Our Correspondent
Kohima | November 25
Nagaland Chief Minister Neiphiu Rio today introduced the government resolution on the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 at the Nagaland Legislative Assembly (NLA).
Rio stated that Nagaland Land and Revenue Regulations (Amendment) Act, 2002 amended the Assam Land and Revenue Regulations, 1886 by inserting a proviso after sub-section (2) 162 permitting transfer by way of mortgage in favour of the banks, registered cooperative societies and the financing institutions with the condition that such entries 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.
The resolution stated that opinions have been expressed on the applicability of the SARFAESI Act, 2002 on account of the specific constitutional protections under Article 371 A (I) (a) (iv), and the consequent non implementation of the SARFAESI Act, 2002 has been detrimental to the overall economic growth of the state as it has restricted flow of credit to the people. It noted that banks have been reluctant to provide loans in the absence of secured assets and an effective mechanism for the expeditious recovery of dues in case of default in loan repayment.
It stated that the provisions of the SARFAESI Act, 2002 cannot override any provision of the Constitution of India. The tenor of Article 371 A of the Constitution of India will apply at the stage when the banks/financial institutions would make an attempt to transfer the ownership of the property through the process of auction, the resolution said.
It added that therefore, the banks/financial institutions are obligated to respect and follow the mandatory constitutional protection (Article 371 A (I) (a) (iv) to ensure that the ownership of security interest is transferred, following the procedures laid down in the SARFAESI Act, 2002 read with Nagaland Land & Revenue Regulations (Amendment) Act, 2002 and other applicable Acts of Nagaland, only in favour of an indigenous person and none else.
The government recommended that the Assembly pass this resolution for implementing the SARFAESI Act, 2002 in Nagaland in accordance with the provisions of the document.
The SARFAESI Act, 2002 empowers banks and financing institutions to take possession of the mortgaged assets against default in repayment of loan and realize their money by selling the secured assets without the intervention of Courts.
Article 371A (I) (a) (iv) of the Constitution of India provides that no Act of Parliament in respect of ownership and transfer of land and its resources shall apply to the state of Nagaland unless the legislative assembly of Nagaland by a resolution so decides.
Consideration and adoption of the resolution shall be taken up on November 26.
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