Kerala High Court
State Bank Of India vs Jespin Raju on 27 March, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE EASWARAN S.
WEDNESDAY, THE 27TH DAY OF MARCH 2024 / 7TH CHAITHRA, 1946
WP(C) NO. 12567 OF 2018
PETITIONER/S:
STATE BANK OF INDIA
PALLITHURA BRANCH, TRIVANDRUM
PIN 695 586,REPRESENTED BY THE CHIEF MANAGER.
BY ADVS.
SRI.MANU GEORGE KURUVILLA
SRI.AMAL GEORGE
RESPONDENT/S:
1 JESPIN RAJU
KILU COTTAGE, VALIYAVILAKOM PURAYIDAM,
THUMBA,PALLITHURA PO, TRIVANDRUM 695 586.
2 KERALA STATE FISHERMEN DEBT RELIEF COMMISSION
T.C.11/683-1 & 29, NALANDA ROAD, NANTHANCODE,
TRIVANDRUM, PIN 695 011, REPRESENTED BY ITS
SECRETARY.
BY ADVS.
SRI.T.B.HOOD
SMT.M.ISHA
SRI.T.G.SUNIL, SC, KSFDRC
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 27.03.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P. (C) No.12567 of 2018 2
"C.R"
EASWARAN S. , J.
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W.P. (C) No.12567 of 2018
-----------------------------------
Dated this the 27th day of March 2024
JUDGMENT
Can the Kerala Fishermen Debt Relief Commission interdict
a secured creditor from enforcing the security interest created
under the provisions of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(for short, the Securitisation Act) is the question before this
Court? Petitioner, State Bank of India, challenges Ext.P8 order
passed by the Kerala State Fishermen Debt Relief Commission
(KSFDRC) wherein the measures under the Securitisation Act is
interdicted. The main ground of challenge against Ext.P8 order
is that the Securitisation Act overrides the provisions of the
Kerala Fisherman Debt Relief Commission Act 2008.
2. The averments in the writ petition shows that by Ext.P1
application dated 19.8.2008, the 1st respondent availed a credit
facility in the form of housing loan. On default, the bank
initiated measures under the Securitisation Act on 6.10.2016.
Once the measures were initiated, the 1 st respondent
approached this Court by filing W.P.(C) No.12744 of 2017 which
resulted in Ext.P4 judgment wherein, the 1 st respondent was
given liberty to pay the outstanding amounts in twelve monthly
installments. On default, the bank moved the jurisdictional
Magistrate under Section 14 of the Securitisation Act and
obtained Ext.P5 order appointing a Commissioner for taking
physical possession of the secured asset. In the meantime, the
1st respondent seems to have approached the 2 nd respondent,
the KSFDRC, with an application for waiver on 19.3.2018. By
Ext.P7, the bank raised objection and also stated that the issues
could be amicably settled. On 04.04.2018, the 2 nd respondent
issued the impugned order- Ext.P8 by which the secured
creditor was directed to hand over the keys of the secured asset
to the complainant with a further direction to the petitioner bank
not to take coercive steps without the permission of the 2 nd
respondent. Challenging the aforesaid directions, the petitioner
has approached this Court with the present writ petition.
3. I have heard Sri. Amal George, the learned counsel
appearing for the petitioner, Sri. T.B. Hood, the learned counsel
appearing for the 1st respondent and Sri. T.G. Sunil, the learned
Standing Counsel appearing for the 2nd respondent.
4. While deciding the validity of Exhibit P8 order, this Court
is called upon to decide the jurisdiction of the 2 nd respondent to
issue Ext.P8 order.
5. Sri. Amal George, the learned counsel points out that in
terms of the provisions contained under Section 35 of the
Securitisation Act, the authority of the 1 st respondent is ousted.
In short, the contention of the petitioner is that the
Securitisation Act being a Central Statute and the law enacted
by the Parliament, the operation of the Kerala State Fishermen
Debt Relief Commission Act, 2008 (Act 18 of 2008) is not
applicable. Sri. T.B. Hood, the learned Counsel for the 1 st
respondent supported the findings of the 2 nd respondent in
Exhibit P8 order. He would argue that the 1 st respondent was
justified in moving the 2nd respondent since it has the power
under the Act 18 of 2008 to issue directions in respect of loans
availed by fisherman in distress.
6. On consideration of the points raised in the writ petition,
I find substantial force in the contentions of the learned counsel
appearing for the petitioner.
7. Section 35 of the Securitisation Act specifically provides
that the Act shall have overriding effect over other laws for the
time being in force. The provisions under Section 35 of the
Securitisation Act opens with a non obstante clause. The effect
of non obstante clause in a statute came up for consideration
before this Court in the decision rendered in Rajan P Kuttan
and another vs State of Kerala 2021(6) KHC 513 wherein it
was held by the Division Bench of this court as follows:
" A non obstante clause is generally appended to the
section to give enacting part of the section, in case of
conflict an overriding effect over the provisions in the
same or Rule framed thereunder or any other Act
mentioned in the non obstante clause. In other words,
this clause empowers the legislation or a provision to
override the effects of any other legal provisions
contrary to this under the same law or any other law."
8. A reading of Section 13(1) of the Securitisation Act
shows that it begins with a non obstante clause which provides
that notwithstanding anything contained in any other provisions
of law of Sections 69 and 69A of the Transfer of Property Act,
the secured creditor is entitled to take such measure without the
intervention of the Court or tribunal for enforcement of the
security interest. Further more, any person aggrieved by such
action can move the Debt Recovery Tribunal under Section 17 of
the Act by an application.
9. Therefore, can it be said that the 1 st respondent was
justified in moving the 2nd respondent with an application under
the Act 18 of 2008 with an application seeking for intervention.
10. The answer lies in analysing the effect of the
Securitisation Act 2002 qua the Kerala Fisherman Debt Relief
Commission Act 2008.
11. When one reads the provisions of Section 35 of the
Securitisation Act it gives a plain impression that the Act
overrides the provisions of any other law for the time being in
force. Furthermore, the Securitisation Act was enacted by virtue
of the powers vested on the Parliament under Entry 45 List 1
Schedule VII of the Constitution of India which provides for the
matters relating to banking. On the other hand, a cursory
glance on the enactment of the Kerala State Fishermen Debt
Relief Commission Act, 2008 shows that it is intended to provide
for benefit entirely different from the purpose for which the
Securitisation Act is enacted. The preamble of the Kerala State
Fishermen Debt Relief Commission Act, 2008 shows that it is
intended to provide urgent relief to the fishermen who are in
distress due to indebtedness, by constituting a committee for
recommending the relief measures. Under no stretch of
imagination, it could be construed that the Commission
constituted under the Kerala State Fishermen Debt Relief
Commission Act, 2008 would get the authority to interdict the
secured creditor acting in terms of the provisions of the
Securitisation Act to restrain the secured creditor from taking
measures for enforcement of the security interest.
12. Still further, it is to be noted that under Article 246
of the Constitution of India, the law enacted by the Parliament
has to be given primacy over the State laws.
13. Article 246 of the Constitution of India relates to the
federal supremacy of the law enacted by the Parliament. In the
light of the provisions contained in the Constitution and also the
power traceable to Entry 45 List I of the Schedule VII of the
Constitution of India, while enacting the Securitisation Act, this
Court finds that the Securitisation Act will definitely have
predominance over the Kerala State Fishermen Debt Relief
Commission Act, 2008. Therefore on a conjoint application of
Article 246 of the Constitution of India and Section 35 of the
Securitisation Act, this Court has no hesitation to hold that the
Securitisation Act definitely has primacy over the Kerala
Fisherman Debt Relief Commission Act 2008.
14. The effect of Article 246 of the Constitution of India
on the State law issue came up for consideration before the
Apex Court in State Bank of India Vs. Santhosh Gupta and
Another [2017 (2) SCC 538], wherein the inter play between
the Securitisation Act and the Jammu and Kashmir Transfer of
Property Act was considered by the Honourable Supreme Court.
The Honourable Supreme Court, referring to Article 246 of the
Constitution of India held that the provisions of the
Securitisation Act will act as a predominance over the operation
of the State laws . I am thus guided by the principles laid down
by the Honourable Supreme Court in the aforesaid judgment
15. There is yet another reason for interdicting Exhibit P8
order of the 2nd respondent. It is clear from Ext.P4 judgment of
this Court that the 1st respondent was given liberty to clear off
the debt. Admittedly, the said directions have not been complied
with. Therefore the 2nd respondent could not have passed an
order contrary to the directions of this Court under Exhibit P4
Judgment. On this count also, the order impugned in the writ
petition is liable to be set aside.
16. Even if it assumed for a moment that the Act 18 of 2008
applies on facts of the case, even the order impugned cannot be
sustained. A reading of Section 5 of the Act 18 of 2008 shows
that the powers and duties of the Commission are well defined.
Section 5(b) provides the power to the Commission to
determine in case of creditors other than institutional
creditors ( emphasis supplied) to determine the fair rate of
interest and an appropriate level of debt the fisherman is liable
to pay. Section 5(2) further provides power of the Commission
to issue orders keeping in abeyance the repayment of all debts
of fisherman in the disaster affected areas to the creditors other
than to institutional creditors. Hence it is to be presumed that
the State Legislature was aware of the its limitation in the
matter of recovery measures of an institutional creditors and
wanted the Act 18 of 2008 to be taken out of the purview of
cases covering Institutional Creditors. Though Sub Section (3) of
Section 5 of the Act 2008 opens with a non obstante clause, this
Court is firm in its view that when the said non obstante clause
is pitted against a central Legislation, there would be a direct
conflict between the Central Law and the State Law giving way
for operation of Article 246 of the Constitution of India and thus
the provisions of Securitisation Act will override the provisions of
Kerala Fisherman Debt Relief Commission Act 2008.
17. In the light of the aforesaid principles, I find that the
2nd respondent assumed jurisdiction over the subject matter
which it had none and completely went wrong in directing the
petitioner bank to refrain itself from proceeding under the
provisions under the Securitisation Act. It also completely went
wrong in directing the bank to hand over the possession of the
secured assets. These directions were however stayed by this
Court while admitting the present writ petition. It was done
rightly so.
In the result, the writ petition is allowed. It is declared
that the 2nd respondent has no jurisdiction to interfere with the
recovery proceedings against the 1st respondent under the
Securitisation Act and the application filed by the 1 st respondent
before the 2nd respondent is held to be not maintainable.
Resultantly, Exhibit P8 order is set aside. The petitioner bank is
at liberty to proceed with the recovery measures in accordance
with the provisions of the Securitisation Act.
Sd/-
EASWARAN S.
JUDGE
NS
APPENDIX OF WP(C) 12567/2018
PETITIONER EXHIBITS :
EXT.P1 TRUE PHOTOCOPY OF THE APPLICATION FOR
MORTGAGE LOAN SUBMITTED BY THE 1ST
RESPONDENT AND HER HUSBAND ON
19/08/2008.
EXT.P2 TRUE PHOTOCOPY OF THE NOTICE UNDER
SECTION 13 (2) OF THE SARFAESI ACT
DATED 06/10/2016.
EXT.P3 TRUE PHOTOCOPY OF THE REPRESENTATION
SENT BY THE 1ST RESPONDENT BEFORE THE
PRESIDENT DATED 29/03/2017.
EXT.P4 TRUE PHOTOCOPY OF THE JUDGMENT IN
WPC.NO.12744/2017 DATED 10/04/2017.
EXT.P5 TRUE PHOTOCOPY OF THE COURT ORDER DATED
15/02/2017.
EXT.P6 TRUE PHOTOCOPY OF THE COMMUNICATION BY
THE SECOND RESPONDENT DATED 19/03/2018.
EXT.P7 TRUE PHOTOCOPY OF THE REPLY SENT TO THE
SECOND RESPONDENT DATED 23/03/2018.
EXT.P8 TRUE PHOTOCOPY OF THE ORDER PASSED BY
THE 2ND RESPONDENT DATED 04/04/2018.
