K. SREEDHAR versus M/S RAUS CONSTRUCTIONS PVT. LTD & ORS.

K. SREEDHAR versus M/S RAUS CONSTRUCTIONS PVT. LTD & ORS.

The High Court erred in entertaining the writ petition challenging the DRT order when an appeal to the DRAT was the available statutory remedy and in setting aside the sale: the auction purchaser complied with Rules 9(3) and 9(4) (25% deposit on next working day and balance within the extended period), possession notices complied with Rules 8(1) & (2), and Section 31(i) of the SARFAESI Act did not apply because the borrowers failed to prove the properties were actually used for agricultural purposes when the security interest was created; burden to prove agricultural use lay on the borrower. Therefore the High Court's order was quashed and the DRT order restoring the sale was affirmed.

Parties
Appellant (auction Purchaser): K. Sreedhar; Respondent (debtor / Borrower): M/s Raus Constructions Pvt. Ltd.; Appellant / Secured Creditor: Indian Bank
Jurisdiction
India
Judgment Date
05 January 2023
Procedural Posture
Civil Appeal / Final Judgment on Appeal From High Court Order
Outcome
Appeals allowed; impugned High Court judgment quashed and set aside; DRT-I order restored
Legal Topics
Section 31(i) Agricultural Land Exemption, Security Interest (enforcement) Rules, 2002 Compliance (rules 8(1), (2), 9(3), (4)), Jurisdictional Limits of Writ Jurisdiction Vs Statutory Appeal to DRAT, Burden of Proof on Agricultural Use
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Banking Law Civil Procedure Property Law Section 31(i) Agricultural Land Exemption Security Interest (enforcement) Rules, 2002 Compliance (rules 8(1),(2), 9(3),(4)) Jurisdictional Limits of Writ Jurisdiction Vs Statutory Appeal to DRAT Burden of Proof on Agricultural Use

Case Brief

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Parties

K. Sreedhar

Appellant (auction Purchaser)

M/s Raus Constructions Pvt. Ltd.

Respondent (debtor / Borrower)

Indian Bank

Appellant / Secured Creditor

Procedural Posture

Civil Appeal / Final Judgment on Appeal From High Court Order

Legal Issues

  1. 1 Whether the High Court ought to have entertained a writ petition under Article 226/227 challenging an order of the DRT when an alternative statutory remedy by way of appeal to DRAT was available
  2. 2 Whether there was non-compliance with Rules 8(1) & (2) and Rules 9(3) & (4) of the Security Interest (Enforcement) Rules, 2002 in relation to e-auction and deposit of sale consideration
  3. 3 Whether properties shown as agricultural in revenue records are exempt from SARFAESI Act under Section 31(i) when they were not actually used for agricultural purposes at time of creation of security interest

Ratio Decidendi

The High Court erred in entertaining the writ petition challenging the DRT order when an appeal to the DRAT was the available statutory remedy and in setting aside the sale: the auction purchaser complied with Rules 9(3) and 9(4) (25% deposit on next working day and balance within the extended period), possession notices complied with Rules 8(1) & (2), and Section 31(i) of the SARFAESI Act did not apply because the borrowers failed to prove the properties were actually used for agricultural purposes when the security interest was created; burden to prove agricultural use lay on the borrower. Therefore the High Court's order was quashed and the DRT order restoring the sale was affirmed.

Court Disposition

Appeals allowed; impugned High Court judgment quashed and set aside; DRT-I order restored

Orders

  • Impugned judgment and order dated 06.03.2020 of the High Court for the State of Telangana at Hyderabad in W.P. No.12081/2019 quashed and set aside
  • Judgment and order dated 16.05.2019 passed by Debts Recovery Tribunal-I, Hyderabad in SA No.171/2016 restored