilities and within two weeks thereafter sent notice dated 4 23.11.2010 (Annexure 13) under section 13(4) of the Act against the assets mortgaged by the petitioner towards the collateral security. 6. Learned counsel for the petitioner also submitted that petitioner-Unit is well-equipped and potentially viable in all respects, but it is unable to complete its infrastructure, which remained incomplete due to non-disbursement of the balance amount of sanctioned term loan without any rhyme and reason by respondent-Bank. It is also stated that withholding of the sanctioned term loan by respondent-Bank without any reasonable cause is not only unlawful and unreasonable but also amounts to misrepresentation and subsequent non-cooperation, which is the sole cause of the unexpected and undesired loss and damage to petitioner-Unit, which is totally dependent upon respondent-Bank on the point of financial assistance. Hence, he submitted that the entire proceeding under section 13 of the Act including the orders under challenge are against the spirit of the Act itself. 7. He further argued that the land in question is a big agricultural plot and in a small portion thereof, there may be a room or two for the purpose of agriculture, cultivation and irrigation, but the entire plot is agricultural in nature, which is fully proved by an album of photographs, which was produced by learned counsel for the petitioner at the time of hearing of this case, and also by the list given in Annexure 10 of the writ petition as well as the registered deeds of transfer (Annexure 1 series of I.A. No. 942 of 2011) in favour of the petitioner. Hence he submitted that the fact that the 5 land in question is agricultural in nature is not a disputed one and the respondents are merely trying to raise dispute for the purpose of this case and, accordingly, provisions of the Act shall not apply to any security interest created in the agricultural land as per section 31(i) of the Act. 8. It was also claimed by learned counsel for the petitioner that Reserve Bank of India prescribed Guidelines for such matters and a Revised Guideline for Rehabilitation of Sick S.S.I. Units was prepared (Annexure 15) providing that it is of utmost importance to take measures to ensure that sickness is arrested at the incipient stage itself and the Bank should make full enquiry into the financial health of the unit, its operations etc. and take remedial action and should also be under obligation to provide timely financial assistance depending on established need of the unit. He also claimed that Reserve Bank of India’s Guidelines have statutory force and are mandatory for all the Banks, but in the instant case, respondent-Bank has clearly violated the said guidelines and for that reason only the petitioner is suffering. 9. Learned counsel for the respondents, on the other hand, claimed that cash credit account was given to the petitioner, which availed the same. It was further claimed that the term loan for the same purpose was not to be given directly, rather mode of disbursement was provided in letter dated 20.03.2004 (Annexure `G’) given under the head `Assessment of Term Loan’, but the petitioner did not follow the said terms and was put to loss due to its 6 own act. Learned counsel for the respondents further claimed that M/s Neptune Equipment Private Limited, Ahmedabad sent letter dated 01.07.2005 (Annexure E) to the petitioner refusing to supply and refunded the cheques, whereafter respondent-Bank also sent a consequential letter to the petitioner on 23.08.2005 (Annexure F), but inspite of receiving all informations in the year 2005 itself, the petitioner did not take any appropriate step in that regard and only after six years, the instant writ petition has been filed in the year 2011. 10. He further averred that where ever there is any procedural error, it can be legally considered in an appeal under section 17 of the Act, which is prescribed against any step taken under section 13(4) of the Act. He further submitted that it is apparent that the petitioner had managed for six years without receiving the remaining amount of term loan and it never reported of any sickness or erosion of entire capital and hence there was no question of revival of petitioner-Unit. Hence he claimed that initiation of the proceeding under section 13 of the Act was quite legal and justified and if any error has been committed by the authorities in the said proceeding, the petitioner has an adequate and efficacious remedy of appeal for redressal of its grievance. 11. Learned counsel for the respondents also argued that the land in question is situated in Hajipur town surrounded by buildings near National Highway and hence it cannot be agricultural land. He also averred that merely that mere deeds of transfer cannot 7 show as to whether any land is agricultural in nature rather the fact of tilling it every year has to be proved for the said purpose. It was also stated that neither in the affidavit of the petitioner (Annexure I) nor in the opinion of the Lawyer dated 29.04.2004 (Annexure H) supplied at the time of argument it is mentioned that the land in question was agricultural in nature. It is also claimed that there are bamboo clumps and banana trees on the land in question and hence at worst it would come under the definition of horticulture and not under the definition of agriculture as defined by the Apex Court in case of Commissioner of Wealth-tax Andhra Pradesh vs. Officer-in- charge (Court of Wards), Paigah, reported in A.I.R. 1977 Supreme Court 113. Hence, he states that the said question is clearly disputed question of fact, which cannot be decided by this Court. 12. Learned counsel for the respondents also argued that after issuance of notice under section 13(2) of the Act dated 23.08.2010, no objection under section 13(3-A) of the Act was filed by the petitioner and merely a frivolous notice was sent by the petitioner after 60 days on 30.10.2010 (Annexure 11), which was rejected by the authorities of the Bank on 09.11.2010 (Annexure 12), but no step was taken by the petitioner thereafter in the said matter. Hence, he submitted that all these objections raised by the petitioner are baseless, frivolous and misconceived. 13. Considering the entire facts and circumstances of this case and the arguments raised by learned counsel for the parties, it transpires that the land in question contains constructions 8 and in the remaining land there are bamboo clumps and banana trees, which is apparent from the photographs and other documents. It is true that in the deed of transfer in favour of the petitioner the land in question is recorded as agricultural land but that document is the document of the petitioner and it does not show that the land is still used for agricultural purposes. 14. A land can be said to be agricultural land only when it is either actually used or ordinarily used or made to be used for agricultural purposes and must have a connection with an agricultural user or purpose. In the instant case what was really required to be shown was the connection of the land in question with an agricultural purpose and user and not the mere possibility of user of land by some one for an agricultural purpose. It is not mere potentiality but the actual condition and user of the land, which can legally show as to whether it is agricultural land. Here in the instant case, it is not established by the materials on record that the land in question is still in any way connected with an agricultural purpose and user and hence this is a disputed question of fact, which cannot be decided by this Court. 15. So far the Reserve Bank of India’s Guidelines for Rehabilitation of Sick S.S.I. Units are concerned, they provide that the measures have to be taken to ensure that sickness is arrested at the incipient stage itself. Here in the instant case, the loan was sanctioned in March, 2004 and in the same 9 month mode of disbursement was also provided under the head `Assessment of Term Loan‘ and the claim of respondent- Bank is that the petitioner did not follow the said terms and was put to loss due to its own acts. Hence this question is also a disputed question of fact in view of the petitioner’s claim that respondent- Bank did not follow the Guidelines provided by the Reserve Bank of India, which have statutory force. 16. It is also apparent from the respective claims of the parties that the loan was sanctioned in March, 2004, whereafter M/s Neptune Equipments Private Limited was appointed as supplier but the said supplier returned cheques and refused to supply the required article vide letter dated 01.07.2005, whereafter respondent-Bank also sent a consequential letter to the petitioner on 23.08.2005. All these developments took place in the year 2005, but no step was taken by the petitioner against respondent-Bank for taking steps as per Reserve Bank of India’s Guidelines and only when possession notice dated 23.11.2010 under section 13(4) of the Act was sent to the petitioner, the instant writ petition was filed on 05.01.2011. 17. The materials on record clearly show that the demand notice under section 13(2) of the Act was issued to the petitioner on 23.08.2010 but no objection under section 13(3-A) of the Act was ever filed by the petitioner before the authority 10 concerned although it was incumbent upon the petitioner to file objections under the said provision stating the entire facts and raising all its claims. Sending merely a Lawyer’s notice to respondent-Bank on 30.10.2010 (Annexure 11) and that too beyond the period of sixty days, cannot be legally considered to be an objection under any provision of law, more so when the said Lawyer’s notice was merely to release further finance for revival of the industrial unit, which was duly replied by respondent- Bank vide letter dated 09.11.2010 denying the claim of the petitioner and directing it to discharge its loan liabilities but when the petitioner failed to comply, the impugned possession notice under section 13(4) of the Act was sent by respondent- Bank on 23.11.2010 (Annexure 13). 18. In the aforesaid facts and circumstances, this Court does not find any reason to interfere with the steps taken by the respondents under the provision of section 13 of the Act, specially when the petitioner has got an adequate and efficacious remedy available in terms of section 17 of the Act and, accordingly, this writ petition is dismissed. MPS/ ( S. N. Hussain, J. )