59 mins ·
SBI challenges JK High Court's order on
SARFAESI Act.
In a significant development, country’s
largest public sector bank- State Bank of India- has filed a Special Leave
Petition in the Supreme Court challenging a judgment of the J&K High Court
on Sarfaesi Act 2002. The J&K High Court had ruled that the
Parliament-enacted Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest (Sarfaesi) Act, 2002 was not applicable to
Jammu and Kashmir.
"The HC erred in holding that Sarfaesi
Act adversely impacts the inherent natural and constitutional right of the
state subjects. There cannot be any inherent natural and constitutional right
to take a loan from a bank and decline to repay the same," the SBI pleads
in its petition.According to the bank the purpose behind Sarfaesi Act was to
“empower secured creditors to take measures for recovery of their dues without
the intervention of courts or tribunals and help reduce their non-performing
assets (NPAs).”
"Parliament has the power to enact this
special provision, that is Sarfaesi Act, because recovery of dues is an
essential function of any banking institution and in exercise of its
legislative powers the Parliament can provide a mechanism by which loans can be
recovered," the bank pleads in its petition.The Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (also known as the Sarfaesi Act) is an Act of the Parliament of India.
It allows banks and other financial
institution to auction residential or commercial properties to recover loans.A
senior SBI official informed Greater Kashmir that the bank filed the petition
seeking revision of JK High Court order as the Parliament had enacted Sarfaesi
Act to enable the banking industry tackle delay in recovery of loans.
"The Act allows banks to recover debts by
taking possession of secured assets and sell them without intervention of
tribunals or courts in other parts of the country. However, in Jammu and
Kashmir, the banks are finding it difficult to recover loan amounts due to
non-applicability of the securitization Act,” he said.
"Parliament had specifically provided
that all transfer of properties under the Sarfaesi Act would be appealable
before the District Judge or the high court to protect state subjects'
interests in their properties,” SBI pleaded before the Supreme
Court.Interestingly banks- both private and public sector - have been pressing
for applicability of SAFAESI Act in the state.However, the Jammu and Kashmir HC
ordered in the petition filed earlier before it that SARFAESI Act cannot be
extended to state.
A division bench of the High Court comprising
Justice M H Attar and A M Magrey had held in the 76-page judgment earlier this
year that any law made by the Parliament which affects the laws made by State
legislature cannot be extended and applied to J&K.
"The State of J&K would be at liberty
to enact law similar to that of SARFAESI Act for securing the interests of the
banks and financial Institutions," it observed.
"Article 35(A) of the Constitution of
India, which has been applied to the State of J&K clarifies the already
existing constitutional and legal position and does not extend something new to
state of J&K," the bench held, observing that Article 35-A was only a clarificatory
provision to clear the issue of constitutional position obtaining in rest of
country in contrast to J&K.
"This provision clears the constitutional
relationship between people of rest of country with people of J&K. It is in
essence an information to the citizens of rest of country that on
constitutional and legal plank they in all respects do not constitute a class
with citizens of J&K," the court had said and held that the J&K
citizens have their own constitution and their sovereign character which cannot
be challenged, altered or abridged.
Meanwhile, a bench of Justices J S Khehar and R Banumathi issued
notice to the writ petitioners, mainly traders from Jammu and Kathua, who had
successfully challenged the application of Sarfaesi Act to the residents of
J&K
Regards, E.R.Iyer
