Case No.: Appeal 11247 of 2016
The appeal was filed by the appellant pursuing to a writ petition filed with the Agartala bench of the Gauhati High Court, and the writ petition filed by the people are the respondent in this case. The respondents filed a writ petition earlier stating that the sale notification dated 26/06/2012 regarding an asset mortgaged by them as security against the loan issued by the appellant (UCO Bank).
The respondent, earlier the writ petitioner, mortgaged an asset with the bank and received the funds against the property with the sole intention to use the money for the purpose of construction of a hotel. Due to non-payment of any instalment as affirmed in the loan agreement with the bank, the bank issued the said notice for sale of such asset with regards to non-payment of loan for the security interest of the bank under the provision of SARFAESI Act, 2002, i.e. 13(2) of the Act. The writ petitioner being a member of scheduled tribe roared that such sale of assets is in infraction with the provision of Tripura Act, 1960, i.e. section 187 of the mentioned Act. He further explains his point by mentioning that section 187 imposes a restriction or limitation over the act to sale the mortgaged property with the bank to any person who is not a member of the scheduled tribe. The person to whom such mortgaged property is to be sold by the bank is not a member of the scheduled tribe, and so the sale or process of the sale in itself is the violation of the provision of Tripura Act, 1960.
- Whether section 13 of the SARFAESI Act, 2002 will prevail over Section 187 of Tripura Act, 1960?
- Whether the parliamentary legislation has the sole dominance over the state legislation?
- To what extent the laws made by the parliament will be applicable if there is a conflict between Union and State Legislatures.
- Whether the sale is valid or invalid?
After the reading of the constitution of India, it supposes that there is a fine demarcation of the power between the union and the state. In some situations, where there is a corner regarding which, there arises a conflict between the union and the state legislature, and the law made by the union of parliament may prevail. With due regards to this clause/provisions regarding the dominance of the union law over state law in such dispute should not result in a situation where the state laws are left meaningless. Both the legislatures are supreme in their own charted territory and with regards to the Constitution.
A union legislature should no encroach in the field of the state legislature as per the articles of the Constitution specify, but an encroachment is possible from the state legislature in the field of the union while exercising law and if such encroachment is merely an ancillary such encroachment should not be understood as an extension of power in each other’s field.
As in the above case section 13 of SARFAESI Act, 2002 which is the central act and which provides and regulates conditions as when a bank to secure the interest of its institution in case of a default by the borrower or the guarantor is allowed to sale the mortgaged property/asset to recover the money/interest to ant person by way of auction or agreement to purchase.
Section 187 of the Tripura Act, 1960, which provides the provision regarding the imposition of the restriction on the sale of the asset to any non-scheduled tribe member forms a part of the state law.
The court stated that such restriction is valid with a reason that there does not exist any central law with explicit mentioning of a state’s law is contrary to the provisions, but such condition should give way as soon a central act steps in with exclusive regulation in dealing with the sale of mortgaged assets and other aspects concerning the mortgage. In the above case, the central act, i.e. SARFAESI Act, 2002, is proved dominant over the state law, i.e. Tripura Act, 1960.
Section 187 of the Tripura Act. 1960 in the above case has no power to withhold the action provided by the SARFAESI Act, 2002 in the sale of the assets in lieu of the default by the member of ST regarding payment of the loan amount.
The Bank may proceed to sale the asset to any person willing to purchase the property and recover the interest.