[Case Brief] State Bank of India v/s. Santosh Kumar Gupta & Anr.

The constitution of India ensures that there is uniform rule over the entire Union of India. But in order to ensure that the cultural identities, customs, economic and political interests of the certain regions are protected, these regions are governed with special provisions. One such region is the State of Jammu and Kashmir. In the instant judgement, the Supreme Court has held that the Constitution of India is superior to the Constitution of Jammu and Kashmir.


Before the Supreme Court of India

Civil Appeal Nos.: 12237-12238 of 2016 [Arising Out Of SLP (C) Nos.30884-30885 of 2015] along with batch of appeals.

Bench: Kurian Joseph & Rohinton Fali Nariman, JJ.

Decided on: 16/12/2016

Relevant Provisions:

1. Section 140, Transfer of Property Act of Jammu And Kashmir,
2. Section 13, 17, 34, 35, SARFAESI Act.
3. Article 370 and 35A Constitution of India.
4. List 1 of Seventh Schedule – Entry 45 and 95.

List 3 of Seventh Schedule – Entry  6 and 11A.

Brief facts: This appeal is filed against the decision of J&K High Court which held that provisions of SARFAESI are not applicable to the state of J&K because its outside the legislative competence of Parliament, as they are in conflict with Section 140 of the Transfer of Property Act of Jammu & Kashmir, 1920.

Issue: Whether SARFAESI in its application to the State of Jammu & Kashmir would be held to be within the legislative competence of Parliament?

 Arguments of appellant

  1. SARFAESI is framed under entry 45 and 95 of List 1 of schedule 7 and no relevance of list 2 or list 3 entries because all provisions of SARFAESI deals with banking activites.
  2. Pith and substance of the act must be considered to make it applicable to Jammu and Kashmir which implies that it does not relate to transfer of property in its true sense.
  3. Article 1 of the Indian constitution and section 3 of the J&K constitution make it clear that India is India is a union of states and J&K is an integral part of it.
  4. The powers of parliament are not limited by virtue of article 370(1)(b) because the presidential order of 1954 has made the issue clear.
  5. The recent judgement of Supreme Court in UCO bank v. Dipak Debbarma (25th November, 2016) has declared that State law (Tripura Land Reform Law) must give way to parliamentary enactment (SARFAESI).

Arguments of Respondent

  1. Constitution of India and Jammu & Kashmir have equal status and none is subordinate to the other.
  2. According to pith and substance SARFAESI relates to property which is a subject matter of state legislature only and power of parliament is restricted by Article 370(1)(b).
  3. Section 140 of J&K TOPA is in direct conflict with section 13 SARFAESI hence TOPA of J&K must prevail. Property of a resident of J&K cannot be transferred to a non-resident merely because SARFAESI says so.
  4. Section 17A and 18B relates to administration of justice which is under list 3. And Article 35A of constitution has established rights towards property in J&K.
  5. Article 370 is a non-obstante clause which prevails over the entire constitution even though it is a temporary provision that does not negate its effect. Parliament need concurrence of J&K assembly before applying any statute in J&K.

Decision: Appeals allowed, Decision of High court overruled.

Held – SARFAESI Act has to be read with constitution of India and constitution of Jammu & Kashmir. Constitution of India is superior to the Constitution of J&K. Provisions of SARFAESI Act are applicable to the State of J&K.


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