New Delhi: Putting the interests of home buyers above those of banks, when a real estate company defaults in repayment of bank loan and handing over possession, Supreme court It was held that in case of conflict between recovery proceedings under the Real Estate (Regulation and Development) Act and the Securitization and Reconstruction of Financial Properties and Enforcement of Security Interest Act, the former would prevail.
This decision will bring relief to lakhs of homebuyers waiting for delivery. The government had amended the Insolvency and Bankruptcy Code, making homebuyers part of the committee of creditors that decide the fate of the company, but they were not given priority in the payment of dues in case of liquidation.
A bench of Justice MR Shah and Justice BV Nagarathna dismissed an appeal. Union Bank of India Against the order of the Rajasthan High Court which said that a complaint can be filed against the banks before the Real Estate Regulatory Authority.RERA) if he has taken over as a secured creditor after default by the promoter.
The bank alleged that RERA has no jurisdiction over the bank as the lenders do not come under the definition of ‘promoters’. RERA Act And the recovery proceedings of the Bank cannot be stayed by the Authority. The interests of creditor banks and homebuyers often collide when a real estate company fails to complete the project on time, and also fails to repay the loan and both initiate legal proceedings against the defaulting company.
Banks have several instruments to deal with loan defaults, which may include IBC or SARFAESI.
The HC said a complaint against banks can be filed before RERA if the lenders have taken possession of a project as a secured creditor after default by the promoter in repaying the loan.
“The moment the bank resorts to any remedy under sub-section (4) of section 13, it triggers the statutory assignment of the right of the borrower to the secured creditor. By this stage the bank or financial institution arises in whose favor Reserved interest may have been created in … may not be liable to the jurisdiction of RERA. However the moment the bank or financial institution takes recourse to any of the remedies provided in section 13(4) of the SARFAESI Act, RERA will Jurisdiction to consider a complaint filed by an aggrieved person,” the HC had said.
Upholding the HC’s decision, the SC said it was in “complete concurrence” and dismissed the bank’s appeal. However, the bench clarified that the HC’s decision would be applicable only in cases where proceedings under RERA are initiated by home buyers to protect their interests. The HC had delivered the verdict while deciding a petition filed against the order passed by Union Bank of India Rajasthan RERA In which RERA canceled the bank auction and directed the bank to hand over the possession of the semi-finished housing project to RERA.
This decision will bring relief to lakhs of homebuyers waiting for delivery. The government had amended the Insolvency and Bankruptcy Code, making homebuyers part of the committee of creditors that decide the fate of the company, but they were not given priority in the payment of dues in case of liquidation.
A bench of Justice MR Shah and Justice BV Nagarathna dismissed an appeal. Union Bank of India Against the order of the Rajasthan High Court which said that a complaint can be filed against the banks before the Real Estate Regulatory Authority.RERA) if he has taken over as a secured creditor after default by the promoter.
The bank alleged that RERA has no jurisdiction over the bank as the lenders do not come under the definition of ‘promoters’. RERA Act And the recovery proceedings of the Bank cannot be stayed by the Authority. The interests of creditor banks and homebuyers often collide when a real estate company fails to complete the project on time, and also fails to repay the loan and both initiate legal proceedings against the defaulting company.
Banks have several instruments to deal with loan defaults, which may include IBC or SARFAESI.
The HC said a complaint against banks can be filed before RERA if the lenders have taken possession of a project as a secured creditor after default by the promoter in repaying the loan.
“The moment the bank resorts to any remedy under sub-section (4) of section 13, it triggers the statutory assignment of the right of the borrower to the secured creditor. By this stage the bank or financial institution arises in whose favor Reserved interest may have been created in … may not be liable to the jurisdiction of RERA. However the moment the bank or financial institution takes recourse to any of the remedies provided in section 13(4) of the SARFAESI Act, RERA will Jurisdiction to consider a complaint filed by an aggrieved person,” the HC had said.
Upholding the HC’s decision, the SC said it was in “complete concurrence” and dismissed the bank’s appeal. However, the bench clarified that the HC’s decision would be applicable only in cases where proceedings under RERA are initiated by home buyers to protect their interests. The HC had delivered the verdict while deciding a petition filed against the order passed by Union Bank of India Rajasthan RERA In which RERA canceled the bank auction and directed the bank to hand over the possession of the semi-finished housing project to RERA.
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