- i- IN THE HIGH COU^T OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction) THURSDAY, THE TWENTIETH DAY OF MARCH TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE THE CHIEF JUSTICE SRI DHIRAJ SINGH THAKUR AND HONOURABLE SRI JUSTICE R. RAGHUNANDAN RAO WRIT PETITION NO: 20595 OF 2024 Between: 1. Velupuri Rajini, (Aadhaar No.6763 6669 0985), W/o.Pulla Rao, aged about 42 years, R/o.D.No.1-93,Potturu, Within Guntur Municipal Corporation, Guntur. 2. Velpuri Masthanamma, W/o.Madhava Rao, aged about 45 years, R/o.D.No.1-93,Potturu, Within Guntur Municipal Corporation, Guntur. (Cause title amended as per c.o.dt.05.12.2024 vide I.A.No.3 of 2024 in W.P.No.20595 of 2024) ...PETITIONERS AND 1c The Authorized Officer, Indian Overseas Bank, Ring Road Branch, 4D- D-27, Ring Road, Ground floor, Vanj Circle, Vijayawada-520008. 2. Muvva Shivaprasad, S/o. Nageswara Rao, aged -years, Occ: Business, R/o. 6-1, BC Colony, Kondapaturu, Kakumanu Guntur, Guntur District, Andhra Pradesh-522112. 3. M/s. Anaga Industries Private Limited, Registered Cum Office Address shop No. 235, Vishnu priya Commercial Complex, Etukuru Bypass c. Service Road, Kamma Seshaiah Ground, NearTSR Ginning Mill. Guntur - 522003. (Cause title with regard to Respondent No.3 was amended as per Court Order dt.02.01.2025 vide I.A.No.4 of 2024) ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, Order or Direction particularly one in the nature of Writ of Mandamus, declaring the action of the 1®* respondent in proceeding with the Open Sale Auction dated 05.08.2024, without considering the request made by the petitioners that they would pay the auction bid amount forthwith, despite the fact that the said property is an agricultural property as barred under Section 31 of the SARFAESI ACT, and as it is conspicuous on the face of the record that the said property is an agricultural property based on the Encumbrance Certificate as bad illegal, arbitrary, unjust, improper and in violation of Article 19, 20, 21 and 300-A of Constitution of India and consequently direct the respondents not to take any coercive steps and to quash all further proceedings which in contravention of law. more lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased to grant stay of all further proceedings in pursuance to the Open Sale Auction dated 05.08.2024 in respect of the petitioner’s property admeasuring Ac.0.73 cents situated in D.N0.II6/B- 1 of Potthur Village, Guntur pending disposal of the Writ Petition. t lA NO: 2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant permission to pay the said auctioned amount of Rs.46.00 lakh within a time frame to release the said auctioned land of two parcels i.e., Ac.0.50 cents each referred to above in the interests of justice. Counsel for the Petitioners : SRI K. A. NARASIMHAM Counsel for the Respondent No.1 : Ms. SUDHA MADHURI GOVINDU Counsel for the Respondent Nos.2 & 3 : The Court made the following: ORDER 1 HCJ&RRR,J W.P.No.20595/2024 I APHCOl0401592024 IN THE HIGH COURT OF ANDHRA PRADESH ATAMARAVATI (Special Original Jurisdiction) [3446] ,THE DAY OP MARCH TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE THE CHIEF JUSTICE DHIRAJ SINGH THAEUR THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO WRIT PETITION NO: 80595/8084 Between: Velupuri Rajini and Others ...PETITIONER(S) AND The Authorized Officer and Others ..RESPONDENT(S) Counsel for the Petitioner(S): l.KANARASIMHAM Counsel for the Respondent(S): 1. SUDHA MADHURI GOVINDU The Court made the following ORDER: (Per Hon’'ble Sri Justice R. Raghunandan Rao) Heard Sri K.A. Narasimham, learned counsel appearing for the petitioners and Ms. G. Sudha Madhuri, learned Standing Counsel appearing for the respondent. 2. The Is*' respondent-hank; had advanced certain financial assistance to the 2^^ respondent herein. The Istpetitioner, as security for repayment of the said financial assistance, had acted as guarantor 2 HC J &RRR,J W.P.No.20595/2024 r and mortgaged her land admeasuring Ac.0.73 cents in D.N0.II6/B-I of Putthur Village, Guntur District. On account of non-payment of dues, the loan advanced to the 2^^ respondent had become a non-performing asset. Subsequently, the respondent had initiated proceedings under the SARFAESI Act, 2002 for sale of the land of the Istpetitioner. 3. Aggrieved by the proceedings of the respondent, initiated to conduct an auction on 05.08.2024, under the provisions of SARFAESI Act, 2002, the petitioner has approached this Court by way of the present writ petition. 4. Sri K.A. Narasimham, learned counsel appearing for the petitioners contends that the land in question is agricultural land, which is exempted from the provisions of the SARFAESI Act, 2002. He draws the attention of this Court to Section 31 of the SARFAESI Act, 2002, which excludes agricultural land from the provisions of the SARFAESI Act, 2002. 5. The learned counsel for the petitioner, would also fairly concede that the l^t petitioner had taken steps for converting this land from agricultural land to non-agricultural land and had also paid necessary conversion amount, which had been calculated by. the revenue authorities. 6. The learned counsel for the petitioner would contend that though the conversion amount had been paid by the petitioner, no 3 HC J &RRR, J W.P.No.20595/2024 consequential order of conversion has been passed and as such, the land would remain agriciiltural land. He would also submit that agricultural operations are still being carried on in the said land and contends that in such a situation, the land cannot be treated as non-agricultural land which could be subjected to the recovery procedure under SARFAESI Act, 2002. The learned counsel would rely upon the judgment of the Hon’ble Supreme Court in Commissioner of Wealth Tax, Andhra Pradesh vs. Officer In-Charge (Court of Wards) ^, and ITC Limited vs. Blue Coast Hotels Ltd., and Ors.,^ . 7. In Commissioner of Welth Tax, Andhra Pradesh vs. Officer In-Charge (Court of Wards), the issue that came up before the Hon’ble Supreme Court was whether agricultural land would have to be excluded from the definition of assets under the Wealth Tax Act. The Hon’ble Supreme Court, after reviewing various judgments on this issue, had held that the land over which agricultural operations are carried on, would amount to agricultural land. The principle laid down by the Hon’ble Supreme Court has been summarized, in the following manner. 24. For the reasons already given, we do not think that the term “agricultural land” had such a wide scope as the Full Bench appears to have given it for the purposes of the Act we have before us. We agree that the determination of the character of land, according to the purpose for which it is meant or set ^AIR 1977 sc 1123 ^AIR 2018 SC 3063 4 HCJ &R-RR, J W.P.NO.S0595/2024 f apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultxiral purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of “assets”, but its actual condition and intended user which has to be seen for purposes of exemption from wealth tax. One of the objects of the exemption seemed to be to encourage cultivation or actual utilization of land for agricultural purposes. If there is neither anything in its condition, nor an3rthing in evidence to indicate the intention of its owners or possessors, so as to connect it with an agricultural pimpose, the land could not be “agricultural land” for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good prima facie evidence. We do not think that all these considerations were kept in view by the taxing authorities in deciding the question of fact which was really for the assessing authorities to determine having regard to all the relevant evidence and the law laid down by this Court. The High Court should have sent bank the case to the assessing authorities for deciding the question of fact after stating the law correctly. 8. A Division Bench of the Hon’hle Supreme Court in ITC Limited vs. Blue Coast Hotels Ltd., and Ors., following the aforesaid judgment, had gone into the question of sale of agricultural lands under 5 HC J &RRR, J W.P.No.20595/2024 C the SARFAESI Act, 2002 and the lands, which would fall within such exemption, as follows: 38. It is undisputed that these lands were mortgaged in favour of the creditor under a deed dated 26-2- 2010. Obviously, since no security interest can be created in respect of agricultimal lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis. The undisputed position is that the total land on which the Goa Hotel was located admeasures 182225 sq m. Of these, 2335 sq mts., are used for growing vegetables, fruits, shrubs and trees for captive consumption of the hotel. There is no substantial evidence about the growing of vegetables but what seems to be on the land are some trees bearing curry leaves and coconut. This amounts to about 12.8% of the total area. In the judgments cited above, the Hon’hle Supreme Court 9. was considering the question of classification of Agricultural land into non-agricultural land, on general principles. In the present case, there is a specific Act governing the situation, viz.. The A.P. Agricultural Land (Conversion for Non-Agricultural Purposes) Act, 2006 (for short the Act No.3 of 2006). This Act defines “agricultural lands” to he lands used for agriculture and “non-agricultural land” to he land other than the agricultural land. / / / 6 HC J &RRR,J ■W.P.No.20595/2024 • c Section 3(1) of the Act No.3 of 2006 states that no 10. agricultural land in the State shall he put to non-agricultural purposes without prior payment of conversion tax to the Government. The A.P. Agricultural Land (Conversion for non-Agricultural Purposes) Rules, 2018 (for short ‘the Rules’) were issued by way of G.O.Ms.No.98, Rev. DA &? LR) Department, dated 19.02.2018. Rule 4 of these Rules states as follows: “Rule-4: Conversion:- On payment of requisite One Time Conversion Tax, the Land stands converted and can be used for non-agricultural purpose by the declarant.” 11. By virtue of Rule-4, Agricultural Land stands converted to non-agricultupal land, on payment of one time conversion tax. The learned counsel for the petitioner had fairly stated that the conversion tax had been paid. 12. In the circumstances, the land in question had been converted from agricultural land to non-agricultural land and consequently, the exemption available imder Section 31 of-the SARFAESI Act would not be applicable to the land, which is sought to be auctioned now. 13. Consequently, nothing survives in the writ petition. Accordingly, the writ petition is dismissed. There shall be no order as to 7 HC J &RRR, J ■W.P.No.20595/2024 c costs. As a sequel, pending miscellaneous applications, if any, shall stand closed. Sd/- A.VIJAYA BABU ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, 1. One CC to Sri K. A. Narasimham, Advocate [OPUC] One CC to Sri Sudha Madhuri Govindu, Advocate [OPUC] 3: Three C.D. Copies. Cnr HIGH COURT DATED:20/03/2025 S’ 2J MAR 2025 g ^ . Current Section ^ ^4£e8PATCv;^^ ORDER WP.No.20595 of 2024 DISMISSING THE W.P. WITHOUT COSTS