Allottees’ rights not subservient to bank’s: real estate body

Pronouncing judgment in a case pertaining to e-auction of a project by a creditor company, the Haryana Real Estate Regulatory Authority (HARERA) has ruled that the rights of the allottees are not subservient to those of the bank.

The order emphasised that in case of failure of the banks to ensure that the funds were applied for the purpose they were granted, banks cannot be allowed to supersede the rights of the allottees.

The matter pertained to M/s Supertech Limited, who is neither the licensee nor a collaborator, approaching PNB Housing Finance Ltd. for a construction loan for the project ‘Supertech Hues’, which was duly advanced to M/s Supertech Limited with M/s Sarv Realtors Pvt. Ltd. as the confirming party by way of equitable mortgage of the project land measuring 33.33 acre by deposit of the title deeds along with receivables from the mortgaged properties.

However, M/s Supertech Ltd. failed to repay the loans taken and hence became a defaulter. Consequent upon the said project was put for e-auction by the creditor company. Aggrieved allottee Deepak Chaudhary approached the Authority. The Authority on hearing the matter on urgent basis stayed the e-auction proceeding as prior written approval of the Authority and 2/3 allottees was not taken and any such transfer through e-auction would have jeopardised the interest of 950 allottees who have invested a total amount of ₹328.19 crore in the project.

Chairman of HARERA Gurugram, K.K. Khandelwal, said a peculiar trend was noticed recently in the real estate sector that promoters mortgaged their project land/structure, as well as all receivables from the sold/unsold inventory to lending organisations/financial institutions/banks/creditors to get bank loans to fund the construction for developing projects. However, when these promoters failed to repay the loans, the financial institutions auctioned the residential or commercial properties that had been pledged with them to recover loans from borrowers by invoking the SARFAESI Act, 2002.

He said that the Authority clarified through this judgment that if a loan has been sanctioned for construction of a real estate project, then the SARFAESI Act, 2002, has to be read harmoniously with the RERA Act, 2016, and the lending institution shall first disclose all rights and liabilities on the project that includes all the rights and liabilities of the allottees – such as, refund amounts, interest, compensation, delayed possession charges, possession of the unit – who have invested money in that particular real estate project.

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Printable version | Oct 18, 2021 10:21:05 PM |

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