The bank has sold the agricultural land of scheduled caste without earlier written permission of the collector. The official permission of the collector is required for the selling of land belongs to scheduled caste.
I belong to the scheduled caste, and the bank sold my land in public auction to a person other than scheduled caste. I secured a loan from the bank by mortgaging my agriculture land. However, I regularly paid the instalments but due to some financial crisis, it has been unpaid.
The bank released a notice for repayment of the whole outstanding amount, but I was not in a position to pay the same. Consequently, the bank initiated the action under the SARFAESI Act. Ultimately, the bank sold my land to a person not belonging to schedule caste.
The purchases took possession over the land and got a mutation in his favour. I want to challenge the whole proceeding because written permission of the collector is mandatory for selling of SC’s land. Please suggest.
You have no right to challenge the appropriate action initiated under the SARFAESI Act because the bank has enforced the right to sell your land. The SARFAESI Act empowers the bank to recover its loan by selling the security of the borrower. It was a secured loan and you mortgaged your land with the bank in lieu of that loan.
SARFAESI Act 2002
When the borrower makes defaults in repayment of the loan and the outstanding amount is increasing then the bank initiates an action under the SARFAESI Act.
Section 13 of the said Act empowers the bank to take possession of the mortgaged property and sell in the course of recovery of NPA. However, you could challenge the validity of such notice.
SARFAESI Act is a special law which enables the Bank to protect its loan and reduce its NPA. When the borrower does not pay the instalments, his loan becomes a non-performing asset (NPA).
In Mardia Chemicals Ltd. vs Union of India (2004)4SCC 311; the Supreme Court held that the provisions of SARFAESI Act are valid and does not infringe the constitutional right of the citizen.
It is a prime responsibility of the bank to protect its interest and recover the loan by selling the security of the borrower. So, the action of the bank is legitimate and in accordance with the law.
The revenue law protects the right of tillers and makes special provisions for the scheduled caste tenure holder. According to the land revenue code, the SC Bhumidhar cannot sell his land to the person other than SC.
If he wants to sell his land then he must obtain written permission of the Collector before such sell.
The above provision of the land revenue code does not apply to the sale under the SARFAESI Act. The SARFAESI act does protect the interest of the bank instead of the borrower. Hence, the auction purchaser could be a person other than scheduled caste.
Land of scheduled caste
In UCO bank and another vs Deepak Debasma and others AIR 2016 SC 5502; the Supreme Court upheld that the provisions of land revenue laws are not applicable on the SARFAESI Act. The person other than schedule tribe can purchase his land in an auction under the SARFAESI Act.
The prior written permission of the collector is mandatory for the purchase of land belongs to schedule caste and schedule tribe. So according to the judgment of UCO bank, the permission of Collector is not necessary for the auction of your land.
You cannot challenge the validity of sale because the auction purchaser had the right to purchase your land. In such kind of sale, the permission of Collector is not necessary though the land relates to the scheduled caste.
When the auction purchase is the bona-fide purchaser then he has the right to take mutation of land in his favour.