9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 1519 - HC - Indian LawsValidity of Regulation 9 of Rajasthan Real Estate Regulatory Authority Regulations 2017 - jurisdiction of RERA as being assignee of the promoter - orders passed by RERA are appealable before the Appellate Authority or not - interplay of RERA Act and SARFAESI Act - Applicability of decision in Bikram Chatterji 2019 (7) TMI 1233 - SUPREME COURT . Validity of Regulation 9 of the Regulation of 2019 - HELD THAT - The Allahabad High Court had occasion to consider somewhat similar issue of delegation of the authority of RERA into one Member to entertain complaints in case of M/S. K.D.P. BUILD WELL PVT LTD. VERSUS STATE OF U.P. AND 4 OTHERS 2020 (2) TMI 1736 - ALLAHABAD HIGH COURT . It was held that the order passed by one member of RERA is legal and valid. This was seen in light of Section 81 of RERA Act. Once again in case of M/s Newtech Promoters and Developers Pvt. Ltd. the Division Bench of Allahabad High Court considered the validity of the powers exercised by single member of RERA. The Court referred to the provisions contained in the Act and regulations framed by the authority and upheld the power of the single member to entertain the complaints. The decision of Allahabad High Court in the case of M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. VERSUS STATE OF U.P. AND 5 OTHERS 2021 (1) TMI 1346 - ALLAHABAD HIGH COURT was challenged before the Supreme Court. Several questions were raised and answered. One of the questions was whether Section 81 of the Act authorizes the authority to delegate its power to single member to hear complaints instituted under Section 31. After referring to the statutory provisions and relying upon several decisions of the Supreme Court the Supreme Court in the said decision upheld the delegation of power to decide the complaints by single members in terms of Section 81 of the Act. The controversy at hand is substantially governed by the decision of Supreme Court in case of M/s Newtech Promoters and Developers Pvt. Ltd. 2021 (12) TMI 892 - SUPREME COURT . It was a case in which the question was delegation of the authority in terms of Section 81 of the Act which we may recall provides that the authority may by general special order in writing be delegated to any member such powers and functions under the Act as it may deem necessary. When the Supreme Court has upheld the delegation of powers to adjudicate in single member of the authority in terms of Section 81 of the Act recourse to Regulation 9 of the Regulations of 2017 would become academic. The resolution challenged by the petitioners passed by RERA delegating powers to decide complaints into single members could as well have been passed in exercise of powers under Section 81. In fact the resolution itself does not refer to the source of power under Regulation 9 alone. Whether so stated or not this resolution can always stress the source of the power under Section 81 of the Act since it is well settled that non-mentioning of the provisions or wrong reference to a statutory provision for exercise of power would not invalidate the exercise if powers can be traced to any statutory source. Section 81 of RERA Act gives powers to the authority to delegate to any member powers and functions under the Act. Sub-section (1) of Section 85 enables the authority to frame regulations consistent with the Act and the Rules. Regulation 9 framed in exercise of such powers merely regulates the process of delegation of powers in single members of RERA. This regulation is thus not ultra vires the Act or invalid for any other reason. Applicability of RERA while SARFAESI Act - HELD THAT - Section 35 of the SARFAESI Act provides that the provisions under the said Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Similarly worded provision giving overriding effect to RERA Act is contained in Section 89. This Section as noted provides that provisions of the said Act (i.e. RERA Act) shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. The question would therefore arise which of the two provisions giving overriding effect to the statute would prevail. In case of West Bengal Electricity Regulatory Commission Vs. CESC Ltd. 2002 (10) TMI 772 - SUPREME COURT a three Judge Bench of the Supreme Court considered the similar conflict between the Electricity (Supply) Act 1948 and Electricity Regulatory Commissions Act 1998 both of which contained similar overriding provisions - it was held that in view of the Section 34 of the RDB Act the said Act overrides the Companies Act to the extent there is anything inconsistent between the Acts. The judicial trend would thus suggest that in the event of direct conflict between the two central statutes giving overriding effect to the Act ordinarily the subsequent legislation would prevail. Whether RERA would have jurisdiction in cases where the transactions between borrowers and the banks are completed before enactment of the Act? - HELD THAT - As is well settled a statutory provision creating rights or obligations is presumed to be prospective unless specifically or by necessary implications it has been given retrospective effect. Section 11 of RERA Act pertains to function and duties of the promoter. Sub-section (4) of Section 11 requires the promoter to perform several acts and obligations - This provision thus creates a new obligation and corresponding right in favour of the allottee. Such provisions cannot have retrospective effect. In any case as noted enforcing any such obligation would be wholly unworkable. It would reopen closed transactions between the borrower and the lender. In our opinion therefore RERA Act would have no applicability to the secured creditors where such security interests have been created before introduction of the Act. Applicability of decision in Bikram Chatterji 2019 (7) TMI 1233 - SUPREME COURT - HELD THAT - In case of Bikram Chatterji the Supreme Court did apply RERA provisions to the transactions which were executed prior to introduction of the Act - the Supreme Court having come to the conclusion that creation of security interest itself was fraudulent the charge was invalid and therefore even if created before introduction of RERA Act the same would not affect the right and interest of the allottees in terms of Section 11(4)(h) thereof. This would mean that in absence of fraud or collusion the Act cannot be applied retrospectively to the banks and financial institutions in whose favour security interests have been created prior to the enactment of the law. Does RERA have the authority to issue any directions against a bank or financial institution which claims security interest over the properties which are subject matter of agreement between the allottee and the developers - HELD THAT - Clauses (a) (b) and (c) of sub-section (4) of Section 13 vest power in the secured creditor to take all steps as the borrower himself could take in relation to the secured asset. Clause (d) goes a step further and enables the bank to recover its dues directly from a debtor or the borrower who has acquired any of the secured assets. For all purposes thus the secured creditor steps in the shoes of the borrower in relation to the secured asset. This is thus a case of assignment of rights of the borrower in the secured creditor by operation of law. In other words the moment the bank takes recourse to any of the measures under sub-section (4) of Section 13 it triggers statutory assignment of right of the borrower in the secured creditor. Till this stage arises the bank or financial institutions in whose favour secured interest may have been created may not be in isolation in absence of the borrower be amenable to the jurisdiction of RERA. However the moment the bank or the financial institution takes recourse to any of the measures available in sub-section (4) of Section 13 of the SARFAESI Act RERA authority would have jurisdiction to entertain the complaint filed by an aggrieved person. Conclusions - (i) Regulation 9 of the Regulations of 2017 is not ultra vires the Act or is otherwise not invalid. (ii) The delegation of powers in the single member of RERA to decide complaints filed under the Act even otherwise flows from Section 81 of the Act and such delegation can be made in absence of Regulation 9 also. (iii) As held by the Supreme Court in the case of Bikram Chatterji in the event of conflict between RERA and SARFAESI Act the provisions contained in RERA would prevail. (iv) RERA would not apply in relation to the transaction between the borrower and the banks and financial institutions in cases where security interest has been created by mortgaging the property prior to the introduction of the Act unless and until it is found that the creation of such mortgage or such transaction is fraudulent or collusive. (iv) RERA authority has the jurisdiction to entertain a complaint by an aggrieved person against the bank as a secured creditor if the bank takes recourse to any of the provisions contained in Section 13(4) of the SARFAESI Act. Petition disposed off. The judgment from the Rajasthan High Court primarily revolves around the validity of Regulation 9 of the Rajasthan Real Estate Regulatory Authority Regulations, 2017, and its implications on the powers of the Real Estate Regulatory Authority (RERA) in adjudicating disputes involving real estate projects. Below is a detailed analysis and summary of the judgment: 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions addressed in the judgment are:
2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of Regulation 9
Issue 2: Delegation of Powers to Single Members
Issue 3: Interplay Between RERA and SARFAESI Act
Issue 4: Applicability of RERA to Pre-Existing Transactions
Issue 5: Jurisdiction Over Banks and Financial Institutions
3. SIGNIFICANT HOLDINGS
The judgment concludes by directing parties to pursue their cases before appropriate authorities, lifting stays on pending proceedings, and providing timelines for filing replies or appeals.
|
