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Dimapur, Sep. 29 (EMN): Amid pressure from some organisations, including the Confederation of Nagaland Chamber of Commerce and Industry to enact the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi Act) 2002, in the state, the Nagaland Bar Association (NBA) said that it will adversely affect the people.
In a press release, NBA stated that the Sarfaesi Act, it applied in Nagaland, will not only infringe on the constitutional rights conferred by Article 371A but also “would be highly disastrous to the members of the business community and entrepreneurs as well as the legal heirs and dependants of deceased servicemen, having unpaid money loan”; and also affect the state economy.
It informed the Sarfaesi Act empowers the Banks and Financial Institutions (BFI) to recover dues faster without the intervention of courts and tribunals by deploying Assets reconstruction companies (ARCs) as their legal agent, which can acquire and sell the mortgaged assets of the borrower after 60 days notice even on default of an installment payment.
Informing that the Act has no provision for relaxation in payment of instalment even for unavoidable cases like death and natural calamities, the NBA said the law empowers the BFI to act through their agent and auction the mortgaged assets to recover the amount.
“The resultant affect would certainly be disastrous to the upcoming economy as the legal victims would be no other than members of the business community and entrepreneurs rather than the multinational companies or big industrial houses,” read the press release.
It added that the beneficial business of ARCs at the cost of the borrowers of the loan amount unable to repay on time would certainly hit” those who avail loans.
The bar association went on to say that even in the absence of Sarfaesi Act, the BFI has ample legal means for recovery of loan less than INR10 lakh by filling applications before the Debt Recovery Tribunal or via lawsuit.
Citing the possible repercussion of the Act, NBA opined that ‘it would be much wiser and also legally and constitutionally consonant on the part of the state legislatures not to succumb to the pressure from any discipline for the sake of the public interest and the state economy’.