SARFAESI Act cannot be enforced in Jammu and Kashmir, rules the J&K High Court

In a landmark judgment, the Jammu & Kashmir High Court has held recently that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, enacted by Parliament in 2002, cannot be enforced in the state.A division bench of the Court comprised of Justice Muzaffar Hussain Attar and Ali Muhammad Magrey underlined how the SARFAESI Act is. While the Court pointed out that Parliament has power to legislate laws in respect of banking as “Entry 45 of List of Schedule 7th of Constitution of India has been extended to the State of J&K in accordance with the mechanism and procedure prescribed by article 370, it said the Parliament, however, has no power to legislate law about the subject administration of justice, the land & the other immoveable properties.” “Amendment to Rules of 2002, which provide that a non State subject cannot purchase the immoveable property in consequence to sale made in terms of section 13 of the Act of 2002 is rendered inconsequential. “Since the field of legislation as prescribed in List I, Entries of some of which have been extended to the State of J&K, do not authorize the Union Parliament to legislate law, as already stated, which affects the interests of the State subjects/citizens of J&K and their immoveable property, the competence of the Parliament to legislate section 13 and is held to be beyond its legislative competence to the extent of State of J&K.” Referring to the Judgment of the apex court in Prem Nath Koul’s s case, the J&K High Court said, “It has been authoritatively ruled by the Supreme Court that signing of Instrument of Accession did not affect the sovereignty of Maharaja over his State.” Citing the view of law laid down by the Supreme Court in Prem Nath Koul and Sampat Prakash cases, the court held, “State of J&K occupies a distinct, unique and special position. The constitutional provisions and laws, which have been extended to the State of J&K in accordance with the mechanism and procedure prescribed by 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 & special position of the State of J&K more clear.” “The sovereignty of the State of J&K under the rule of Maharaja, even after signing of Instrument of Accession and in view of framing of its own Constitution, thus “legally and constitutionally remained intact and untampered,” the court said. The Act of 2002, which, in view of discussion made in this judgment, affects these laws and rights of the State subjects, thus cannot be extended to the State of J&K,” the court added.