• SARFAESI Act

Whether SARFEASI Act applicable to a agricultural land, which is used for residential purpose after sanction Municipal Plan from Municipality.
Asked 1 year ago in Business Law from Asansol, West Bengal
1)as per Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the provisions of the SARFAESI Act do not apply to any security interest created in agricultural land

2)he Supreme Court in the decision in SARIF ABIBI MOHMED IBRAHIM'S CASE, referred above held:

"12.Whether a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of this Court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The Court has to answer the question on a consideration of all of them  a process of evaluation. The inference has to be drawn on a cumulative consideration of all the relevant facts."

3) if said land has been converted into NA and is used for residential purposes provisions of SARFEASI act would be applicable
Ajay Sethi
Advocate, Mumbai
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The answer is No. SARFEASI Act does not apply to any security interest created in an agricultural land'. It cannot be proceeded with under this law. 
Ashish Davessar
Advocate, Jaipur
18057 Answers
445 Consultations
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1. SARFAESI Act is not applicable on agricultural land,

2. However, if the said Agricultural land is not used for the purpose of agriculture and is used for constructing residential apartments, hen the said land is not considered as agricultural land and SARFSESI Act is applicable on such land.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
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1. hen Municipality has already sanctioned building plan to construct building thereupon, the the SARFAESI Act, is very much applicable on the said land,

2. Such types of building  constructed upon agricultural land is mortgageable to create scurity interest thereupon.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
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Yes, SARFAESI ACT applies to agricultural and as well. Any immovable property can be a subject matter of equitable mortgage and hence is amenable to SARFAESI Act.
Devajyoti Barman
Advocate, Kolkata
5153 Answers
54 Consultations
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SARFAESI is effective only for secured loans where bank can enforce the underlying security eg hypothecation, pledge and mortgages. In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in question is an unsecured asset, the bank would have to move the court to file civil case against the defaulters.
The Sarfaesi act covers any asset, movable or immovable, given as security whether by way of mortgage, hypothecation or creation of a security interest. There are some exceptions in the act such as personal belongings. However, only that property given as security can be proceeded under the provisions of SARFAESI Act. If the property of the borrower is his own mortgaged residential house, it is also NOT exempted from the Sarfaesi act.
T Kalaiselvan
Advocate, Vellore
13919 Answers
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It is not necessary, once the  property becomes secured asset, that can  be brought under the act for recovery of NPA loans. 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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1) no it is not mandatory 

2) in your case evidence in ground is that land is not used for agricultural purposes 

3) your land is being used for residential purposes as per sanctioned plans by municipal corporation and hence SARFEASI proceedings can be invoked 
Ajay Sethi
Advocate, Mumbai
23116 Answers
1214 Consultations
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Yes it is mandatory.
Ashish Davessar
Advocate, Jaipur
18057 Answers
445 Consultations
5.0 on 5.0
1. No. It is not mandatory at all for invoking SARFAESI Action,

2. What is required in this case is to submit evidence that the said land which has been recorded as agricultural land is not being used as agricultural land which the Bank can easily prove,

3. So, find some other way to avoid SARFAESI Action initiated by the Bank.
Krishna Kishore Ganguly
Advocate, Kolkata
12043 Answers
228 Consultations
5.0 on 5.0

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