# II S.C.R. 723 UCO BANK AND ANR v. DIPAK DEBBARMA & ORS

- **Citation:** [2016] 11 S.C.R. 723
- **Court:** Supreme Court of India
- **Decided:** 2016
- **Case number:** Civil Appeal No.11247 of 2016
- **Bench:** RANJAN GOGOi, Abhay Manohar Sapre
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ii-s-c-r-723-uco-bank-and-anr-v-dipak-debbarma-ors-31179
- **Pages:** 16

## Headnote

Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 - s.13 - Tripura Land
Revenue and Land Rejorms Act, 1960 - s.187 - The Act of 2002
provides for sale of immovable properties offered as security for a
loan advanced, without any restriction as to the class or category
of buyers, is in infraction of s.187 of the Tripura Act of 1960, where
there is embargo on sale of mortgaged properties by the bank to
any person who is not a member of a Scheduled Tribe - Propriety
of - Held: The Act of 2002 enacted by the Union Parliament is
referable to Entry 45 of List I, whereas the Tripura Act can be traced
to Entries 18 and 45 of the State List - In event the incidental
encroachment conflicts with legislation actually enacted by the
dominant power, the dominant legislation will prevail - In instant
case, the conflict is between the Central and the State Act - The
dominant legislation being the Parliamentary legislation i.e. the Act
of2002, the provisions of the TripuraAct of 1960, pro tanto, (s.187)
would be invalid 'to the extent it is inconsistent with the Act of
2002 - Conflict of Laws - Constitution of India -Arts: 31-B, 246,
254; and Seventh Schedule - List I, Entry 45 and List JI, Entries 18
and 45.
Allowing the appeals, the Court
HELD: 1.1 The situation ofrepugnancy or inconsistency
A
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as in the present case is between to a subsequent Central law
G
(Act of 2002) covered by Entry 45 of List I and an earlier State
law (Tripura Act of 1960) relatable to Entries 18 and 45 of List
II. [Para 9) [730-C)
H
723
724
SUPREME COURT REPORTS
f2016111 S.C.R.
A
1.2 In interpreting Article 246 of Constitution of India
regard must be had to the constitutional scheme which visualises
a federal structure giving full autonomy to the Union Parliament
as well as to the State legislatures in their respective/ demarcated
fields of legislation. The problem may, however, become a
B little more complex thiln what may seemingly appear as the
two legislations may very well be within the respective domains
of the concerned legislatures and, yet, there may be intrusion
into areas that fall beyond the assigned fields of legislation. In
such a situation it will be plain duty of the Constitutional Court to
C 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
D 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 precondition 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
E
subject or entry to which the dominant legislation is referable.
F
G
H
(Para 11) (731-B-E]
State of West Bengal and Ors. vs. Committee for
Protection of Democratic Rights, West Bengal and
Ors. 2010 (2) SCR 979: 2010 (3) SCC571; Re. Special
Reference No. I of 2001 2004 (3) SCR 534: 2004 (4)
SCC 489; ITC Ltd. vs. Agricultural Produce Market
Committee and Ors. 2002 (1) SCR441: 2002 (9) SCC
232; S.R. Bomai vs. Union of India 1994 (2) SCR
644 : 1994 (3) sec 1 - relied on.
Mis Hoechst Pharmaceuticals Ltd. and Ors. vs. State
of Bihar and Ors. 1983 (3) SCR 130: 1983 (4) SCC
45; State of W.B. vs. Kesoram Industries Ltd. and Ors.
2004 (1) SCR 564 : 2004 (10) sec 201; Vishal N.
Kalsaria vs. Bank of India & Ors. 2016 (1) SCR 419 :
2016 (3) sec 762 - referred to.
UCO BANK AND ANR. v. DlPAK DEBBARMA & ORS.
725
2.1 In the present case the conflict between the Central
A
and the State Act is on account of an apparent overstepping by
the provisions of the State Act dealing with land reform into an
area of banking covered by t

## Text

[2016] II S.C.R. 723
UCO BANK AND ANR.
v.
DIPAK DEBBARMA & ORS.
(Civil Appeal No.11247 of 2016)
NOVEMBER25,2016
[RANJAN GOGOi AND ABHAY MANOHAR SAPRE, JJ.)
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 - s.13 - Tripura Land
Revenue and Land Rejorms Act, 1960 - s.187 - The Act of 2002
provides for sale of immovable properties offered as security for a
loan advanced, without any restriction as to the class or category
of buyers, is in infraction of s.187 of the Tripura Act of 1960, where
there is embargo on sale of mortgaged properties by the bank to
any person who is not a member of a Scheduled Tribe - Propriety
of - Held: The Act of 2002 enacted by the Union Parliament is
referable to Entry 45 of List I, whereas the Tripura Act can be traced
to Entries 18 and 45 of the State List - In event the incidental
encroachment conflicts with legislation actually enacted by the
dominant power, the dominant legislation will prevail - In instant
case, the conflict is between the Central and the State Act - The
dominant legislation being the Parliamentary legislation i.e. the Act
of2002, the provisions of the TripuraAct of 1960, pro tanto, (s.187)
would be invalid 'to the extent it is inconsistent with the Act of
2002 - Conflict of Laws - Constitution of India -Arts: 31-B, 246,
254; and Seventh Schedule - List I, Entry 45 and List JI, Entries 18
and 45.
Allowing the appeals, the Court
HELD: 1.1 The situation ofrepugnancy or inconsistency
A
B
c
D
E
F
as in the present case is between to a subsequent Central law
G
(Act of 2002) covered by Entry 45 of List I and an earlier State
law (Tripura Act of 1960) relatable to Entries 18 and 45 of List
II. [Para 9) [730-C)
H
723
724
SUPREME COURT REPORTS
f2016111 S.C.R.
A
1.2 In interpreting Article 246 of Constitution of India
regard must be had to the constitutional scheme which visualises
a federal structure giving full autonomy to the Union Parliament
as well as to the State legislatures in their respective/ demarcated
fields of legislation. The problem may, however, become a
B little more complex thiln what may seemingly appear as the
two legislations may very well be within the respective domains
of the concerned legislatures and, yet, there may be intrusion
into areas that fall beyond the assigned fields of legislation. In
such a situation it will be plain duty of the Constitutional Court to
C 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
D 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 precondition 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
E
subject or entry to which the dominant legislation is referable.
F
G
H
(Para 11) (731-B-E]
State of West Bengal and Ors. vs. Committee for
Protection of Democratic Rights, West Bengal and
Ors. 2010 (2) SCR 979: 2010 (3) SCC571; Re. Special
Reference No. I of 2001 2004 (3) SCR 534: 2004 (4)
SCC 489; ITC Ltd. vs. Agricultural Produce Market
Committee and Ors. 2002 (1) SCR441: 2002 (9) SCC
232; S.R. Bomai vs. Union of India 1994 (2) SCR
644 : 1994 (3) sec 1 - relied on.
Mis Hoechst Pharmaceuticals Ltd. and Ors. vs. State
of Bihar and Ors. 1983 (3) SCR 130: 1983 (4) SCC
45; State of W.B. vs. Kesoram Industries Ltd. and Ors.
2004 (1) SCR 564 : 2004 (10) sec 201; Vishal N.
Kalsaria vs. Bank of India & Ors. 2016 (1) SCR 419 :
2016 (3) sec 762 - referred to.
UCO BANK AND ANR. v. DlPAK DEBBARMA & ORS.
725
2.1 In the present case the conflict between the Central
A
and the State Act is on account of an apparent overstepping by
the provisions of the State Act dealing with land reform into an
area of banking covered by the Central Act. The test, therefore,
would be to find out as to which is the dominant legislation having
regard the area of encroachment. [Para 15] [735-E-F]
B
2.2 The Act of 2002 is relatable to the Entry of banking
which is included in List I of the Seventh Schedule. Sale of
mortgaged property by a bank is an inseparable and integral part
of the business of banking. The object of the State Act is an
attempt to consolidate the land revenue law in the State and also
to provide measures of agrarian reforms. The field of
encroachment made by the State legislature is in the area of
banking. So long there did not exist any parallel Central Act
dealing with sale of secured assets and referable to Entry 45 of
List I, the State Act, including Section 187, operated validly.
However, the moment Parliament stepped in by enacting such a
law traceable to Entry 45 and dealing exclusively with activities
relating to sale of secured assets, the State law, to the extent
that it is inconsistent with the Act of 2002, must give way. The
dominant legislation being the Parliamentary legislation, the
provisions of the Tripura Act of 1960, pro tanto, (Section 187)
would be invalid. It is the provisions of the Act of2002, 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 contaiqed in
. Section 1R7 of the Tripura Act of 1960. [Para 18] [736-B-E]
Central Bank of India vs. State of Kera/a and Ors. 2009
(3) SCR 735: 2009 (4) SCC 94 - referred to.
1983 (3) SCR 130
2004 (1) SCR 564
2010 (2) SCR 979
2004 (3) SCR 534
Case Law Reference
referred to
referred to
relied on
relied on
Para7
Paras
Parall
Para12
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r2016111 s.c.R.
2002 (1) SCR 441
relied on
Para13
1994 (2) SCR 644
relied on
Para 13
2016 (1) SCR 419
referred to
Para 14
2009 (3) SCR 735
referred to
Para 19
CIVILAPPELLATEJURISDICTION: Civil Appeal No. 11247
of2016.
From the Judgment and Order dated 11.09.2012 of the High Court
ofGauhati Bench atAgartala in Writ Petition (C) No. 378of2012
C
WITH
C. A. No. 11250of2016.
Mukul Rohatgi,AG, V. Giri, Sr. Adv., Ms. Arti Singh, Ms. Pooja
Singh, Shankar Divate, Manoj, Ms. Aparna Sinha,Abhijat P. Medh, Shivam
D Singh. Rituraj Biswsas, Gopal Singh, Ms. Varsha Poddar, Sagar
Chakravarty, Advs. for the appearing parties.
The Judgment of the Court was delivered by
RANJAN GOGOi, J, 1. Leave granted.
E
2. The writ petition out of which these appeals have arisen was
instituted before the Agartala Bench of the Gauhati High Court. The
writ petitioners, who are the respondents herein, are members of
Scheduled Tribe(s) of the State ofTripura. They had contended that the
Sale Notification dated 26.06.2012 issued by the appellant Bank under
F
the provisions of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (hereinafter referred to
as the "Act of2002") was in infraction of Section 187 of the Tripura.
Land Revenue and Land Reforms Act, 1960 (hereinafter referred to as
the "TripuraAct of 1960") as under the TripuraAct there is a legislative
embargo on the sale of mortgaged properties by the bank to any person
G who is not a member ofa scheduled tribe. The auction purchasers in the
present case happened to be the persons who are not members of any
scheduled tribe.
3. The High Court by the i1:1pugned order answered the writ petition
H
UCO BANK AND ANR. v. DIPAK DEBBARMA & ORS.
[RANJAN GOGOi, J.]
in favour of the respondents/writ petitioners on the ground that the Tripura
Act of 1960 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 Act of2002 so as to invalidate the sale Notification
dated 26.06.2012, the same being contrary to the provisions of Section
187 of the Tripura Act of 1960.
4. It will not require much appreciation or scrutiny to come to the
conclusion that the High Court was wholly incorrect in answering the
writ petition and striking down the sale Notification dated 26.06.2012 on
the above basis. Article 31-B of the Constitution, on the very face of
the language contained therein, is self explanatory and provides protection/
immunity to a legislation from challenge on the ground that it violates any
of the provisions of Part III of the Constitution. Inclusion of the Tripura
Act of 1960 in the Ninth Schedule by itself, would, therefore, not confer
immunity to the said legislation from being overridden by the provisions
ofa Parliamentary statute. This is a question, therefore, that this Court
will have to deal with notwithstanding the fact that the proceedings before
the High Court did not proceed on the aforesaid basis. We had, therefore,
permitted the learned counsels of both sides to address us on the core
question arising in the present appeals, namely, whether the Act of2002
insofar as it provides for sale ofimmovable properties offered as security
for a loan advanced, without any restriction as to the class or category of
buyers, would prevail notwithstanding the restrictive provision in this regard
under Section 187 of the TripuraAct of 1960.
5. Shri Mukul Rohatgi, the learned Attorney General for India
appearing on behalfofthe appellant-Bank and Shri V. Giri, learned senior
counsel rep;esenting the auction-purchasers in the connected appeal have
contended that the purpose and object of the Act of20Q2 is to regulate
securitisation and reconstruction of financial assets and enforcement of
security interest and for matters connected therewith. On the other hand,
the purpose of the TripuraAct of 1960 is to consolidate the law relating
to land revenue and to provide for the acquisition of estates and for
certain other measures ofland reform. While the Act of2002 enacted
by the Union Pa~liament is referable to Entry 45 ofList I, the TripuraAct
can be traced to Entries 18 and 45 of the State List. Section 187 of the
TripuraAct puts an embargo on the sale ofhypothecated/ mortgaged
727
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SUPREME COURT REPORTS
f2016111 S.C.R.
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properties by a bank to any person who is not a tribal. Therefore, the
provisions of the TripuraAct of I 960 deal with a crucial aspect of the
subject of banking. Reference in this regard is made to the provision of
Section 13 of the Act of 2002 which permits the secured creditor to
enforce the security interest without the intervention of the Court. The
B
c
sale of the property ofany person, offered to a bank as security for any
financial facility, so as to recover the dues of the Bank is a part of the
core banking activity of any bank. The dominant legislation so far as
banking is concerned, in the present case, is the Act of2002 enacted by
the Union Parliament and not the State Act. On the said basis, it is
contended that by virtue of Article 246(1) of the Constitution, the Act of
2002, so far as sale of mortgaged properties by the bank is concerned,
would prevail over Section 187 of the Tripura Act of 1960. The said
provisions of the State Act must give way to the provisions of the Central
Act, it is urged.
D
6.
Learned counsels for the respondents/writ petitioners, in reply,
have contended that the provisions of both the statutes can co-exist and
run parallelly without any conflict. It is urged that, in fact, there is no
conflict between the two. Section 187 of the Tripura Act of 1960 does
not prohibit or impose a complete embargo on the sale of mortgaged
E
properties. Only when the borrower is a tribal the sale by the Bank has
also to be to a tribal.
7.
Repugnancy or inconsistency between the provisions of
Central and State enactments can occur in two situations. The first, in
case of a Central and a State Act on any field of entry mentioned in List
p
III of the Seventh Schedule (Concurrent List). To such a situation of
repugnancy or inconsistency, the provisions of Article 254 of the
Constitution would apply. Ifthere is such an inconsistency, Article 254(1)
makes it very clear that the central Jaw will prevail subject, however, to
the provisions of Article 254(2) and forther subject to proviso to Article
G
254(2). The above position would b;! clear from the opinion rendered by
a three Judges Bench of this Court in M/s Hoechst Pharmaceuticals
Ltd. and Ors. vs. State ofBihar and Ors.I Para 67 of the aforesaid
opinion which may be usefully noticed is in the following terms:
H
1 (1983)4 sec 45
UCO BANK AND ANR. v. DIPAK DEBBARMA & ORS.
[RANJAN GOGOI, J.]
"67. Article 254 of the Constitution makes provision first, as to
what would happen in the case of conflict between a Central
and State law with regard to the subjects enumerated in the
Concurrent List, and secondly, for resolving such conflict.Article
254(1) enunciates the normal rule that in the event of a conflict
between a Union and a State law in the concurrent field, the
former prevails over the latter. Clause (1) lays down that if a
State law relating to a concurrent subject is 'repugnant' to a
Union law relating to that subject, then, whether the Union law is
prior or later in time, the Union law will prevail and the State law
shall, to the extent of such repugnancy, be void. To the general
rule laid down in clause (1 ), clause (2) engrafts an exception viz.,
that if the President assents to a State law which has been
reserved for his consideration, it will prevail notwithstanding its
repugnancy to an earlier law of the Union, both laws dealing
with a concurrent subject. In such a case, the Central Act, will
give way to the State Act only to the extent of inconsistency
between the two, and no more. In short, the result of obtaining
the assent of the President to a State Act which is inconsistent
with a previous Union law relating to a concurrent subject would
be that the State Act will prevail in that State and override the
provisions of the Central Act in their applicability to that State
only. The predominance of the State law may however be taken
away if Parliament legislates under the proviso to clause (2).
The proviso to Article 254(2) empowers the Union Parliament to
repeal or amend a repugnant State law, either directly, or by itself
enacting a law repugnant to the State law with respect to the
'same matter'. Even though the subsequent law made by
Parliament does not expressly repeal a State law, even then, the
State law will become void as soon as the subsequent law of
Parliament creating repugnancy is made. A State law would be
repugnant to the Union law when there is direct conflict between
the two laws. Such repugnancy may also arise where both laws
operate in the same field and the two cannot possibly stand
together: See Zaverbhai Amaidas v. State of Bombay, (1955)
I SCR 799; M Karunanidhi v. Union of India, (1979) 3 SCR
254 and T Barai v. Henry Ah Hoe, (1983) I SCC 177."
729
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SUPREME COURT REPORTS
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8. The above view has been reiterated in State of W.B. vs.
Kesoram Industries Ltd. and Ors. 2 There are several other
pronouncements of this Court on the aforesaid issue. The same, however,
would not require any mention as any such reference would be only a
multiplication of discussions on what appears to be a settled issue. In the
B
present case, however, the question before this Court is not one of
repugnancy between a Central and a State law relatable to an Entry in
List III (Concurrent List). No further attention to the above aspect of
the matter would, therefore, be required.
9. The second situation ofrepugnancy or inconsistency as in the
C
present case is between to a subsequent Central law (Act of 2002)
covered by Entry 45 of List I and an earlier State law (Tripura Act of
1960) relatable to Entries 18 and 45 of List II. How such a situation is to
be resolved and answered and which legislation would have primacy is
the moot question that arises for consideration in the present appeals.
D
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terms.
10. Article 246 of the Constitution oflndia is in the following
"246. Subject-matter of laws made by Parliament and by
the Legislatures of States:-
(1) Notwithstanding anything in clauses (2) and (3), Parliament
has exclusive power to make laws with respect to any of the
matters enumerated in List I in the Seventh Schedule (in this
Constitution referred to as the 'Union List')
(2) Notwithstanding anything in clause (3), Parliament and,
subject to clause (1 ), the Legislature of any State also, have power
to make laws with respect to any of the matters enumerated in
List III in the Seventh Schedule (in this Constitution referred to
as the 'Concurrent List')
(3) Subject to clauses (I) and (2), the Legislature ofany State
has exclusive power to make laws for such State or any part
thereof with respect to any of the matters enumerated in List II
.in "the Seventh Schedule (in this Constitution referred to as the
'State List')
H
'(2004) IOSCC201
UCO BANK AND ANR. v. DIPAK DEBBARMA & ORS.
[RANJAN GOGOi, J.]
( 4) Parliament has powerto make laws with respect to any matter
for any part of the territory oflndia not included (in a State)
notwithstanding that such matter is a matter enumerated in the
State List"
11. In interpreting Artie le 246 regard must be had to the
constitutional scheme which visualises a federal structure giving full
autonomy to the Union Parliament as well as to the State legislatures in
their respective/demarcated fields of legislation. The problem may,
however, become a little more complex than what may seemingly appear
as the two legislations may very well be within the respective domains of
the concerned legislatures and, yet, there may be intrusion into areas
that fall beyond the assigned fields oflegislation. In such a situation It
will be plain duty of the Constitutional Court to see ifthe 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. This is the principle that is discernible from the Constitution
Bench judgment of this Court in State of West Bengal and Ors. vs.
Committee for Protection of Democratic Rights, West Bengal and
Ors.3 Paragraphs 25, 26 and 27 which illuminates the issue may be
conveniently extracted below.
"25. The non obstante clause in Article 246( 1) contemplates
the predominance or supremacy of the Union Legislature. This
power is not encumbered by anything contained in clauses (2)
and (3) for these clauses themselves are expressly limited and
made subject to the non obstante clause in Article 246(1 ). The
State Legislature has exclusive power to make laws for such
State or any part thereof with respect to any of the matters
'(2010) 3 sec s11
731
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SUPREME COURT REPORTS
r10161 11 S.C.R.
enumerated in List II in the Seventh Schedule and it also has the
power to make laws with respect to any matters enumerated in
List III (Concurrent List). The exclusive power of the State
Legislature to legislate with respect to any of the matters
enumerated in List II has to be exercised subject to clause (1)
i.e. the exclusive powerofParliamentto legislate with respect to
matters enumerated in List l. As a consequence, ifthere is a
conflict between an entry in List I and an entry in List II, which
is not capable of reconciliation, the power of Parliament to
legislate with respect to a matter enumerated in List II must
supersede pro tanto the exercise of power of the State Legislature.
26. Both Parliament and the State Legislature have concurrent
powers of legislation with respect to any of the matters
enumerated in List Ill. The words "notwithstanding anything
contained in clauses (2) and (3)" in Article 246(1) and the words
"subject to clauses (I) and (2)" in Article 246(3) lay down the
principle of federal supremacy viz. that in case of inevitable
conflict between the Union and State powers, the Union power
as enumerated in List I shall prevail over the State power as
enumerated in Lists II and Hf and in case of an overlapping
between Lists II and III, the latter shall prevail.
27. Though, undoubtedly, the Constitution exhibits supremacy of
Parliament over the State Legislatures, yet the principle offederal
supremacy laid down in Article 246 of the Constitution cannot be
resorted to unless there is an irreconcilable direct conflict between
the entries in the Union and the State Lists. Thus, there is no
quarrel with the broad proposition that under the Constitution
there is a clear demarcation oflegislative powers between the
Union and the States and they have to confine themselves within
the field entrusted to them. It may also be borne in mind that the
function of the lists is not to confer powers; they merely demarcate
the legislative field ... '. .................... "
12. Equally illuminating is the view available in the opinion of this
Court rendered in re. Special Reference No. 1 of 2001\ which is
reproduced below.
H • (2004) 4 sec 489
UCO BANK AND ANR. v. DI PAK DEBBARMA & ORS.
[RANJAN GOGOI,J.]
"13. The Constitution ofTndia delineates the contours of the
powers enjoyed by the State Legislature and Parliament in respect
of various subjects enumerated in the Seventh Schedule. The
rules relating to distribution of powers are to be gathered from
the various provisions contained in Part XI and the legislative
heads mentioned in the three lists of the Schedule. The legislative
powers of both the Union and State Legislatures are given in
precise terms. Entries in the lists are themselves not powers of
legislation, but fields oflegislation. However, an entry in one list
cannot be so interpreted as to make it cancel or obi iterate another
entry or make another entry meaningless. In case of apparent
conflict, it is the duty of the court to iron out the crease and avoid
conflict by reconciling the conflict. If any entry overlaps or is in
apparent conflict with another entry, every attempt shall be made
to harmonise the same.
14. When the question arose about reconciling Entry 45 ofList I,
duties of excise, and Entry 18 of List II, taxes on the sale of
goods, of the Government oflndiaAct, 1935, Sir Maurice Gwyer,
C.J. in Central Provinces and Berar Act No. XIV of 1938, Jn
re, (1939) FCR 18, at pp. 42-44 observed:
"A grant of the power in general terms, standing by itself, would
no doubt be construed in the wider sense, but it may be qualified
by other express provisions in the same enactment, by the
implications of the context, and even by considerations arising
out of what appears to be the general scheme of the Act."
It was further observed:
"An endeavour must be made to solve it, as the Judicial
Committee have said, by having recourse to the context and
scheme of the Act, and a reconciliation attempted between
two apparently conflictingjurisdictions by reading the two entries
together and by interpreting, and, where necessary modifying
the language of the one by that of the other. If indeed such a
reconciliation should prove impossible, then, and only then, will
the non obstante clause operate and the federal power prevail;"
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SUPREME COURT REPORTS
[2016) 11 S.C.R.
15. Although Parliament cannot legislate on any of the entries in
the State List, it may do so incidentally while essentially dealing
with the subject coming within the purview of the entry in the
Union List. Conversely, the State Legislature also while making
legislation may incidentally trench upon the subject covered in
the Union List. Such incidental encroachment in either event need
not make the legislation ultra vires the Constitution. The doctrine
of pith and substance is sometimes invoked to find out the nature
and content of the legislation. However, when there is an
irreconcilable conflict between the two legislations, the Central
legislation shall prevail. However, every attempt would be made
to reconcile the conflict."
13. The federal structure under the constitutional scheme can
also work to nullify an incidental encroachment made by the Parliamentary
legislation on a subject of a State legislation where the dominant legislation
D is the State legislation. An attempt to keep the aforesaid constitutional
balance intact and give a limited operation to the doctrine of federal
supremacy can be discerned in the concurringjudgment of Ruma Pal, J.
in ITC Ltd. vs. Agricultural Produce Market Committee and
Ors.5, wherein after quoting the observations of this Court in the case of
E S.R. Bomai vs. Union oflndia 6 (para 276), the learned Judge has
gone to observe as follows (para 94 of the report):
· "276. The fact that under the scheme of our Constitution,
greater power is conferred upon the Centre vis-a-vis the States
does not mean that States are mere appendages of the Centre.
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Within the sphere allotted to them, States are supreme. The
Centre cannot tamper with their powers. More particularly,
the courts should not adopt an approach, an interpretation, which
has the effect of or tends to have the effect of whittling down
the powers reserved to the States.
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94. Although Parliament cannot legislate on any of the entries in
the State List, it may do so incidentally while essentially legislating
within the entries under the Union List. Conversely, the State
Legislatures may encroach on the Union List, when such an
' (2002) 9 sec 232
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UCO BANK AND ANR. v. DIPAK DEBBARMA & ORS.
[RANJAN GOGOi, J.]
encroachment is merely ancillary to an exercise of power
intrinsically under the State List. The fact of encroachment does
not affect the vires of the law even as regards the area of
encroachment. [A.S. Krish.na vs. State of Madras, AIR I 957
SC 297; Chaturbhai M. Pate.I vs. Union oflndia, (I 960) 2 SCR
362; State ofRajasthan vs. G Chawla, AIR 1959 SC 544; lshwari
Khetan Sugar Mills (P) Ltd. vs. State ofU.P., (1980) 4 SCC
136]. This principle commonly known as the doctrine of pith and
substance, does not amount to an extension of the legislative
fields. Therefore, such incidental encroachment in either event
does not deprive the State Legislature ~n the first case or
Parliament in the second, of their exclusive powers under the
entry so encroached upon. In the event the incidental
encroachment conflicts with legislation actually enacted by the
dominant power, the dominant legislation will prevail."
14. The aforesaid view in the concurringjudgment of Ruma Pal,
J. in ITC Ltd. vs. Agricultural Produce Market Committee and
Ors. (supra), seems to have been echoed in a recent pronouncement of
this Court in Vishal N. Kaisaria vs. Bank oflndia & Ors. 7 , wherein
this Court had held that the provisions of the Act of2002 will not have an
overriding effect on the provisions of the State Rent Control Acts.
15. In the present case the conflict between the Central and the
State Act is on account of an apparent overstepping by the provisions of
the State Act dealing with land reform into an area of banking covered
by the Central Act. The test, therefore, would be to find out as to which
is the dominant legislation having regard the area of encroachment.
16. The provisions of the Act of2002 enable the bank to take
possession of any property where a security interest has been created in
its favour. Specifically, Section 13 of the 2002 Act enables the bank to
take possession of and sell such property to any person to realise its
dues. The purchaser of such property acquires a clear title to the property
sold, subject to compliance with the requirements prescribed.
17. Section 187 of the TripuraAct of 1960, on the other hand,
prohibits the bank from transferring the property which has been
1 {2016) 3 sec 762
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A mortgaged by a member of a scheduled tribe to any person other than a
memberof a scheduled tribe. This is a clear restriction on what is permitted
by the Act of2002 for the realisation of amounts due to the bank.
18. The Act of2002 is relatable to the Entry of banking which is
included in List I of the Seventh Schedule. Sale of mortgaged property
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by a bank is an inseparable and integral part of the business of banking.
The object of the State Act, as already noted, is an attempt to consolidate
the land revenue law in the State and also to provide measures of agrarian
reforms. The field of encroachment made by the State legislature is in
the area of banking. So long there did not exist any parallel Central Act
C dealing with sale of secured assets and referable to Entry 45 of List I,
the State Act, including Section 187, operated validly. However, the
moment Parliament stepped in by enacting such a law traceable to Entry
45 and dealing exclusively with activities relating to sale of secured assets,
the State law, to the extent that it is inconsistent with the Act of2002,
D must give way. The dominant legislation being the Parliamentary
legislation, the provisions of the Tri pura Act of I 960, pro tan to, (Section
187) would be invalid. It is the provisions of the Act of2002, 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
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prevail over the provisions contained in Section 187 of the TripuraAct of
1960.
19. The decision of this Court in Central Bank oflndia vs.
State ofKerala and Ors.8, holding that the provisions of the Bombay
Sales Tax Act, 1959 and the Kerala General Sales Tax Act, 1963 providing
F
for a first charge on the property of the person liable to pay sales tax, in
favour of the State, is not inconsistent with the provisions contained in
the Recovery of Debts Due to Banks and Financial Institutions, Act
1993 (for short the "DRT Act") and also the Act of 2002 must be
understood by noticing the absence ofany specific provision in either of
0
the Central enactments containing a similar/parallel provision of a first
charge in favour of the bank. The judgment of this Court holding the
State enactments to be valid and the Central enactments not to have any
overriding effect, proceeds on the said basis i.e. absence of any provision
H ' (2009) 4 sec 94
UCO BANK AND ANR. v. DIPAK DEBBARMA & ORS.
737
[RANJAN GOGOI, J.]
creating a first charge in favour of the bank in either of the Central
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enactments.
20. The High Court in the judgment under challenge has also
taken the view that the impugned sale Notification dated 26.06.2012 is
invalid for infraction of Rule 5 and Rule 8(5) of the Security Interest
(Enforcement) Rules, 2002, in as much as the bank did not obtain any
valuation report of the property before resorting to the impugned auction
sale. The Rules in question read as follows.
"5. Valuation of movable secured assets.-
After taking possession under sub-rule (1) ofrule 4 and in any
case before sale, the authorised officer shall obtain the estimated
value of the movable secured assets and thereafter, if considered
necessary, fix in consultation with the secured creditor, the reserve
price of the assets to be sold in realisation of the dues of the
secured creditor."
"8. Sale ofimmovable secured assets.-
(5) Before effecting sale of the immovable property referred to
in sub-rule (1) of rule 9, the authorised officer shall obtain valuation
of the property from an approved valuer and in consultation with
the secured creditor, fix the reserve price of the property and
may sell the whole or any part of such immovable secured asset
by any of the following methods:
21. Our attention had been specifically drawn to the stand of the
appellant-Bank before the High Court in the counter filed (paragraph
20). Taking into account the averments made in the said affidavit, we
find that the sale proclamation had mentioned a reserve price of Rs. 275
lacs and the property had been actually sold by auction at Rs. 416 lacs.
That apart, the valuation report dated 14.06.2012 of the approved valuer
valuing the property at Rs. 341.15 lacs has also been placed before us by
way of an additional document which we are inclined to take on record.
The requirements under Rule 5 and Rule 8(5) have, therefore, been
complied with and the sale proclamation and the sale effected pursuant
thereto cannot be invalidated on the above ground.
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22. For the aforesaid reasons, the impugned order passed by the
High Court has to be set aside which we hereby do. The appeals are
consequently allowed. There will, however, be no order as to costs.
Ankit Gyan
Appeals allowed.