Judgment:
S.U. Khan, J.
1. Heard learned Counsel for the parties.
2. Petitioner in the year 1989-90 took a loan of Rs. 92,000 for purchasing tractor from State Bank of India, Rani Ki Sarai, Azamgarh Branch. After repaying an amount of Rs. 15,000, petitioner did/could not repay the remaining amount of the loan. Recovery certificate of Rs. 2,01,756 was issued against the petitioner and sent to the Tehsil authorities. In pursuance of the said recovery certificate the tractor was sold on 17.2.1995 for Rs. 53,100. Thereafter, another recovery certificate was issued on 15.6.1995 for remaining amount which was shown to be Rs. 1,56,382. In pursuance of the said recovery certificate petitioner's agricultural plot No. 378 area 1.5 hectares was directed to be auctioned. Petitioner deposited an amount of Rs. 1,02,500 on 14.8.1995. However, the aforesaid plot of the petitioner was auctioned on 22.1.1996. Collector on behalf of the State Government purchased the plot in question for Re. 1, Annexure-2 is bid/auction sheet in which it is mentioned that no one appeared to bid and on the earlier occasion of auction also no one had turned up to bid hence for the outstanding dues of Rs. 56,382.50 the property was auctioned in favour of State Government. It has not been shown that what was the reserved price of the land in dispute shown in proclamation of sale. In the writ petition it has been stated that market value of the land in dispute was Rs. 8,00,000. Even though the market value of Rs. 8,00,000 appears to be on the higher side, however, judicial notice may be taken of the fact that in almost no part of Uttar Pradesh in the year 1996 market value of agricultural land could be less than Rs. 1,00,000 to 1.5 lakhs per hectare. The auction was approved by Deputy Collector on 16.3.1996, Annexure-3 to the writ petition. Annexure-4 to the writ petition is a report sent by the bank concerned to the Tehsildar dated 27.4.1996 in reply to his letter dated 24.4.1996 informing that the dues against the petitioners were Rs. 56,382.50 and interest uptil 30.4.1996 was Rs. 20,192.50 (total Rs. 76,575).
3. Petitioner filed objections under Rule 285-1 of U.P.Z.A.L.R. Rules against the auction dated 22.1.1996 which were rejected on 22.10.1999 by Commissioner, Azamgarh. The said order has been challenged through this writ petition.
4. In the matter of agricultural loans the experience of the Court is that on the one hand debtors do not behave in reasonable manner and avoid payment of instalments under one excuse or the other. This High Court is flooded with the writ petitions of such debtors seeking relief of payment in instalments after default. Similarly, on the other hand Banks and State Authorities are also behaving in unreasonable and heartless manner in realising the dues. In the instant case as against the loan of Rs. 92,000 petitioner had already paid Rs. 1,70,000 and prayed for some more time to pay the balance. The tractor itself had been auctioned by the Tehsil authorities. Still the land of the petitioner was sold.
5. Banks in the matter of huge commercial loans liberally extend the facility of one time settlement by reducing the total amount of loan and interest due till then drastically. However, in the case of agricultural loans banks are not ready to reduce the interest even in case of genuine difficulties faced by the borrowers. As far as principal amount is concerned, there is absolutely no question of reducing the same by a single penny. However, as far as huge interest is concerned banks may show some humane face by reducing that.
6. The State also does something which is extremely harsh if not cruel. It auctions borrowers' lands for petty amounts without proper advertisement. If the auction is advertised in widely circulated News Paper well in advance land may be auctioned for proper consideration. State further charges 10% recovery charges. In this scenario some times the borrower of agricultural loan feels himself pitched into Shylocks (plural, not singular).
7. State Government often comes up with schemes of loan waiver. As an extension of the same scheme State Government must seriously consider to waive the condition of realisation of recovery charges in case of recovery of agricultural loans.
8. Under proviso to Rule 285B of the rules it is provided as under:
Where at any auction under Section 284 no bid is offered upto the amount of the arrear, for which the sale has been ordered, the Collector may bid upto the amount of such arrear.
9. It is utmost essential to ascertain that what minimum part of the land of borrower can satisfy the arrears and only that much part should be put to auction vide Balakrishnan v. Malaiyandi Konar : AIR 2006 SC 1458 : 2006 (2) AWC 1255 (SC). It is all the more necessary when property/land is purchased by the State under the aforesaid proviso to Rule 285B. State is not supposed to take over the property/purchase the property of a person, even though he may be the defaulter for less than the market value. If auction takes place then the presumption is that the properties are sold for the market value. Excess amount (more than the arrears) for which property is auctioned is to be returned to the owner of the land. However, if State purchases the property under the aforesaid proviso then there is no excess amount. Accordingly, it is utmost essential in such cases where State purchases the property under the aforesaid proviso to determine that what minimum part of the property to be auctioned can satisfy the entire arrears.
10. Rule 281 provides that property must be sold in the lots of 1.25 hectares. It is to avoid fragmentation. However, now (since 2004) the Section prohibiting sale of fragment (168A) has been deleted. Moreover, if State was purchaser, Section 168A did not apply.
11. Accordingly, the purchase of the property by the State in the instant case cannot be approved.
12. In the impugned judgment by the Commissioner it is mentioned that petitioner had paid total Rs. 1.70,600 against the loan of Rs. 92,000 (including the amount for which tractor was auctioned). In the impugned order it is also mentioned that at the time of auction total arrears were Rs. 56,382.50.
13. On 7.5.2009, I passed the following order (on the order sheet):
The Court is tentatively of the opinion that in case the amount of Rs. 56,382 for which land of the petitioner, was auctioned and purchased by the State for Re. 1 is paid to respondent bank through a draft drawn in the name of Manager, State Bank of India, Rani Ki Sarai Branch, Azamgarh, the auction of petitioner's land may be set aside.
List on 25.5.2009.
On the next date, the draft must be brought in Court.
14. The case has wrongly been listed today hence the office did not send the file. However, learned Counsel for both the parties appeared and requested that the file of the case might be summoned from the office and the same may be decided today.
15. Accordingly, file of the case has been summoned from the office.
16. A draft of Rs. 56,383 has been handed over to the learned Counsel for the Bank. Photo copy of the draft has been on record. Learned Counsel for the Bank after some hesitation stated that the amount, draft of which has been handed over today, will be treated by the Bank to be in full and final satisfaction of its dues.
17. After hearing learned Counsel for the petitioner, learned Counsel for the Bank and learned standing Counsel for the State writ petition is disposed of and the auction dated 22.1.1996 is set aside. Impugned order is also set aside. It is declared that the entire loan stands paid. Consequent mutation in favour of petitioner in respect of agricultural land in question, i.e., plot No. 378 area 1.505 hectares must be made by the Tehsildar concerned in the revenue records within a month from the date of receipt of certified copy of this order.
18. If State had paid any amount to the bank then the same must at once be returned by the bank to the State Government.
19. Office is directed to supply a copy of this order free of cost to learned Chief Standing Counsel within two weeks for being sent to the Chief Secretary.