RERA proceedings would prevail SARFAESI if  Bank steps in to shoe of promoter.

(Developer fails to pay loan .Bank auctions property; RERA orders stay )

 

Raj High court.: Union Bank of India VS RERA Rajasthan :- This judgement will become a precedent to protect flat buyers who are sight to be ousted by lenders who have financed a building with building as collateral:- 

 

The court also held that in event of conflict between the RERA Act and the recovery proceedings of bank - RERA proceedings would prevail SARFAESI . Bank steps in to shoe of promoter. and  is an assignee of the promoter. 

 

Chief justice Akil Kurashi and justice Uma Shankar Vyas while deciding the writ  filed by Union Bank against order of RERA Rajasthan single member. Sunrisers residential in which the entire project building was mortgaged by the developer to Andhra bank  for ₹15 Cr ( taken over by UBI)

 

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.

 

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

 Dr Prem Lata

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