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(This is a guest post by Anmol Jain.)

Ranjan Gogoi, J. has been appointed the 46th Chief Justice of India. It is believed that he favours judicial restraint, and that the judiciary should maintain the separation of powers. This might be of high bearing, because it indicates the approach of the Supreme Court towards the upcoming constitutional matters. It is a possibility that we may witness a fewer number of judgments with the likes of Sabarimala [Indian Young Lawyers Association v. The State of Kerala], where the Court is actively involved in doing social justice. I shall support this assertion through a critique of a significant judgment delivered by Gogoi, J, in UCO Bank v. Dipak Debbarma, which has not received enough discussion. However, the impact of this judgment is serious.

This case concerns a question of repugnancy between the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [“SARFAESI Act”], which is a central law, and Tripura Land Revenue and Land Reforms Act, 1960 [“Tripura Act”], which is a state law. The SARFAESI Act is covered under entry 45 of List I of the Seventh Schedule to the Constitution, covers ‘banking’ as a subject matter of the Union, whilst the Tripura Act is covered under entries 18 [Land and incidental matters thereof and covers agricultural loans] and 45 [Land Revenue and incidental matters thereof] of the State List. The primary issue before the court was regarding the conflict between Section 13 of the SARFAESI Act and Section 187 of the Tripura Act. They read as follow:

SARFAESI: “13. (1) Enforcement of Security Interest – … any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal, by such creditor in accordance with the provisions of this Act. …

… (4) In the case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset…”

Tripura: “187. Special provision regarding Scheduled Tribes – … Provided that the land transferred to a co-operative society or to a bank by way of mortgage in pursuance of clause (c) shall not be transferred by such society or bank to a person who is not a member of the Scheduled Tribes without the permission of the collector in writing.”

Put simply, Section 13 of the SARFAESI Act permits the secured creditors to enforce the security interest without the intervention of any judicial authority, whilst Section 187 of the Tripura Act prohibits the banks from selling mortgaged land of a person belonging to a Schedule Tribe [“ST”] to any person not belonging to an ST unless permitted by the Collector. The Court found an irreconcilable conflict between the two provisions on account of overstepping by the Tripura Act into an area of banking covered by the SARFAESI Act [¶15]. To determine which law shall prevail, the Court adopted the test of ‘dominant legislation’. According to this test, in the event where the ‘incidental encroachment’ by a legislation conflicts with another legislation actually enacted by the ‘dominant power’, the latter shall prevail [ITC Limited v. Agricultural Produce Market Committee, (2002) 9 SCC 232, ¶94]. Here, ‘incidental encroachment’ signifies a situation where a State law legislates on the subjects provided under the Union list and vice versa; and ‘dominant power’ signifies that entity which is authorised to make the law. For instance, for an item under the Union list, the Parliament is the dominant power and for an item under the State List, the State Legislature is the dominant power. Applying this test, the Court held SARFAESI Act is the dominant legislation for matters concerning banks and thus, the SARFAESI Act prevails.

I respectfully disagree with the decision of the Court for multiple reasons that, interestingly enough, originate from the precedents cited by the Court in the judgment itself. This approach shall examine the limited vision adopted by the Court while delivering this verdict.

First, I contend that there is a minimal encroachment by the Tripura Act on the Union list, which cannot be termed as an irreconcilable conflict. Section 187 of the Tripura Act is not primarily intended to legislate on the ‘banking’ matters but to provide for land reforms and an arrangement for a situation of default in repaying the agricultural loans. This claim is supported by the Statements of Objects and Reasons [See Rangamayee Chowdhury v. State of Tripura, 2010 SCC OnLine Gau 656] attached to the Second Amendment Act of 1974 and the Sixth Amendment Act, 1994 that had substantially modified Section 187 of the Tripura Act. They state that the Amendment Acts seek to introduce land reforms which are essential to remove the impediments in the matter of agricultural production, eliminate elements of exploitation and social injustice in the agrarian system, and provide certain extensive amendments to give relief to the members of the Scheduled Tribes in the State.

Therefore, the incidence on the ‘banking’ matters is minimal and is limited only to those cases involving an ST member. The banks are still permitted to sell the mortgaged securities. Section 187 merely qualifies the power of the banks by keeping the larger interest of the society in mind. The prime reason for having such a provision in the law-books is to secure the interests of the deprived community. Historically, the feudal lords and then the landlords, never let the tenants own the lands they were tilling upon. Now, if the already deprived section of the society is further deprived of their land holdings due to failure to pay loans, there shall be no improvement in their living standard.

At the same time, I understand that the interests of the banks are required to be secured. Therefore, the State Legislatures have devised such an arrangement wherein the banks are allowed to sell the lands of the defaulting mortgagee but they can sell it only to another ST member. This ensures that the ST community as a whole does not lose any part of land due to their economic vulnerability. Perhaps such an arrangement may not be viable in a long-term, but this determination is the prerogative of the Legislatures.

The Rajasthan High Court, in State of Rajasthan v. Uka [2010 (2) RLW(RJ) 705], had confronted a similar provision wherein the banks were prohibited from selling the mortgaged securities belonging to the SC/ST members to a person who is not a member of these communities. The Court upheld the validity of the provision, though with a reservation, which was expressed by Dr Vineet Kothari, J. in the obiter dictum. The Court stated that:

Such a restriction…may give rise to a vicious circle of poverty…The purpose was obviously to protect the interest of the weaker section of the society like the persons belonging to SC/ST category. If after the land of such poor agriculturists belonging to SC/ST being acquired by Bank is again to be sold to a person of same weaker section, it is almost certain and very likely that it would not fetch the full and proper market value, which could be fetched if such agricultural land is sold in the open market and so-called affluent and richer people are also allowed to buy such land.

I do not wish to further discuss the debate about whose interests should take precedence, the interests of the members of ST community or of the banks. I believe the former shall win because our constitutional setup warrants that social justice is to be done in such a manner that an unequal can be brought at a par with the so-called equals. Even the recent case of Jarnail Singh v. Lachhmi Narain Gupta (¶19) acknowledges the fact that backwardness of the members of these communities is presumed and therefore, the government need not collect the data to prove backwardness before making provisions for reservation in promotion for SCs and STs.

Thence, I conclude that the primary object of Section 187 of the Tripura Act is to further the object of land reforms and not to legislate on banking matters. The incidental encroachment is minimal in nature. Now, the question is that whether such minimal encroachment enjoys a constitutional safeguard or not.

The Court cites In re, Special Reference No. 1 of 2001 [(2004) 4 SCC 489, ¶13] and S. R. Bommai v. Union of India [(1994) 3 SCC 1. ¶276]. In these couple of cases, the Supreme Court had held that:

An entry in one list cannot be so interpreted as to make it cancel or obliterate another entry or make another entry meaningless. In case of apparent conflict, it is the duty of the court to iron out the crease and avoid conflict by reconciling the conflict. If any entry overlaps or is in apparent conflict with another entry, every attempt shall be made to harmonise the same.”

The courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the powers reserved to the States.

I find that the Court has done the opposite here. Instead of interpreting the two provisions harmoniously, the Court seems to focus on the conflict and ultimately finds Section 187 of the Tripura Act to be repugnant. Such an interpretation has indeed left Entry 18, List II of the Seventh Schedule to the Constitution as nugatory because now the State cannot make arrangements regarding the settlement of agricultural loans. However, if one reads it otherwise, i.e. if we rule that States can make arrangements regarding disposal of mortgaged security belonging to members of a particular community, it does not obliterate entry 45 of List I. ‘Banking’ matters are very vast in nature and the Central Government can still provide provisions regarding disposal of mortgaged security belonging members of all community but, the ST.

Further, the Court states that it is the ‘duty’ of the constitutional court to see if the conflict can be resolved by acknowledging the mutual existence of the two legislations (¶11). Also, it cites State of West Bengal v. Committee for Protection of Democratic Rights, West Bengal [(2010) 3 SCC 571, ¶27] which provided that the principle of federal supremacy cannot be resorted to unless there is an irreconcilable direct conflict between the entries in the Union and the State lists. If we read Section 187 of the Tripura Act and Section 13 of the SARFAESI Act together, we find that both the provisions allow the bank to sell the mortgaged securities of the defaulting mortgagees. Therefore, I do not find any ‘irreconcilable direct conflict’ between the two provisions. Section 187 of the Tripura Act, which is a special provision, has merely narrowed the application of the general provision under SARFAESI, Act for larger public interest.

Furthermore, in In re, Special Reference No. 1 of 2001 [(2004) 4 SCC 489, ¶14, 15], the Supreme Court had held that:

An endeavour must be made to solve it, … by having recourse to the context and scheme of the Act, and a reconciliation attempted between the two apparently conflicting jurisdictions by reading the two entries together and by interpreting, and, where necessary modifying the language of the one by that of the other. … The doctrine of pith and substance is sometimes invoked to find out the nature and content of the legislation.


Though the Court has cited this precedent, but in vain. The doctrine of pith and substance would provide that Section 187 of the Tripura Act is a provision legislating on the matters concerning lands and agricultural loans but not banking. Therefore, we find that the conflict here is not irreconcilable; it just requires a broad vision warranted by the constitutional scheme to find that both the provision can mutually exist. The judgment has an effect of whittling down the powers reserved to the States to legislate of matters concerning lands, specifically agricultural lands.

Second, the court has employed the rule of dominant legislation to resolve the conflict. As per Rajan Gogoi, J.’s words, at ¶11, the said principle shall be applicable only if a pre-condition exits, namely, the parliamentary legislation is the dominant legislation and the state legislation, though within its own field, has the effect of encroaching on a vital sphere of the subject to which the dominant legislation is referable. As argued above, I believe that Section 187 of the Tripura Act does not encroach on a ‘vital sphere’ of the subject of ‘banking’. The only encroachment is regarding one of the banking functions, i.e. selling of the mortgaged security and concerns only one community.

Third, the Court also cites Vishal N. Kalsaria v. Bank of India [(2016) 3 SCC 762] but fails to adequately appreciate this case. In this case, the Court distinguished the objects of the SARFAESI Act and Maharashtra Rent Control Act, 1999[1] and held that a tenant cannot be arbitrarily evicted by using provisions of SARFAESI Act because once tenancy is created, the tenant can be evicted only after following the due process of law as prescribed by the Rent Control Act. The instant case presents an apt condition for the application of this precedent. The objects of the Tripura Act are different from the objects of the SARFAESI Act. Therefore, banks cannot be allowed to sell the mortgaged security of the defaulting mortgagees belonging to ST community using Section 13 of the SARFAESI Act while ignoring the rights of the STs granted under the Tripura Act.

One might disagree with my arguments. However, I believe that the Constitution demands contextual interpretation guided by the realities of the society. It would be wrong to treat the Constitution as a mere legal document. It is more than that. It is a political document. If we literally interpret a provision, we shall fail to uphold the underlined principles of our Constitution. Additionally, I do wish to clarify here that I believe judicial restraint. At the same time, I feel that the Courts should never abandon dynamism, at least when the matter is of constitutional significance.

[1] Object of the SARFAESI Act: to provide smooth and efficient recovery procedure to enable banks to recover non-performing assets. Object of the Rent Control Act: to control and regulate the rate of rent and to provide protection to tenants against their arbitrary evictions.

(The author is a third-year student at the National Law University, Jodhpur.)