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UCO Bank & Anr. v. Dipak Debbarma & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 11247 of 2016)Decided 25 Nov 2016
Civil Appeal No. 11247 of 2016
Justice Ranjan Gogoi · Justice Abhay Manohar Sapre

Background

A bank, acting under the SARFAESI Act, 2002, issued a sale notification auctioning mortgaged property that had originally belonged to a member of a Scheduled Tribe in Tripura, and sold it to buyers who were not themselves tribal. The borrower's family challenged the sale before the Gauhati High Court (Agartala Bench), relying on Section 187 of the Tripura Land Revenue and Land Reforms Act, 1960, which bars sale of such mortgaged tribal land to non-tribals. The High Court struck down the sale notification, reasoning that because the Tripura Act is listed in the Ninth Schedule of the Constitution, it was immune from being overridden and prevailed over the Central SARFAESI Act.

Decision Breakdown

The Supreme Court held the High Court's reasoning was fundamentally wrong. Article 31-B/Ninth Schedule protection only shields a law from being struck down for violating Fundamental Rights (Part III): it says nothing about resolving a conflict between a Union law and a State law under the Constitution's distribution-of-legislative-power scheme (Article 246). Examining that separate question, the Court held that SARFAESI Act, 2002 (Entry 45, List I, banking) is the "dominant" legislation, while the Tripura Act's restriction encroaches into the field of banking recovery. Under the principle of federal supremacy in Article 246(1), the State provision (Section 187) must give way to the extent it is inconsistent with the Central Act. The Court also rejected a separate challenge that the bank skipped mandatory valuation steps, finding the record showed a proper valuation report and a reserve price had in fact been fixed. The High Court's order was set aside and the appeals allowed.

Lesson Learnt

A State law's inclusion in the Ninth Schedule only protects it from a Fundamental Rights challenge: it does not make the State law immune from being overridden by a validly enacted, dominant Central law on a Union List subject like banking. Tribal-land transfer protections under State law cannot block a bank's SARFAESI recovery sale where the two laws directly conflict.

Official source (sci.gov.in)View Judgment (PDF)

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