News: Rajasthan HC holds banks accountable under RERA-21-12-2021
The court also held that in event of conflict between the RERA Act and the recovery proceedings of the bank under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, RERA Act would prevail.
JAIPUR: In a landmark judgment, divisional bench of Rajasthan High Court has held that complaints against banks can be filed before the Real Estate Regulatory Authority (RERA) if lending banks has taken the possession of a project as a secured creditor, pursuant to the default of the promoter in paying the loan.
The court also held that in event of conflict between the RERA Act and the recovery proceedings of the bank under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, RERA Act would prevail.
The decision was given by the divisional bench comprising chief justice Akil Kurashi and justice Uma Shankar Vyas while deciding the writ petitions filed by the Union Bank of India against the order passed by Rajasthan RERA wherein while cancelling the bank auction, RERA directed the bank to hand over the possession of the semi-constructed residential project to RERA.
Appearing on the behalf of the allottees, advocate Mohit Khandelwal said this order was given in the context of an under construction residential complex project titled ‘Sunrisers’ in which the entire project building was mortgaged by the developer to Union Bank of India (Erstwhile Andhra Bank), for obtaining a term loan of Rs 15 crore, though several flats were already booked by the allottees even before the said term loan.
Later, due to non-repayment of the said loan by the promoters, the entire project building was attached by the Union Bank of India. Earlier, Rajasthan RERA in its judgment cancelled the auctions proceedings of the bank and ordered the bank to hand over the possession of the flat to RERA, which would get the project completed at its own level.
“The Union Bank of India challenged the order by stating that the RERA does not have any jurisdiction over the bank as banks do not fall under the definition of ‘Promoters’ for the purpose of RERA Act. Moreover, the recovery proceedings of the bank cannot be halted by RERA,” said Khandelwal.
The court rejected the claims of the Union Bank and ruled that pursuant to taking possession of the project, the bank enters into the shoes of the promoter and becomes the assignee of the promoter and thus, amenable to jurisdiction of RERA. Moreover, the RERA would prevail over SARFAESI, meaning thereby that the rights of the realestate allottees shall not be subservient to that of Bank.
It was further held that the single member of RERA is competent to hear and decide the complaints filed before the authority.
In the decision, the rights of the allottees have been considered paramount by court and it would confer wide powers to RERA. Further, the rights of the allottees cannot be infringed by the bank while exercising its legal rights.
