J&K govt opposes bank sale of mortgaged assets

Srinagar: The Jammu and Kashmir government on Monday formally stated that banks cannot sell immovable mortgaged properties of the defaulters to outsiders.

Governor N.N.Vohra, in his customary speech to joint session of the state legislature in winter capital Jammu, said, “Some concerns have been expressed about the recent Supreme Court judgment on the applicability of SARFEASI. To put all speculative and ill intended interpretations to rest, the true position is that even if banks sell immovable mortgaged assets, they can do so only to state- subjects.” He added that in order to facilitate the creation of a market for distressed assets of state-subjects, the government has already put into motion the formation of an Asset Reconstruction Company in partnership with the state-owned J&K Bank.

Earlier on Sunday, the state’s finance minister, Haseeb A. Drabu, had said that there was “nothing to worry” about the SC verdict as it “reaffirms that the Transfer of Property Act in the State prevails over SARFAESI” and that it will not allow sale of immovable property to non-state subjects. He while speaking at a function held at the J&K Bank corporate headquarters here said, “In the event of a bank taking recourse of property, they cannot sell it to a non-state subject and in the last budget, I had already made a provision for an Asset Recovery Company with the J&K Bank which can buy these impaired assets.”

He also said, “But I think what eventually has happened is that we have got a clarity on it that the Transfer of Property Act of J&K will actually prevail over this (SARFAESI) and you cannot sell any immovable mortgage property to non-state subjects.”

The SC had last month said that provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI),  which empower banks to take possession of secured assets of the borrowers and sell them, are fully applicable to Jammu and Kashmir.

The Apex Court passed this judgment while setting aside the judgement of State High Court dated July 16, 2015, which had ‘wrongly’ upheld that the key provisions of the SARFAESI were outside the Legislative competence of Parliament and were inapplicable to the State of Jammu and Kashmir. The SC said, “All the notices issued by the banks in terms of Section 13 of SARFAESI and other coercive methods are valid and can be proceeded with further” after hearing the Special Leave Petition (SLP) filed by Union Government challenging the verdict of Division Bench of J&K High Court wherein it was held that SARFAESI Act, enacted by Parliament in 2002, cannot be enforced in the State keeping in view its constitutional position.

The Governor while referring to the recent civil unrest in the Valley said that the loss of lives in the past six months is most unfortunate and regrettable. “The irreparable pain of losing someone we love is not unknown to us. While the political rhetoric may result in keeping us at odds, our grief brings us together - whether of a mother who has lost her young soldier son on duty at the line of control or of a mother whose child has been killed by a tear gas shell or blinded by pellets,” he said.

He added, “We must accept that, for one or the other reason, all of us are to blame - parents, protesters, politicians and the law enforcers. We must introspect seriously and identify what we should or could have done better or differently, even though this will not give life to those we have lost. We must admit our shortcomings and lift ourselves out from the unfortunate syndrome that has involved us in a cycle of violence which has affected almost every arena of activity. While hundreds were injured, civilians, police and paramilitary forces personnel lost their lives. I share the grief of all the families who have lost their loved ones and pray for the early recovery of all those who were injured.  I also sympathize with the very large number of families who have had to leave their hearth and homes in the aftermath of the increased incidents of cease-fire violations”.