Union Bank of India vs. Rajasthan Real Estate Regulatory

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

 D.B. Civil Writ Petition No. 13688/2021

Bench: Akil Kureshi, Uma Shanker Vyas

Decided on 14 December, 2021

Legal point

·         Whether RERA have any jurisdiction over the bank as banks do not fall under the definition of ‘Promoters’ for the purpose of RERA Act.

·         Whether the RERA would prevail over SARFAESI.

·         Whether the single member of RERA is competent to hear and decide the complaints filed before the authority.

Facts

An under construction residential complex project  titled ‘Sunrisers’ building was mortgaged by the developer to Union Bank of India (Erstwhile Andhra Bank), for obtaining a term loan of Rs. 15 crore, several flats were already booked by the allottees even before the said term loan.

Due to non-repayment of the said loan by the promoters, the entire project building was attached by the Union Bank of India and initiated auction of the building to recover the loan amount. Homebuyers contacted RERA 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. Bank is neither Promoter /agent of promoter nor a homebuyer.

That the recovery proceedings of the bank under special act SARFAESI meant to recover their unpaid dues, cannot be halted by RERA

That the single member of RERA is not competent to hear and decide the complaints filed before the authority.

Order by H.C.

The divisional bench of High Court of Rajasthan comprising Chief Justice Akil Kurashi and Justice Uma Shankar Vyas decided the writ petitions filed by the Union Bank of India against the order passed by Rajasthan RERA with the following observations -

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.

The rights of the allottees are considered of paramount importance by court and it would confer wide powers to RERA. The RERA would prevail over Securitisation and Reconstruction of Financial Assets and  Act, 2002 (hereinafter to be referred as 'SARFAESI Act') the rights of the real estate allottees shall not be subservient to that of Bank and cannot be infringed by the bank while exercising its legal rights.

It was further held that the single member of RERA is competent to hear and decide the complaints filed before the authority.

This judgment by High Court of Rajasthan is an outstanding consumer jurisprudence

 

Dr Prem Lata 

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