Securitisation Act Being A Central Law Has Primacy Over Kerala Fisherman Debt Relief Commission Act: Kerala High Court

The Kerala High Court has held that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 being a central legislation will have primacy over the Kerala State Fishermen Debt Relief Commission Act, 2008.The Court was considering the validity of an order issued by the Kerala State Fishermen Debt Relief Commission interdicting the powers of the State Bank Of India in initiating recovery proceedings under the Securitisation Act. Justice Easwaran S. stated that the Securitisation Act enacted by the Parliament under Article 246 of the Constitution will predominate over the Kerala State Fishermen Debt Relief Commission Act, 2008. It also stated that Section 35 of the Securitisation Act gave an overriding effect to it over other laws. “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.”The first respondent, a fisherman had availed of a credit facility and on default of payment, measures were initiated under the Securitisation Act. On default of payment, the Bank initiated recovery proceedings by taking physical possession of the secured asset. The KSFDRC interdicted this order by directing the Bank to refrain from taking coercive steps and directing the Bank to not take possession of the secured asset and to hand over its keys. Aggrieved by the Order of the Kerala State Fishermen Debt Relief Commission, the State Bank of India has approached the High Court. The Counsel appearing for the State Bank of India contended that Section 35 of the Securitisation Act has an overriding effect over other laws. It was argued that the Securitisation Act being a central statute would prevail over the operation of the Kerala State Fishermen Debt Relief Commission Act, 2008. The Court stated that the Securitisation Act was enacted by the Parliament since Banking falls under the ambit of the Union Government under Entry 45 List 1 Schedule VII of the Constitution. It stated that the Kerala State Fishermen Debt Relief Commission Act was enacted to provide urgent relief to fishermen in distress due to indebtedness by constituting a committee for recommending the relief measures and was different from the objectives of the Securitisation Act. “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,” stated the Court. Further, the Court stated that as per Section 5 of the Kerala State Fishermen Debt Relief Commission, it could issue orders keeping in abeyance the repayment of all debts of fishermen in the disaster-affected areas to creditors other than institutional creditors. It said that the Kerala State Fishermen Debt Relief Commission Act cannot be pitted against central legislation. It clarified, “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.”Accordingly, the Court held that the Kerala State Fishermen Debt Relief Commission Act had no jurisdiction to interdict the recovery proceedings initiated by the Bank under the Securitisation Act. Thus, the Court allowed the writ petition and set aside the order issued by the Kerala State Fishermen Debt Relief Commission. It also gave liberty to the Bank to proceed with recovery measures as per the provisions of the Securitisation Act. Counsel for Petitioner: Advocates Manu George Kuruvilla, Amal GeorgeCounsel for Respondents: Advocates T B Hood, M Isha and Standing Counsel T G Sunil Citation: 2024 LiveLaw (Ker) 221Case title: State Bank of India v Jespin RajuCase number: WP(C) NO. 12567 OF 2018Click Here To Read/Download The Judgment

Securitisation Act Being A Central Law Has Primacy Over Kerala Fisherman Debt Relief Commission Act: Kerala High Court

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Securitisation Act Being A Central Law Has Primacy Over Kerala Fisherman Debt Relief Commission Act: Kerala High Court

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