“Article 246. Subject –mAtter of lAwS mAde by the PArliAment And by the legiSlAture of StAteS:-

Notwithstanding anything in clauses (2) and (3), Parliament has the 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 the 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 (1) and (2), the Legislature of any State has exclusive power to make laws for such Stae 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’)

(4) Parliament has the power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List.”

In the aforesaid judgments the Hon’ble Supreme Court held that the principle of federal supremacy which Article 246 of the Constitution embodies and by virtue of the provisions of Article 246(1) of the Constitution, 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 –the State List in Seventh Schedule. That under Article 246, List I – the Union List, Entry 45 Parliament alone can enact law with regard to the conduct of business by the banks which includes recovery of dues as an essential function of any Banking / Financial Institution. In excise of its legislative power relating to banking, Parliament can provide the mechanism by which monies due to the Banks and Financial Institutions can be recovered. The term ‘banking’ in Entry 45 would mean that the Parliament is empowered to make law in all aspects of banking including ancillary or subsidiary matter relating to banking.

The Bank and Financial Institution are concerned, Section 13 of the SARFAESI Act of 2002 deal with recovery of debts owning to such banks and financial institutions and certain measures which can be taken outside of the court process to enforce such recovery which may be by way of selling of secured assets of realize the debitsor by taking over the management of the business of the borrower and/or appointing any person as manager to manage the securities assets.

The Hon’ble Supreme Court in the aforesaid judgments further held that by applying the doctrine of pith and substance of SARFAESI Act of 2002 , it is clear that in pith and substance the entire SARFAESI Act of 2002 is directly link to Entry 45 List Ithe Union List read with Entry 95 List Ithe Union List in that it deals with recovery of debts due to banks and financial institutions, inter alia through facilitating securitization and reconstruction of financial assets of banks and financial institution and sets up a machinery in order to enforce the provisions of the SARFAESI Act of 2002 .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 SARFAESI Act of 2002, must give way. The SARFAESI Act of 2002, is related to the entry of banking which is included in List I– the Union List of Seventh Schedule and sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. That has been consciously included in List I – the Union List by the Constitution maker because banking industry is the engine / driving force of the economy and it is therefore important to expedite the recovery of loans for overall growth and development