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.

Rajasthan RERA - Complaint under Section 12 will not be dealt by the Authority and has to be compulsorily put before the Adjudicating Officer.

 In the Matter of Amit Kumar Lamba V/s Shekhar home Developers Complaint no.RAJ-RERA-C-2018-2193  decided on 23.04.2019 before Rajasthan Real Estate Regulatory Authority

The Bench of Sh. Nihal chand Chairman and and Rakesh jain member held that

Complaint for Relief under Section 12, Section 14(3), Section 18(2) and Section 18(3) are to be filed with and disposed of by the adjudicating officer alone, in the manner prescribed in the Rule 36 of the Rules. 

Complaints for Relief under Section 14(1) , Section 14(2) , Section 19(16) to 19(11) are to be filed with and disposed of by the Authority alone, in the manner prescribed in the Rule 35 of the Rules.

As regards to complaint under Section 18(1), the Complaint is to be filed with and disposed by authority if the complaint pertains to refund, interest , penalty or of other other directions.

The Complaint under Section 18(1) is to be disposed by the Adjudicating officer if the complaint pertains to the compensation only.

The copy of Detailed order can be found at https://rera.rajasthan.gov.in/Content/pdf/2018-2193%20001-converted.pdf

If the developer is not building the project as promised in the brochure, the Authority directed the promoter to complete the project as promised in brochure and rectify the mistake and also for compensation they can approach the Adjudicating Authority

 In the Matter of Pawan Beniwal and Kavita Vs Parsvnath Developers Ltd Complaint no.Raj-RERA-C-2017-2007 decided on 20.06.2019  before Rajasthan Real Estate Regulatory Authority

• The Rajasthan Real Estate Authority presided by Shri Nihal Chand Goel and Shri Rakesh Jain held that the Allottee/complainant contended that the developer is not developing these flats as per their brochure in that they have converted the lawn of the flat into a common facility area by making five sewerage manholes in the backyard. 

• The issue has not been resolved despite complaints made to the non-complainant. Even as per para 1(a) of the Agreement, it is clear that a lawn was supposed to be part of these flats at ground floor, but no lawn has been developed. 

• The competent Authority issued the following directions:

• (i) The non-complainant shall cover the manholes and develop the back yard/ rear set back into a proper lawn; 

• (ii) The complainants shall take possession of the their respective floors; and then point out the difficulties and deficiencies in workmanship, quality or provision of services to the promoter to rectify such difficulties and deficiencies, at no cost to the complainants, Within 30 days thereof; 

• (iii) If, before or after giving possession, the non-complainant does not comply with the directions given hereinbefore, the complainants will be at liberty to approach the Adjudicating Officer for relief under section 14(3) of the Act. Besides this, the complainants will also be at liberty to approach the Adjudicating Officer for relief of compensation under section 12 and section 18(1) of the Act.

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Authority is competent only to deal with violations or contraventions of the Act.,Authority is not the appropriate forum for settlement of disputes between the land owner and the promoter or between partners in business

 In the Matter of Raghunath Prasad Jain Vs Arihant Dream Infra Projects Ltd. Complaint no.RAJ-RERA-C-2017-2105 decided on 12.06.2019 before Rajasthan Real Estate Regulatory Authority.

• The Rajasthan Real Estate Authority presided by Shri Nihal Chand Goel and Shri Rakesh Jain held that the promoter has no obligation towards the land owner or his partners in business. 

• All the obligations of the promoter enumerated under the Act are either towards the allottees or towards the Authority, but there is no obligation the promoter has towards the land owner or his partners in business. And, the Authority is competent only to deal with violations or contraventions of the Act. 

• Thus, the Authority is not the appropriate forum for settlement of disputes between the land owner and the promoter or between partners in business;and this complaint of the land owner against the promoter is not maintainable under the Act.

• In this case, the agreement for sale executed between the allottees and the non-complainant, it was promised to deliver the possession of the project by October, 2016. Promoters challenged the maintainability of the complainant as it has been wrongly invoked under RERA as the complainant is not an allottee, but the land owner and business partner, who has been duly shown as a co-promoter in the application for registration filed before the Authority, under his consent. 

• The Act provides for remedial action for the allottees or customers being buyers of the developed property; and the disputes inter-se between the developer and the owner of land are not under the ambit and jurisdiction of RERA.

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RERA has superseding powers on Directorate of Enforcement as far as protection of homebuyer rights are concerned

 Before Ld. RERA Rajasthan:

Hydepark landowners association V. Adarsh Buldestate Ltd. (ABL)and others Complaint No. RAJ-RERA-C-201 9-31 69

The Authority has ruled that RERA has superseding powers on Directorate of Enforcement as far as protection of homebuyer rights are concerned;

it has Also ruled that valuation of “proceeds of crime” connected to a project cannot be more than actual amount invested towards the construction. Such a valuation can be arrived at through a government approved valuer by already legally settled principles of calculation methodology.

The Complete order can be seen at 

https://rera.rajasthan.gov.in/Content/pdf/29352019-3169%20merged_compressed.pdf

RERA Act, being a special law for protection of interest of consumers in real estate sector, prevails over Companies Act

In the Matter of Kuldeep Kaur v. MVL Ltd., Complaint No. RAJ-RERA-C-2018-2127, decided on 09-05-2019 at The Rajasthan Real Estate Regulatory Authority: A Coram of Nihal Chand Goel (Chairman) and Rakesh Jain (Member), rejected an application for staying the proceedings filed under Section 279 of the Companies Act, 2013.

In the present order, the Authority was dealing with ten cases taken together, all against the company MVL Ltd. having a common case. An application was filed under Section 279 of the Companies Act, 2013 on the behalf of the non-complainant company requesting that the proceedings be stayed as the High Court of Delhi had admitted a winding-up petition against the non-complainant company and had appointed a provisional liquidator.

The learned counsel, Harshal Tholia, filed a reply to the said application and brought the Authority’s attention to Section 279 of the Act which contained two clearly separate provisions, one for the fresh institution or commencement of a new suit or other legal proceeding, and the other for proceeding with an already pending suit or other legal proceeding.

The Authority observed that no pending suit or other legal proceedings can be proceeded with when a winding order is passed and hence the appointment of a provisional liquidator was of no consequence when it came to staying or not staying a pending suit or other legal proceedings. 

Only the winding up order was relevant for staying a pending suit or other legal proceedings. As the winding-up order had not been made by the court till that time, the stage for staying the proceedings had not arrived yet.

It was further noted that the proceedings were pending under the Real Estate (Regulation and Development) Act, 2016 which was a special Act of the Parliament made much after the Companies Act, 2013. 

Referring to the Section 89 of the RERA Act, the Authority held that it prevailed over the Companies Act, 2013 and hence Section 279 of the Companies Act, 2013 did not come in the way of the Authority’s proceedings.

In view of the above, the application for staying the proceedings was rejected.

RERA is applicable to state run entities too

 In September 2020, the Rajasthan RERA in a landmark decision held that the RERA Act is mandatory in nature. 

In Vinod Agarwal Vs. Jaipur Development Authority (JDA) RAJ -RERA-C-2020 -3622, the complainant said that he had participated in an auction organized by JDA and was allotted a plot in the project. He had also deposited 15% of the amount with JDA. However, JDA further issued a demand note of 35% of the amount and 15% interest in case of delay, without executing the agreement for sale. 

As per RERA Act, the developer is not allowed to accept more than 10% of the cost without executing or getting an agreement of sale registered. 

The argument put forth by the respondent was that it is a statutory development authority, it is guided by Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974. Further, it was added that the auction conditions did not stipulate any specific requirement for executing an agreement of sale. Also, the auction of the plot took place on an as-is-where-is basis. 

However, RERA ruled that the project was registered under it and thus, all rules and regulations under the Act would be applicable to the project as well and directed JDA to execute the sale agreement before demanding an additional amount. Section 13 of the Act mandates the execution of the sale agreement. 

The Complete order can be found at https://rera.rajasthan.gov.in/Content/pdf/Vinod%20Agarwal.pdf