STATE BANK OF INDIA v. SANTOSH GUPTA AND ANR. ETC.

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A (c) the provisions of the Constitution oflndia as applicable in relation to the State; shall be introduced or moved in either House of the Legislature." . 42. It is also significant in this context to refer to the Preamble to B the Constitution of Jammu & Kashmir, 1957 and compare it to that of the Constitution oflndia, 1950. The Preamble of the Constitution of Jammu and Kashmir reads as follows:

c "WE, THE PEOPLE OF THE STATE OF JAMMU AND KASHMIR, having solemnly resolved, in pu.rsuance of the . accession of this State to India which took place on the twenty-sixth day of Octob'er, 194 7, to further define the existing relationship of the State with the Union oflndia as an integral part thereof, and to secure to ourselves- D JUSTICE, social, economic•and political; LIBERTY qfthought, expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among us all; E FRATERNITY assuring dignity of the individual and the unity of the nation; IN OUR CONSTITUENT ASSEMBLY this seventeenth day of November, 1956, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION." F Ii is to be noted that the opening paragraph·ofthe Constitution of India, namely "WE THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens ... " has been wholly omitted in the Constitution of Jammu & Kashmir. There is G no reference to sovereignty. Neither is there any use of the expression "citizen" while referring to its people. The people of Jammu & Kashmir for whom special rights are provided in the Constitution are referred to as "permanent residents" under Part III of the Constitution of Jammu & Kashmir. Above all, the Constitution of Jammu & Kashmir has been H

STATE BANK OF INDIA v. SANTOSH GUPTA AND ANR. ETC. I 031 [R. F. NARIMAN, J.]

made to further define the existing relationship of the State with the A Union ofindia as an integral part thereof.

43Copy pinpoint43. It is thus clear that the State of Jammu & Kashmir has no vestige of sovereignty outside the Constitution of India and its own Constitution, which is subordinate to the Constitution of India. It is therefore wholly incorrect to describe it as being sovereign in the sense of its residents constituting a separate and distinct class in themselves. The residents of Jammu & Kashmir, we need to remind the High Court, are first and foremost citizens oflndia. Indeed, this is recognized by Section 6 of the Jammu & Kashmir Constitution which st_ates: "6. Permanent residents:-(!) Every person who is, or is deemed to be, a citizen oflndia under the provis'ions of the Constitution ofindia shall be a permanent resident of the State, if on the fourteenth day of May, 1954- (a) he was a State Subject of Class I or of Class II ; or (b) having lawfully acquired immovable property in the State, D he has been ordinarily resident in the State for not less than ten years prior to that date. (2) Any person who, before the fourteenth day of May, 1954, was a State Subject of Class I or of Class II and who having migrated after the first day of.March, 194 7, to the E territory now included in Pakistan, returns to the State under a permit for resettlement in the State or for pe~anent return' issued by or under the. authority of any law made by the State Legislature shall on such return be a permanent resident of the State. F (3) In this section, the expression "State _Subject of Class I or of Class II" shall have the same meaning as in State Notification No. l-L/84 dated the twentieth April, 1927, read with State Notification No. 13/L dated the twenty 7th June, 1932." G They a~e governed first by the Constitution of India and also by the Constitution of Jammu & Kashmir. This is made clear by Section 10 of the Jammu & Kashmir Constitution which states: "10. Rights of the permanent residents:- The permanent, H

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A residents of the State shall have all the rights guaranteed to them under the Constitution of India." We have been constrained to observe this because in at least three places the High Court has gone out of its way to refer to a sovereignty which does not exist. ·

44Copy pinpoint44. Again it is wholly incorrect to refer to Entry l l A of List 3 and to state that since it is not extended to the State of Jammu & Kashmir, Parliament would have no legislative competence to enact Sections 17 A and 188 ofSARI'AESI. There are at least three errors in this conclusion. First and foremost, it is not possible to dissect the previsions ofSARFAESI c and attach them to different Entries under different Lists. As has been held by us, the whole of SARFAESI is referable to Entry 45 and 95 of List I. Secondly, what has been missed by the impugned judgment is that Entry 95 List I is a source of legislative power for Parliament for conferring power and jurisdiction on the District Court and the High Court respectively in respect of matters contained in SARFAESI. And D third, the subject "Administration of Justice" is only general and can be referred to only if Entry 95 List I read with Entry 45 List I are not attracted. We are afraid that despite the judgment in Narottamdas Jcthabai and Jamshed Guzdar's case (supra), the High Court. even though it refers to Narottamdas Jethabai, has completely missed this E crucial aspect. :v!ost importantly, even if it is found that Section 140 of the Jammu & Kashmir Transfer of Property Act entitles only certain persons 10 purchase prope1ties in the State of Jammu & Kashmir, yet, as has been held hereinabove, Rule 8(5) proviso which recognizes this provision, has been brushed aside. In any case an attempt has first to be made to harmonise Section 140 of the Jammu & Kashmir Transfer of F Property Act with SARFAESJ, and if such harmonization is impossible, it is clear that by virtue ofArticle 246 read with Section 5 of the Jammu & Kashmir Constitution, Section 140 of the Jammu & Kashmir Transfer of Property Act has to give way to SARFAESI, and not the other way around.

45Copy pinpoint45. Reliance has also been placed on Article 35A ofthe Constitution as it applies to the State of Jammu & Kashmir. The said Article reads as follows: "'35A. Saving of laws with respect to permanent residenrs "and /heir rights- Notwithstanding anything contained in H

STATE BANK OF INDIA v. SANTOSH GUPTA AND ANR. ETC. 1033 [R. F. NARIMAN, J.]

this· Constitution, no existing law in force in the State of A Jammu and Kashmir, and no law hereafter enacted by the Legislature of the State,- ( a) Defining the classes of persons who are, or shall be, permanent residents of the State of Jammu and Kashmir; or (b) Conferring on such permanent residents any special rights B and privileges or imposing upon other persons any restrictions as respects- (i) employment under the State Government; (ii) acquisition of immovable property in the State; c (iii) settlement in the State; or (iv) right to scholarships and such other forms of aid as the State Government may provide, Shall be void on the ground that it is inconsistent with or takes away or abridges any rights conferred on the other citizens oflndia by any provision of this Part."

46Copy pinpoint46. We fail to understand how Article 35Acarries the matter any further. This Article only states that the conferring on permanent residents of Jammu & Kashmir special rights and privileges regarding the acquisition of immovable property in the State cannot be challenged on the ground that it is inconsistent with the fundamental rights chapter of the Iridian Constitution. The conferring of such rights and privileges as mentioned in Section 140 of the Jaminu & Kashmir Transfer of Property Act is not the subject matter of challenge on the ground that it violates any fundamental right of the Constitution ofindia. Furthermore, F in view of Rule 8(5) proviso, such rights are expressly preserved. 4 7. We find that the High Court judgment ultimately states: "It is held thatthe Union Parliament does not have legislative · competence to make laws contained in section 13, section r7(A), section 18(8) section 34, 35 and section 36, so far· G as they relate to the State of J&K; It is further held that in view of the aforesaid declaration, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 cannot be H

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A enforced in the State of J&K; It is further held that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 can be availed of by the banks, which originate from the State of J&K for securing the B monies which are due to them and which have been advanced to the borrowers, who are not State subjects and residents of the State of J&K and who are non State subjects/ non citizens of the State of J&K and residents of any other State oflndia excepting the State of J&K." C Having held that the provisions ofSARFAESI cannot be applied to the State of Jammu & Kashmir, it is a contradiction in terms to state that SARFAESI can be availed of by banks which originate from the State of Jammu & Kashmir for securing monies which are due to them and which have been advanced to borrowers who are not the residents of the State of Jammu & Kashmir. D

48Copy pinpoint48. We therefore set aside the judgment of the High Court. As a result, notices issued by banks in terrns of Section 13 and other coercive methods taken under the said Section are valid and can be proceeded with further. The appeals are accordingly allowed with no order as to costs. E

Kalpana K. Tripathy Appeals allO\\·ed.