Banks Can Sell Tribal Land To Non-Tribal Even If Prohibited By State Law

In an important pronouncement which would have serious impact in states having significant tribal population, the Apex Court has held that Banks can sell tribal land to non-tribal even if prohibited by state law. The Supreme Court in UCO Bank vs. Dipak Debbarma, has held that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provisions contained in Section 187 of the Tripura Land Revenue and Land Reforms Act, 1960. The Court observed that the Parliamentary legislation being dominant, the provisions of Tripura Act which prohibits the bank from transferring the property which has been mortgaged by a member of a scheduled tribe to any person other than a member of a scheduled tribe, would be invalid. The Bench comprising Justice Ranjan Gogoi and Justice AM Sapre set aside the Judgment of the Gauhati High Court wherein it had held that the Tripura Act being included in the Ninth Schedule to the Constitution and, therefore, enjoying the protection of Section 31-B of the Constitution, would prevail over the SARFAESI Act, the same being contrary to the provisions of Section 187 of the Tripura Act. The High Court had held the sale notification issued by the bank invalid. On Appeal by the bank, the Apex Court observed that, though Article 31-B of the Constitution, provides protection/immunity to a legislation from challenge on the ground that it violates any of the provisions of Part III of the Constitution, it would not confer immunity to the said legislation from being overridden by the provisions of a Parliamentary statute. The Court also explained how the situation of repugnancy or inconsistency between to a subsequent Central law and an earlier State law needs to be resolve. The bench, referring to Article 246 of the Constitution said: “In such a situation it will be plain duty of the Constitutional Court to see if the conflict can be resolved by acknowledging the mutual existence of the two legislations. If that is not possible, then by virtue of the provisions of Article 246(1), the Parliamentary legislation would prevail and the State legislation will have to give way notwithstanding the fact that the State legislation is within the demarcated field (List II). This is the principle of federal supremacy which Article 246 of the Constitution embodies. The said principle will, however, prevail provided the pre-condition exists, namely, the Parliamentary legislation is the dominant legislation and the State legislation, though within its own field, has the effect of encroaching on a vital sphere of the subject or entry to which the dominant legislation is referable.”

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