RERA has the jurisdiction to entertain a complaint filed by an aggrieved person against the bank as a secured creditor

 In the matter of Union Bank of India, Jaipur vs. Rajasthan Real Estate Regulatory Authority & Ors., D.B. Civil Writ Petition No. 13688/2021 & 69 other connected Writ Petitions A divisional bench of the Rajasthan High Court  held that the RERA has the jurisdiction to entertain a complaint filed by an aggrieved person against the bank as a secured creditor. In this behalf, the Rajasthan HC observed that lenders such as banks who have entered into securitized transactions have the power in case of default under the SARFAESI Act to enforce their security interest through various measures such as taking possession of the secured assets, taking over management of the business of the borrower, etc. It was held that oncethe bank takes such actions for enforcing their security interest in terms of Section 13(4) of the SARFAESI Act, the secured creditor for all purposes enters into the shoes of the borrower/promoter as there is an assignment of statutory rights in favour of the lender.

The Rajasthan HC held that the RERA Act would have no retrospective application to transactions completed between the borrower (developer in such cases) and the lender (banks/financial institutions) wherein security interest has been created prior to the RERA Act. The RERA Act can have retrospective application only when the creation of security interest was made fraudulently or in collusion with the bank/financial institutions.

The Rajasthan HC observed that both the RERA Act and the SARFAESI Act are special laws. Whilst relying on the order of Bikram Chatterji and Ors. Vs. Union of India 2019 19 SCC 161, the Rajasthan HC concluded that in case of a conflict between two special laws, the special law that was enacted later would prevail. Since,the RERA Act was enacted subsequent to the SARFAESI Act, the provisions of RERA Act would prevail over the provisions of SARFAESI Act.

THE SUPREME COURT OF INDIA in the matter of UNION BANK OF INDIA

VERSUS RAJASTHAN REAL ESTATE REGULATORY AUTHORITY & ORS. ETC. ETC. Petition for Special Leave to Appeal (C) Nos.1861-1871/2022; Dated 14-02-2022 has ratified the above order of the Rajasthan High Court.

Section 12 Refund - Developer to deal with Bank Directly in case of Refund in Subvention Scheme

 In the Matter of Mohan Vamsi Vs M/s Dewan housing Finance  ( Complaint no. CC006000000193176) the Maharashtra Real Estate Regulatory Authority has Ruled that

In Case of Refund in the Project where the Subvention Scheme is involved, the Builder has to deal directly with the bank and to return the money taken under Subvention scheme. The Complainant will have not  have any role between the builder and the bank.

 In the Earlier matter of khyati shah v/s rajsanket realty limited Complaint number CC006000000141031 Decided on 08/01/2020

The Complainant Filed the complaint seeking directions to the respondent to refund the entire amount paid by the complainant along with interest under the provision of section 18. The complainant purchased the flat in respondent’s project under the Subvention scheme whereby paying 20% of total amount 1,98,14,750/- . Agreement to sale was also registered on 06/09/2013. Out of The remaining amount 75% was to be paid by the ICICI bank immediately on registration of agreement to sale and balance 5% on the Possession of the flat. The interest on that amount in the form of PRE-EMIs was to be paid by the respondent builder.

Date of Possession was not mentioned in the agreement of sale. The respondent builder in contravention of the agreement stopped paying pre-emi to the Icici bank so icici issued several demand letters to the complainant to pay the pending amount.

The honourable tribunal observed that “the date of possession was not mentioned in the agreement for sale but the respondent no. 1 agreed to pay the monthly EMI to the respondent no. 2 till the possession is given to the complainant. since it has stopped paying EMI from march,2019 the same can be taken as the date of possession, Hence the complainant, who is an allottee is entitled to seek relief under section 18 of the RERA and the refund sought by the complainant, under section 18 is justified.”

The Honourable tribunal further added that “ The respondent number 1 ( The builder) is further directed to deal with the bank under subvention scheme for the remaining amount payable to the respondent number 2 viz. ICICI bank as the complainant is not liable to pay anything to the respondent number 2.”