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The presence of crops when a property is inspected does not necessarily establish its agricultural character when it was mortgaged. In V. Ajayakumar and U. Nithya v. Federal Bank, DRAT Chennai dismissed a Section 31(i) exemption claim because the borrowers' later certificate and inspection report did not bridge the evidentiary gap back to the 2006 mortgage. Official order, paragraphs 10–17.
Order at a glance
| Detail | Verified record |
|---|---|
| Tribunal | Debts Recovery Appellate Tribunal, Chennai |
| Chairperson | Justice G. Chandrasekharan |
| Appeal | RA(SA) 48/2019 |
| Order date | |
| Originating order | DRT-II, Ernakulam, 6 October 2018, TSA 575/2016, formerly SA 737/2013 |
| Disposition | Appeal dismissed; originating order confirmed; parties to bear their own costs; pending applications closed |
| Principal question | Whether the secured property was agricultural land attracting Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 |
This is an analysis of the order as delivered. It does not establish the absence of a later challenge or stay.
Why the later evidence did not answer the decisive question
The dispute concerned approximately 1.85 acres in Kallikadu Village, Thiruvananthapuram District, offered as security through an equitable mortgage in 2006. The borrowers sought to stop SARFAESI enforcement, relying principally on an Agricultural Officer's certificate dated 5 November 2013 and an Advocate Commissioner's inspection report dated 27 October 2015. Order, paragraphs 1–6 and 9.
That material was substantial as a description of later physical conditions. The Commissioner recorded crops, trees, fishponds and other activities, as well as a shed used for residence. The borrowers argued that the stepped layout, rubber tapping and aquaculture supported agricultural use. They also disputed service of the demand notice; the bank relied on hand-delivery and postal service records. These were contested positions, rather than findings that enforcement was automatically unlawful. Order, paragraphs 6–9.2.
The appellate reasoning concentrated on timing. An inspection reports what existed when the Commissioner visited. It does not, without supporting material, prove when the trees were planted, fishponds constructed or agricultural activities begun. DRAT found no evidence establishing the property's agricultural character and operations when the security interest was created in 2006. The possibility that improvements were made later could not be ruled out. Order, paragraphs 10–10.2 and 14–15.
The result was not a finding that the Commissioner had seen no farming. The finding was that later observations did not prove the legally relevant earlier condition.
What Section 31(i) meant in this decision
Section 31(i) excludes security interests created in agricultural land from the Act's application. DRAT treated the inquiry as one of actual character and use at creation of the mortgage, together with continued agricultural use through the relevant period. It did not treat agricultural classification in revenue records as conclusive. The certificate's lack of corroborating contemporaneous evidence was decisive. Order, paragraphs 11–15.
The order discussed Indian Bank v. K. Pappireddiyar, ITC Limited v. Blue Coast Hotels Limited and K. Sreedhar v. Raus Constructions. This article reports how DRAT applied those authorities; it does not independently restate every holding or exception in those judgments. Its practical focus is the evidentiary problem resolved in this appeal. Order, paragraphs 12–13.
DRAT also reasoned that the parties' decision to create a mortgage indicated that they had not treated this land as agricultural. That part of the reasoning must be read alongside the failure of proof and the statutory exemption itself. The order should not be reduced to a universal proposition that executing any mortgage eliminates Section 31(i). Whether a different property attracts the exemption remains dependent on its relevant facts and applicable authority. Order, paragraph 15.
A useful distinction for preparing the evidence
The following comparison is an editorial application of the order's reasoning, rather than a mandatory statutory checklist:
| Evidence question | Why it mattered here |
|---|---|
| What did the property look like at the later inspection? | The report described crops and activities, but only at that later point. |
| What was its character and actual use when mortgaged? | DRAT found that the borrowers had not established the 2006 position. |
| Can later observations be connected to earlier use? | The record did not establish when the trees and improvements began. |
| Is there corroboration across the relevant period? | DRAT found the certificate unsupported by other documents establishing the required agricultural operations. |
For practitioners, the drafting lesson is to connect each relied-on document to a date and a proposition. A certificate should not be described as proving historical use merely because it describes present cultivation. Equally, the presence of a residence should not be presented as an automatic answer to the whole exemption question: the borrowers specifically argued mixed agricultural and residential use, while the appellate result rested on the broader record. Order, paragraphs 6.3, 9–15.
What the dismissal decided—and what it left outside this note
DRAT confirmed the DRT-II order and dismissed RA(SA) 48/2019. The appeal therefore failed; the order did not grant the declarations or protection the borrowers sought. Costs were left with the respective parties, and pending applications were closed. Order, paragraphs 16–19.
This case note does not determine a current loan balance, the outcome of any later enforcement step, or the status of another agricultural parcel. It also does not treat aquaculture, a rubber plantation or a house as a universal shortcut to either side of Section 31(i). The source-supported point is narrower: the evidence must answer the relevant historical-use question, rather than merely show later activity.
Questions practitioners may ask
Is an Agricultural Officer's certificate always insufficient?
No. DRAT rejected the sufficiency of the certificate on this record because it was issued seven years after creation of the mortgage and was not corroborated by documents establishing the relevant agricultural operations. The order does not establish a rule that every such certificate has no evidentiary value. Paragraphs 14–15.
Did the Commissioner's report establish agricultural use in 2006?
DRAT held that it did not. The Commissioner inspected in 2015; the report did not establish when the trees or improvements had been introduced. The tribunal distinguished observed conditions from proof of the land's condition when the mortgage was created. Paragraphs 10–10.2.
Does a revenue description settle the Section 31(i) question?
In this decision, no. DRAT required evidence concerning actual use and the relevant timing, and treated revenue classification as inconclusive. That is why a party should explain what each record establishes rather than rely only on its label. Paragraphs 11–15.
Primary source and related reading
The official DRAT Chennai order dated 21 October 2026 in RA(SA) 48/2019 contains the parties' arguments, reasoning and operative directions. The statutory text was checked against the existing primary-text corpus; this article does not claim a comprehensive current-law or later-treatment audit.
For a distinct recovery-accounting issue, see DRAT Delhi on why a cancelled auction and refunded proceeds did not establish debt payment.