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Kohima, Feb. 13 (EMN): Nagaland Chief Minister
Neiphiu Rio has said the “Securitisation and Reconstruction of Financial Assets
and Enforcement Interest” (Sarfaei) Act 2002 cannot be implemented in Nagaland.
Banks have been requesting implementation of the Sarfaei Act in Nagaland so that they can give loans to customers against mortgage of immovable property or fixed assets in favour of the banks. That way, in the case of default in repayment by the borrower, the Act will enable banks to confiscate and sell property without intervention of courts to realise the money.
‘We cannot dilute the existing provisions and permits banks to sell mortgaged immovable property to outsiders,’ Rio told the assembly.
The reason, he said, is that the provisions come in conflict with all protective laws such as the Article 371A / BEFR Act of 1873, and the Nagaland Land and Revenue Regulation (Amendment) Act of 1978.
Rio was making the statement in the house on Thursday pertaining to the Sarfaei Act during the ongoing fifth session of that 13th Nagaland Legislative Assembly which saw an uproar in the floor from the opposition Naga People’s Front (NPF) party demanding discussions in the house. The Leader of Opposition TR Zeliang and others demanded Rule 55 of Procedures and Conduct of Business for non-admittance of the act for discussions.
Assembly speaker Sharingain Longkumer exercised a prerogative not to have any, and asked the members from the opposition to seek clarifications from the speaker’s chamber.
The leader of the house categorically stated that in its present form, the Act comes in direct conflict with the land holding system and restrictions on transfer of lands. A reference was made to Article 371A - special provisions on transfer of land and its resources; the Nagaland Land & Revenue Regulation (Amendment) Act of 1978; sub-section (2) of section 162 of the Assam Land & Revenue Regulation (Amendment) Act of 1886, permitting ownership of land through transfer, exchange, lease, agreement, or settlement only by indigenous inhabitants of Nagaland.
He went on to state that banks have been requesting implementation of the Sarfaei Act in Nagaland so that they can advance loans to customers against mortgage of immovable property or fixed assets in favour of the banks. That way, in the case of default in repayment by the borrower, the Act will enable banks to confiscate and sell property without intervention of courts to realise their money.
“While the interest of the banks must be safeguarded, we cannot dilute the existing provisions and permit banks to sell mortgaged immovable property to outsiders,” Rio said.
The chief minister stated further: “The assumption that Nagas are unable to avail loans from banks due to non-adoption of Sarfasi Act 2002 is misleading and erroneous.” He added that banks have adequate safeguards from existing laws in Nagaland to take possession of secured assets and to sell them to realise dues.
The Nagaland Land and Revenue Regulation (Amendment) Act of 2002 explicitly permits transfer of mortgaged property in favour of banks, which they can very well sell to indigenous inhabitants of the state to recover their dues, Rio maintained.
Referring to a case of the state of Tripura, the chief minister said Nagaland has not enacted any legislation like the former has, but intends to adopt the Sarfaei Act enacted by the central government. He clarified: “However, we intend to ensure that, as in the case of Tripura, transfer of mortgage property takes place only to indigenous Naga inhabitants of Nagaland.”
Rio asserted that the Cabinet had examined the Act on October 18 2019 and decided that the Act can be adopted in the state of Nagaland only after it is ensured that transfer of property attached by banks is made only to indigenous inhabitants of the state.
Further, he maintained that the Sarfaei Act being a central Act, the amendment has to be carried out by the central government. He said, “The state Finance department on November 22 2019 requested the department of financial services of the government of India to modify the Act to restrict the transfer of property to indigenous inhabitants of Nagaland.” He told the assembly that ‘reply is still awaited.’
Rio told the members in the house that a request for incorporation specifically for the state of Nagaland, was sent that would ensure compliance with Article 371A of the constitution and clear the way for implementation of the Act.
The chief minister went on state that realising the difficulties of entrepreneurs in the state, the government of Nagaland had passed the Nagaland Special Economic Zone Bill 2019 to promote economic growth and development.
He stated that initiatives need to be put in place as soon as possible to attract investment and to facilitate access of entrepreneurs to institutional credit at affordable interest rates.
“We will also make all possible efforts to facilitate mortgage of land and fixed assets in these zones against which loans can be accessed,” Rio said.