Excelsior Correspondent
SRINAGAR, July 16: In a land mark judgment, Jammu and Kashmir High Court today quashed the notices issued by the banks in the State to hundreds of defaulters under a Parliamentary Act.
The Division Bench of High Court comprising Justice MH Attar and Justice Ali Mohammad Magrey held that the recovery notices issued by the banks against borrowers under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) are quashed and set aside.
“The respondents Banks and Institutions are restrained from proceeding further in terms of action initiated on the basis of provisions of (SARFAESI) Act against the state subjects and citizens of State of J&K”, court directed in a 74 page judgment on 550 petitions that were clubbed together .
The (SARFAESI) act was enacted by the Parliament in the year 2002 and was enforced on 17.12.2002 and was amended in the year 2004 and 2012 for the purpose to regulate reconstruction of financial assets and enforcement of security interests and for matters connected therewith or incidental thereto.
“It is held that the Union Parliament does not have legislative competence to make laws contained in Sections 13, 17A, 18B,34,35 and Section 36 so far as they relate to the State of J&K. it is further held that in view of the aforesaid declaration, the (SARFAESI) Act 2002 cannot be enforced in the State of J&K”, court said.
Court further said that (SARFAESI) Act 2002 can be availed of by the banks, which originate from State of J&K for securing the money which are due to them and which have been advanced to the borrowers who are not State subjects and residents of the State and who are non-state subjects and non-citizens of the State of J&K and residents of any other State of India excepting the State of J&K.
Court after giving finding that the (SARFAESI) Act 2002 cannot be applied to the citizens of State of J&K, however, held that the banks are at liberty to recover the loan money due to them from the borrowers and loanees by having an appropriate recourse of laws and by approaching the appropriate forums.
Court further granted liberty to the State of J&K to enact law similar to that of (SARFAESI) Act enacted by the Parliament in 2002 for securing the interests of the banks and financial institutions. “The State of J&K, in the event of framing such a law, has to ensure that interests of State subjects and citizens of J&K qua their immovable properties are not affected by transferring the same to non-state subjects”, reads the order of Division Bench.
Giving reference to the case of Prem Nath Koul wherein Supreme Court has held that the J&K State occupies a distinct , unique and special position has authoritatively ruled that signing of Instrument of Accession did not affect the sovereignty of Maharaja over his State and after the Instrument of Accession was signed by the Maharaja, his successor in interest issued proclamation for electing constituent Assembly for faming of Constitution of J&K which thereafter came into force and certain Sections i.e 2,3,4,5,6,7,8, and 158 came into force at once. “The constituent Assembly of the State transferred sovereignty of the State to the people of the State. Even otherwise, the people are repository of severing power of the State as such the State got its own Constitution for regulating its affairs”, court mentioned in the order.
Giving the reference of State Constitution and Supreme Court the Division Bench held that the constitution of India could not apply by force to the State of J&K which otherwise in Article 370 of the Constitution of India is provided for applying constitutional provisions and statutes to the State of J&K.
“The Constitutional provisions and laws, which have been extended to the State of J&K in accordance with the mechanism and procedure, prescribed by the Article 370 and which Constitutional provisions and laws have been made applicable to the State of J&K with modifications etc. make the distinct, unique and special position of the State of J&K more clear”, Division Bench has held.
Referring certain Articles of Indian Constitution which are applicable to the State of J&K court said that these articles provide equal protection of laws to the State subjects and citizens as a class part. “Article 14 of the Constitution of India, as has been made applicable to the State of J&K, gave equal protection of laws to the State subjects and citizens as a class part. Similarly, Article 19(1)(f) of the Constitution of India which has been made applicable to the State of J&K and till date continues to be in force in the state, recognizes the right to own, hold and dispose of property, which right otherwise is inherent in the State subjects and citizens of the State of J&K, who stand defined in terms of Elans and orders of His Highness and constitution of J&K”, court said.
Court also held that a person can be deprived of his physical and material components by procedure established by law. Laws have their own universe. They operate in matter and not in vaccum. The laws are located in time and space. “In the State of J&K, the immovable property of the State subject and citizen, cannot be permitted to be transferred to non-state subject as this legal and Constitutional protection is inherent in the State subjects of the State and his fundamental and basic inherent right cannot be taken away in view of the peculiar and special Constitutional position occupied by the State of J&K”, court clarifies.
Court said the Act of 2002 passed by Union Parliament adversely impacts the inherent, natural and Constitutional rights of the State subjects as already stated that the Parliament lacks the power to enact such a law in view of expression Constitutional provisions in respect of Jammu and Kashmir.
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