Khushi Doshi
Published On: February 17, 2022 at 16:03 IST
On wednesday, the Supreme Court upheld a Rajasthan High Court decision ruling that the Real Estate Regulatory Authority can hear complaints from home buyers against a bank that seized possession of a real estate project as a secured creditor.
While dismissing the Union Bank of India’s Special Leave Petition (SLP), the bench of Justices MR Shah and BV Nagarathna mentioned that it concurs with the High Court’s Judgement completely.
In the Rajasthan High Court, the Union Bank of India and others challenged RERA’s power to issue any orders against a bank or financial institution that claims a security interest in properties pursuant to an Agreement between the allottee and the developers.
Referring to the definitions of terms such as “Promoter,” “Assignee,” and so on in RERA and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, the High Court observed that the moment the bank invokes any of the measures under Sub-Section (4) of Section 13 of the SARFAESI Act, it triggers the Statutory assignment of the borrower’s Right in the secured creditor.
In the case of Bikram Chatterji vs Union of India, the Supreme Court ruled that if RERA and the SARFAESI Act conflicted, RERA’s provisions would take precedence. RERA would not apply to a transaction between a borrower and a bank or financial institution in which a security interest was created by mortgaging the property prior to the implementation of the Act, unless and until it is determined that the creation of such mortgage was omitted.
If the bank invokes any of the Provisions in Section 13(4) of the SARFAESI Act, the RERA has the authority to hear a Complaint filed against the bank as a secured creditor by a person who has been wronged.
Also read: Landmark Judgements by RERA