High Court Questions Bank Auction After 39-Acre Kodagu Coffee Plantation Worth ₹3.12 Crore Sold for ₹99 Lakh

Representative image of coffee estate

Bengaluru: The Karnataka High Court has raised serious questions over the valuation and auction of a 39-acre coffee and cardamom plantation in Kodagu district after finding that the property, which was valued at more than ₹3.12 crore when a loan was sanctioned in 2014, was assessed at just ₹61 lakh in 2024 before being sold in a bank auction for only ₹99 lakh.

According to a report in The Hindu, describing the valuation process as an "appalling state of affairs", Justice M. Nagaprasanna also found that the registered valuer engaged by the bank was legally not qualified to value plantation properties and has issued a show-cause notice asking why prosecution and criminal contempt proceedings should not be initiated against him.

The interim order was passed on a petition filed by Leetha Abraham, who had availed a loan from Canara Bank's Mangaluru branch in 2014 by mortgaging the 39-acre coffee and cardamom plantation situated at Mundrote village in Bhagamandala, Kodagu district.

Following a default in repayment of the loan through equated monthly instalments (EMIs), the bank initiated recovery proceedings under the SARFAESI Act, 2002. The proceedings culminated in the auction of the plantation during 2023-24. The petitioner subsequently challenged the legality of the sale to the auction purchaser in January 2024.

During the hearing, the court found that the plantation had been valued at only ₹61 lakh in 2024, despite the government guidance value of the land alone being ₹2.73 crore in 2023, excluding the value of the standing coffee and cardamom crops.

The court also noted that the bank itself had valued the same 39-acre property at ₹2.73 crore in 2014 while sanctioning the loan. Taking into account the value of the plantation, the property was estimated to be worth over ₹3.12 crore at that time.

"The disparity is not merely substantial; it is startling. Such a valuation prima facie defies commercial logic and invites serious suspicion," the court observed, adding that "such a precipitous and inexplicable depreciation in the value of the property naturally invited anxious scrutiny."

The court's scrutiny further revealed that the bank's valuer, Y.R. Srikanth, had filed an affidavit claiming he was qualified to undertake valuation of plantation and other properties. However, information obtained by the petitioner from the Income Tax Department under the Right to Information (RTI) Act in April 2024 showed otherwise.

According to the registration certificate issued under Section 34AB of the Wealth-tax Act, 1957, Mr. Srikanth was registered only as a valuer of immovable properties other than agricultural lands, plantations, forests, mines and quarries. The certificate expressly barred him from valuing plantation properties.

The court observed that the contradiction between the valuer's affidavit filed in February 2024 and the registration certificate disclosed through the RTI response was "too stark to be ignored."

Consequently, Justice Nagaprasanna directed Mr. Srikanth to explain why prosecution should not be initiated against him for undertaking the valuation of a plantation property despite lacking the legal competence to do so and why criminal contempt proceedings should not be initiated for allegedly filing a false affidavit before the High Court.

The matter remains pending before the Karnataka High Court for further consideration.

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