No Overlapping Between SARFAESI Act And Gangster Act, Both Operate In Different Fields: Allahabad HC

The Court noted that the object of the Act, 2002 is to ensure that dues of secured creditors including banks, and financial institutions are recovered from the defaulting borrowers without any obstruction and intervention of courts or Tribunals, while the object of the Gangster Act is to provide a speedy and transparent procedure to punish the gangster, to establish an efficient recovery system with respect to the property of gangsters and incidental benefits acquired by them through crime.

The Court was hearing a Criminal Miscellaneous Writ Petition seeking issuance of Writ for quashing the order of attachment in the case under Section 14(1) of the U.P. Gangsters and Anti-Social Activities (Prevention) Act, 1986 as much as it relates to the borrower/mortgagor's property.

The bench of Justice Vivek Kumar Birla and Justice Arun Kumar Singh Deshwal observed, “This court is of the view that Article 254 of the Constitution of India will apply only in those cases where there is inconsistency between the law made by the Parliament and law made by the Legislature of State on the subject of List-III (Concurrent List) but there is no inconsistency between the Act, 2002 and the Gangster Act, as object of the Act, 2002 and Gangster Act are different and both the Acts operate in different fields, and both Acts were enacted in different lists. (List I and List III).”

Advocate Amrendra Singh appeared for the Appellant.

Brief Facts-

In the present case, the Petitioner which is a housing finance company sponsored by Canara Bank granted a loan to Rakesh Sharma for purchasing a house in Greater Noida which was mortgaged to the company. He was later charged under the U.P. Gangsters and Anti-Social Activities (Prevention) Act, 1986, because of which the police authorities attached his properties. The Petitioners filed a Writ Petition to challenge the attachment after which the Court directed the Police Commissioner to consider their representation. However, they informed the petitioners that a final order had already been passed, and the matter was referred to the Special Court.

The Court observed, “if a person interested in a property could not file a representation before the District Magistrate/Commissioner of Police u/s 15(1) of the Gangster Act for want of knowledge then he can file his objection before the Special Court even after reference of attachment order to Special Court u/s 16(1) of the Gangster Act and, in appropriate cases the Special Court after completion of the inquiry u/s 17 of the Gangster Act may also deliver the attached property to the interested person if he is found entitled to possession thereof.”

The Court mentioned the Supreme Court decision in Mineral Area Development Authority & Another Vs. Steel Authority of India & Another reported in 2024 SCC OnLine SC 1796 where the issue of interpretation of Article 254 of the Constitution of India came into consideration. According to the Court the SC said, “issue of repugnancy arises only when both the legislatures are competent to legislate on the subject with respect of List-III and in case of conflict in other cases, answer lies in Article 246 of the Constitution of India, itself.”

The Court again mentioned the Supreme Court decision in Government of A.P. Vs. J.B. Educational Society reported in (2005) 3 SCC 212 where according to the Court the SC observed, “However, if the conflict is unavoidable and the two enactments are irreconcilable, then by the force of non- obstante clause in Clause-1 of Article 246 of the Constitution of India, the Parliamentary Legislation would prevail, notwithstanding the exclusive power of the State Legislature to make a law with respect to the matter enumerated in the State List.”

“The conjoint reading of the Act, 2002 and Gangster Act shows that there is no overlapping between them.”, the Court remarked.

Accordingly, the court dismissed the Petition.

Cause Title: Canfin Homes Ltd And Another v. State Of U.P. And 2 Others (Neutral Citation: 2024:AHC:139586-DB)