SARFAESI Act not in conflict with Art 371 (A), says NPCC

DIMAPUR, FEB 17 (NPN) | Publish Date: 2/17/2020 12:46:23 PM IST

Nagaland Pradesh Congress Committee (NPCC) maintained that Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, 2002 was not in conflict with Article 371 (A) or Nagaland Land Revenue and Regulation Act, 1978 and therefore, advocated its implementation.

NPCC president K. Therie has urged upon the state government to make alternative arrangements to enable public to mortgage their properties for securing loans as there was no reason to be confused over the matter. Therie further said the view held by the chief minister Neiphiu Rio that SRFAESI Act was in conflict with Article 371 (A) was “incorrect and misleading”.

Therie explained that SARFAESI Act was an Indian law that allowed banks and other financial institutions to auction residential or commercial properties of defaulters to recover loans. He therefore added that Act’s objective was to shorten the process of going through debt tribunal.

The NPCC chief however, emphasised that banks and financial Institutions and buyers would have to adhere to Nagaland Land & Revenue Regulation Act, 1978, which stated: (2) “Notwithstanding anything to the contrary in any law, usage, contract or agreement no person other than the indigenous inhabitants of Nagaland shall acquire or possess by transfer, exchange, lease agreement or settlement of any land in any area or areas constituted into belts or blocks in contravention of the provisions of sub-section (1). (3) From and after the commencement of Nagaland Land and Revenue Regulation (Amendment) Act, 1978 no document evidencing any transaction for acquisition or possession of any land by way of transfer, exchange, lease, (Act XVI of 1908) agreement or settlement shall be registered under the India Registration Act, 19O8 if it appears to the Registering Authority that the transaction has been effected in contravention of the provisions of sub-section (2)”.

Further, amendment of Section 162 (2002) of the Assam Land and revenue Regulation, 1886 stated: “2. In Section 162, after sub-section (2), the following proviso shall be inserted :- Provided that nothing contained in this chapter or in the rules made thereunder shall affect any transfer by way of a mortgage in favour of any nationalised banks, a cooperative society registered under the Assam Cooperative Societies Act 1949 or such other financing institution as may be approved by the State Government.

Provided further that such nationalised banks, cooperative Societies or other financing institution shall not transfer any land to a person other than the indigenous inhabitant of Nagaland except with the previous sanction of the State Government or an authority appointed in this behalf.”

Holding the view that the Central government has no authority to make law over land usage, Therie said the State Legislature had the power to make laws that were in the State List adding, land was under State List. Further, Nagaland had special power over ownership of land and transfer as provided in Article 371 (A), Therie said. 

It may be recalled that the issue was raised in the recent budget session by the opposition but discussion was disallowed by the Speaker amidst strong protests by the opposition members. 

Leader of the House and chief minister Neiphiu Rio intervened by saying that the justice and law department had on July 19 last year, maintained that SARFAESI Act, 2002 could not be enforced in Nagaland as its provisions were conflicting with all existing protective laws, including Article 371A, which gave special provisions to the Nagas, the Bengal Eastern Frontier Regulation, 1873 and the Nagaland Land and Revenue Regulation (Amendment) Act, 1978.

The state held that land or building of indigenous citizens should not be auctioned to non-indigenous citizens. 

The Supreme Court in UCO Bank vs Dipak Debbarma case maintained that an Act of Parliament SARFASEI ACT was dominant over legislative laws such as the Tripura Act. However, such land laws needed to be made so that mortgaged lands and buildings were to be auctioned to those permitted. 

It may also be recalled that the opposition NPF leader T.R. Zeliang, during the recently concluded Assembly session expressed concern over the SARFAESI Act issue and had written a letter to chief minister Neiphiu Rio.

While also addressing a press conference on February 14, Zeliang had pointed out the implication of the SARFAESI Act, 2002 in the context of Nagaland was one that calls for urgent attention since PDA Government has failed to take any concrete measures to solve the problems faced by the citizens of the state.

Zeliang stated that at present, banks in the state have stopped financing against residential, commercial building and high educational loans out of apprehension.

“As such the borrowers in the state are sandwiched between the state Government and the Bank; it is therefore expected of your Government to clarify on whether the State of Nagaland should uphold the Act or reject it. If we are to accept the Act, your Government must send a clear building and high education loans simply out or apprehensions and speculation based on a mere letter Witten by Law and Justice Department?” Zeliang stated.

Zeliang stated that when Banks can initiate Loan Recovery process legally by filing Civil Suits, Money Suits, Title Suits etc. why has it stopped giving out loans to borrowers in the State on the pretext that the letter of the Justice and Law Department would be detrimental to the Banks?

He questioned that when the Justice and Law Department including the District Administration, Dimapur have forwarded the matter to the State Government for directions, why was the present day government still sleeping over the matter.



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