Excelsior Correspondent
SRINAGAR, Nov 5: Supreme Court today issued notice to the State Government for filing of response within two weeks on a petition filed by the State Bank of India challenging judgment passed by the Jammu and Kashmir High Court wherein it had quashed the loan recovery notices of the banks.
The Apex court bench of Justice Jagdish Singh Khehar and Justice R Banumathi in a petition filed by State Bank of India challenging the Jammu and Kashmir High Court order passed in July this year in which it was said that Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI) Act enacted by the Parliament is not applicable to Jammu and Kashmir issued notice to State Government seeking response in two weeks.
The Division Bench of High Court had 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 had directed.
Aggrieved of these directions, one of the Banks (SBI) approached the Supreme Court by way of Special Leave Petition challenging the judgment of High Court Division Bench.
The (SARFAESI) Act was enacted by the Parliament in the year 2002 and enforced on 17.12.2002. It 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 Section 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”, High Court had said while quashing the Parliament’s Act.
High Court after giving finding that the (SARFAESI) Act 2002 cannot be applied to the citizens of State of J&K, however, had 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.
High Court had 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.
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