SC ruling on Sarfaesi Act triggers row

The Supreme Court ruling about the acquisition of property by non-Kashmiris under Sarfaesi Act has met with resistance in the Kashmir valley. According to Kashmiri civil society and many prominent lawyers, the latest court ruling will open the doors for non-Kashmiris to acquire properties in the valley through banks. The separatists and Kashmir’s civil society said they would issue a complete protest programme and would oppose the Act’s implementation in Kashmir.

Although the state government has clarified that if the banks go for distress sale of the properties in J&K, only the state subjects can participate in the sale, it has not erased fears from the minds of Kashmiris. Earlier, when the State Bank of India tried to sell a property for a bad loan from a trader in Kashmir, the case finally went to the J&K High Court which stayed the proceedings of the bank, arguing that the Sarfaesi Act was not applicable to J&K. The Central government in 2002 passed the Act in Parliament as Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Sarfaesi Act.

The Act gives the banks the power to take possession of the secured asset or take the management of the business of the borrower or sell his assets to recover its loan amount. J&K’s Law and Justice Minister Abdul Haq Khan told the media that the law was clear that only state subjects can buy such properties from the banks. However, there are larger implications to this verdict of the Supreme Court, says a prominent lawyer Mushtaq Ahmad Bhat. He argued that it will be an encouragement to many banks to sell these properties indirectly to non-state subjects in J&K. Aaliya Ahmad, associate professor at MERC, in University of Kashmir, said, “People of Kashmir have been very touchy about their special status and their distinct identity and in the latest decision they only see a design to weaken their position.”