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Banks can sell mortgaged properties to non-STs in Tripura: SC

Press Trust of India  |  New Delhi 

There is no embargo on banks in to sell properties mortgaged to them to non-tribals for realisation of their dues, the Supreme has ruled as it upheld the primacy of a central over a state act which said such assets could be sold only to people belonging to schedule tribes.

A bench of Justices and A M Sapre set aside the order of High which had said that Land Revenue and Land Reforms Act, 1960, would prevail and cancelled the notification of auction of properties issued by

"The dominant legislation being the Parliamentary legislation, the provisions of the Tripura Act of 1960, pro tanto (to that extent) (Section 187) would be invalid.

"It is the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002, which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960," the said.

The bench said that the Act passed by Parliament in 2002 is related to the entry of banking which is included in List I of the Seventh Schedule.

"Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted, is an attempt to consolidate the land revenue in the State and also to provide measures of agrarian reforms.

"The field of encroachment made by the state legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to Entry 45 of List I, the State Act, including Section 187, operated validly.

"However, the moment Parliament stepped in by enacting such a traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State law, to the extent that it is inconsistent with the Act of 2002, must give way," it said.

The apex court said that Tripura Act of 1960, prohibits the bank from transferring the property which has been mortgaged by a member of a scheduled tribe to any person other than a member of a scheduled tribe.

"This is a clear restriction on what is permitted by the Act of 2002 for the realisation of amounts due to the bank," it said.

The Supreme Court said the provisions of the Central Act

enable the bank to take possession of any property where a security interest has been created in its favour and sell such property to any person to realise its dues.

"The purchaser of such property acquires a clear title to the property sold, subject to compliance with the requirements prescribed," it said.

The bench said that it is the duty of the constitutional court to see if the conflict between state law and central law can be resolved by acknowledging the mutual existence of the two legislations but if that is not possible then Parliamentary legislation will prevail over the state legislation.

First Published: Sun, November 27 2016. 20:02 IST