In Case Aggrieved Home Buyers Approach The Authority Against Banks, RERA Also Has Jurisdiction Over Latter: What Supreme Court's Decision Means

by Bhaswati Guha Majumder - Feb 15, 2022 04:48 PM +05:30 IST
In Case Aggrieved Home Buyers Approach The Authority Against Banks, RERA Also Has Jurisdiction Over Latter: What Supreme Court's Decision MeansReal estate
Snapshot
  • The Court was hearing an appeal by the Union Bank of India against a verdict by the Rajasthan High Court.

    The bank's case was that RERA had no jurisdiction over any recovery proceedings the bank may initiate in case of a default by a real estate company.

When a real estate company defaults on repaying bank loans and handing over possession, the Supreme Court held that the Real Estate (Regulation and Development) Act will prevail over recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI).

Millions of homebuyers are expected to be relieved as a result of the court’s decision.

The government had earlier changed the Insolvency and Bankruptcy Code (IBC) to include homebuyers on the committee of creditors that decides the company's destiny. However, the buyers were not given priority in payment of dues in the event of liquidation.

The Court was hearing an appeal by the Union Bank of India against a verdict by the Rajasthan High Court.

The bank appealed that RERA lacked jurisdiction over it since lenders do not fall under the description of "promoters" for the purposes of the RERA Act. Therefore, the authority could not halt the bank's recovery procedures.

This was in response to an earlier verdict of the Rajasthan HC which implied that an aggrieved homebuyer could in fact approach the RERA authority against the recovery procedures of the bank.

The SC stated it was completely in “agreement" with the HC's decision and dismissed the bank's appeal. The bench, however, emphasised that the HC judgement would only apply in circumstances when homebuyers file RERA actions to safeguard their interests.

The HC, in turn, had reached its decision after hearing a case filed by the Union Bank of India. The bank had challenged a ruling of the Rajasthan RERA which had cancelled the bank auction and ordered the bank to hand over possession of a unfinished residential project to RERA.

Get Swarajya in your inbox everyday. Subscribe here.

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber
Comments ↓
Get Swarajya in your inbox everyday. Subscribe here.
Advertisement

Latest Articles

    Artboard 4Created with Sketch.