Decided on March 13,2020

Alla Sanyasi Rao Appellant
BANK OF INDIA Respondents


- (1.)The brief facts in W.P.No.43526 of 2017 are as follows:
The petitioners were partn running service centers at Ramnagar and Gopalapatnam. They obtained loan of rupees one crore and twenty five lakhs as working capital on 11.9.2003 from the Bank of India/first respondent and when they failed to repay the dues to the bank the loan amount declared as NPA on 30.4.2009 by following due procedure under SARFAESI Act 2002, following the notice issued by the bank on 26.11.2009. The petitioners were regularly paying loan amount to the respondent bank, however due to family problems and the business of the firm was not continued, subsequently notice under Section 13(2) was issued by the respondent bank and thereafter possession notices were also issued.

It is stated that the agricultural lands of the petitioners were given as security. The 2nd respondent issued auction notice on 26.2.2015, where under the properties of the petitioners given as security for the loan, were sought to be auctioned. That the mortgaged lands are contiguous and are treated to be agricultural lands in the revenue records. The very fact that lands are described in acreage basis by itself would indicate that the same is being treated as agricultural lands. Hence the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is not applicable as mentioned in section 31 (i). It is further emphasized that these lands which are agricultural lands being the lands proposed to be auctioned are vacant as mentioned in the impugned sale notice, still the character of the land remains to be agricultural land. As the land given as security to the land is an agricultural land, the provisions of SARFAESI Act has no application and the impugned sale notice is without jurisdiction.

(2.)Alternatively, it is stated that the Government of Andhra Pradesh through Municipal Administration and Urban Development (H2) Department issued G.O.Ms.No.345 dt.30.6.2006 under Section 12(2) of the A.P.Urban Areas (Development) Act, 1975 modifying the Zonal Regulations and land use plans where under the lands proposed to be auctioned were ear marked for residential use. It is submitted that the market value guidelines issued by the Stamps and Registration Department w.e.f. 01.4.2013, the basic unit rate per square yard for the land in Narava village was fixed at Rs.2,500/- per square yard and the basic unit rate of Rs.2,500/- per square yard is grossly low and it does not reflect the true market value of the land as neighboring lands which are at a distance of less than one kilometer on either side from the lands of the petitioners, the basic unit per square yard is fixed at Rs.8,000/- per square yard. Hence the reserve price in the impugned auction notice i.e. Rs.5,02,80,000/- for all the four properties is very low.
(3.)The reserve price fixed in the auction notice for all four properties i.e. item no.1(Ac.3.04cents), item no.2(Ac.2.00cents), item no.3(Ac.2.09cents) and item no.4(Ac.1.25cents) even though the properties are independent to each other, the reserve price fixed for the entire land as a whole is impermissible under Rule 8(5) of SARFAESI Act and the Rules 2002.

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