Sunil Fernandes
There cannot be any autonomy beyond what the Constitution provides, and there can certainly be no azadi
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) has presented the most unlikely of sources for a raging debate on the issue of sovereignty of the State of Jammu & Kashmir vis-à-vis the Union of India.
Parliament enacted the SARFAESI Act to provide for an expeditious and efficacious statutory regime for recovery of bank loans from intrepid loan defaulters. Rather than go through a circuitous and often tortuous process of instituting suits for recovery of monies, the SARFAESI Act enables banks to straightaway take possession and auction the defaulter’s property and lays onus on the loan defaulter to seek judicial redress against the proposed auction of his property by the banks.
A clutch of writ petitions were filed in the J&K High Court, challenging the constitutional validity of the SARFAESI Act, essentially on the ground that the law was ultra vires to the statutory provisions contained in a host of Local Laws prevalent in the State of J&K, which prohibit transfer of land from a ‘State Subject’ to a ‘non-State Subject’. Ergo, the writ petitioners contended that even if a State Subject has defaulted in repaying his bank loans, the banks still cannot take possession and auction his property under the SARFAESI Act.
The High Court, in its judgement dated July 16, 2015, allowed the writ petitions, and struck down the SARFAESI Act insofar as it applies to the State of J&K. The reasons given by the court were two-fold. First, the court held that SARFAESI was enacted under Entry 11A (Administration of Justice) of List II (State List), and consequentially Parliament had no jurisdiction to frame such a law for J&K, since List II of the Seventh Schedule of the Constitution of India (CoI) does not apply to that State.
Second, the High Court held that the State of J&K is sovereign in matters in which it had exclusive legislative competence like property rights of its State Subjects and any Central law that adversely affected such rights, even if for wilful default of bank loans, would be unconstitutional.
Several banks led by State bank of India (SBI) challenged the High Court’s decision in the apex court. Notices were issued and detailed arguments spanning several days were addressed. In an erudite, landmark judgement of far-reaching consequence, especially with regards to the constitutional relationship of the State of J&K with the Union of India, the Supreme Court (Bench of Justice Kurian Joseph and Justice Rohinton Fali Nariman) set aside the High Court’s verdict (State Bank of India versus Santosh Gupta and Ors — Civil Appeal No 12237-38/2016 dated December 16, 2016).
This led to a furore in Kashmir valley. Eminent authors, writers, jurists and politicians criticised the judgement (obliquely) and yours truly (in far less oblique terms), as yet another infraction of the State’s “sovereignty” and “erosion” of the Special Status of the State of J&K under Article 370 of the CoI. So heated was this debate on sovereignty that the primordial issue of applicability of the SARFAESI Act to the State of J&K was pushed to the backburner.
The Supreme Court defined ‘sovereignty’ in the Italian Marines Case (Republic of Italy versus Union of India — (2013) 4 SCC 721) as “in an area in which a country is sovereign, its laws will prevail over other laws in case of conflict between the two”. In simple terms, sovereignty is an essential attribute of only an independent nation and manifests itself in the primacy that is accorded to the laws of that sovereign over the competing and conflicting laws that may otherwise be in existence within the territorial boundaries of that sovereign power.
The moot question, therefore, is not whether the State of J&K enjoys any vestige of sovereignty, but whether the Union of India enjoys sovereignty over the State of J&K? As the Supreme Court says, the attributes of a sovereign power are (a) Its laws are supreme throughout its territories and (b) In case of conflict with any other law, the law of the sovereign power will prevail. Are the laws of India supreme over the territory of the State of J&K? In case of conflict, will the laws of India prevail over the laws of the State of J&K? Did the State of J&K enjoy ‘limited sovereignty’ prior to December 16, 2017, and was this sovereignty denuded by the apex court in the SARFAESI judgement?
Proponents of the sovereignty doctrine argue that the CoI does not apply in its full force to the State of J&K, but applies only to a limited extent. They say that to the extent the CoI doesn’t apply to the State of J&K, the latter is supreme/sovereign. They contend that the State of J&K did not ‘merge’ into the Union of India (while the other princely States did circa 1947) but merely ‘acceded’ to the Union of India. They invoke the Oct 26, 1947 Instrument of Accession signed by the then ruler, Maharaja Hari Singh, to buttress their point.
But before we traverse into this sovereignty debate, it is pertinent to note the fate of the primary issue, that is, the applicability of the SARFAESI Act to the State of J&K. The Supreme Court had already settled this issue way back in 2009 — in the Central Bank of India versus State of Kerala, (2009) 4 SCC 94 — wherein it held that SARFAESI was a “Banking Statute” which falls under Entry 45 (Banking) of List 1 (Union list) and not under Entry 11A of List II. Entry 45 of List 1 stands extended to the State of J&K by virtue of Article 370, and, therefore, all banking statutes automatically applied to the State of J&K. The verdicts pronounced by the Supreme Court enjoy the status of a ‘law’ (Article 141 of CoI) and all authorities in the territory of India, including the J&K High Court, are bound by it and cannot take a contrarian stand. Since the very foundational edifice of the High Court’s judgement was legally flawed, the super-structure of sovereignty that was built on it could not entertain any realistic, sanguine hopes of survival. The High Court proceeded to embellish its flawed reasoning by further holding that the entire CoI doesn’t apply to the State of J&K and that the State of J&K was “sovereign” in areas where the CoI didn’t apply.
Undeniably the Constitution of India doesn’t apply to the State of J&K in toto — only 260 of the 395 Articles of the CoI apply to the State of J&K — but to say that this partial applicability of the CoI to the State of J&K is due to the restrictive barrier of the State’s sovereignty is a dangerously flawed argument.
Section 3 of the J&K Constitution 1956 (CoJK) clearly says that the State of J&K shall be an integral part of India. The Constitution of J&K itself was a result of industriousness and diligence of a duly elected Constituent Assembly for the State of J&K, which wisely placed Section 3 beyond the ambit of amending power of the State Legislature. The State Legislature cannot amend Section 3 by employing the powers of constitutional amendment under Section 147 of CoJK, thereby irrevocably making J&K a part of the Union of India.
Article 1 of the CoI states that India is a Union of States which includes Jammu & Kashmir. Unlike the Preamble of the CoI, the Preamble of the CoJK does not lay any claims to sovereignty. It does not state that a sovereign nation has decided to give unto themselves this Constitution — as is the case with the CoI — but only states that this Constitution is in pursuant to the Instrument of Accession.
The CoJK contains several special distinctive provisions, especially with regards to property rights and rights of education and employment, that are available to and only to its State Subjects and Permanent Residents and not to those residing in the rest of the country. However, pertinently, all these rights are available only if the said State Subjects are “Citizens of India”. Therefore, a State Subject of Jammu & Kashmir, residing, say, in Pakistan from 1947 and holding Pakistani nationality, will not be entitled to the Special Provisions and benefits as provided for the State Subjects of J&K in the CoJK, as he is not a citizen of India. Therefore citizenship of India is a sine qua non to enjoy benefits or the unique privileges that are available to the State Subjects of J&K.
No doubt, the State of J&K enjoys a sui generis (unique) relationship with the Union of India. It has its own Constitution and its own Flag. No other State in the country can claim so many exemptions to the Constitutional provisions and Central Laws as the State of J&K. It is definitely first amongst equals — stands highest amongst the other States in the Indian Union — in terms of its constitutional relationship with the Union of India.
At the request of the Government of J&K, the Centre amended SARFAESI Rules and carved out an exception, exclusively for the State of J&K, to the effect, that the State Subject property cannot be sold to a non-State Subject under a SARFAESI auction. This was done in due deference to the J&K Local Laws prohibiting such a transfer and is symptomatic of the special constitutional status that the State of J&K enjoys in the Indian Union. (This exception for the State of J&K in the SARFAESI Rules was missed by the J&K High Court in its judgement and was yet another ground for its eventual setting aside by the Supreme Court.)
But being ‘special’ does not mean the same as being ‘sovereign’. The State of J&K enjoys its special status due to a provision contained in the Constitution of India (Article 370) and not on the basis of any law that originates in the State of J&K or enacted by the Legislature of the State of J&K. Article 370 is the singular source, the fountainhead from which the streams of unique powers enjoyed by that State flow. This uncontroverted fact should itself lay to rest all arguments in favour of the State’s sovereignty.
The CoI envisages a federal scheme of distribution of legislative powers between the Union Government and the State regime. The Union Government has exclusive powers of legislation under List I and concurrent powers of legislation under List III (Concurrent List). Why just J&K, the other constituent States in the Union of India enjoy exclusive legislative competence over subjects that are covered under List II (State List) of the Seventh Schedule of the CoI. A fortiori, does it mean that they are sovereign? The answer is an emphatic “No”. The powers enjoyed by the States, under List II, and by the State of J&K, are due to the scheme of legislative distribution of powers as envisaged in the Constitution of India itself. Therefore, where is the question of any State, including that of J&K, claiming sovereignty for itself? J&K was never sovereign prior to December 16, 2016, and it certainly hasn’t lost its non-existent sovereignty by virtue of the Supreme Court’s SARFAESI judgement post-December 16, 2016. The verdict only clarifies the correct legal position. It only states, albeit with lucidity and precision, what ought to have to been obvious to everyone: That the State of J&K has no “vestige of sovereignty outside the Union of India”. That is because the Union of India is sovereign in all territories that constitute India, and no part or State thereof can contend otherwise, even by resorting to the semantics of ‘limited/residual sovereignty’; ‘non-merger”; ‘accession’ etc.
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