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TMI Blog2021 (12) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... Ranjan, Sr. Adv. assisted by Mr. Naresh Kumar Sejvani, Mr. Himanshu, Mr. Rohan Agarwal Mr. R.K. Agarwal, Sr. Adv. assisted by Mr. Adhiraj Modi, Ms. Sunita Pareek Mr. Anil Mehta, AAG with Ms. Archana, Mr. Yashodhar Pandey, Mr. Mehul Harkawat Mr. Reashm Bhargava Mr. Siddhant Paliwal Mr. Mohit Khandelwal Mr. Shubham Khandelwal Mr. Dikshant Jain, Ms. Pallavi Mehta Mr. Rudraksh Shrarma Ms. Abhilasha Sharma Mr. Rishi Raj Maheshwari Mr. Nachiketa Pareek Mr. Himanshu Jain Mr. Lokesh Jangid on behalf of Mr. Bharat Vyas, Mr. Yogesh Pujari Mr. Ravindra Singh Shekhawat Mr. Goverdhan Singh Mr. Pranjul Chopra with Mr. Novotna Rajawat, Mr. Ajit Maloo Mr. Abhimanyu Yaduvanshi Mr. Pratyush Sharma Mr. Amit Chhangani Mr. R.K. Kasana Mr. Maneesh Sharma with Mr. Lakshay Pareek ORDER By the Court : Per Akil Kureshi CJ. 1. Central question involved in these petitions is of the validity of Regulation 9 of Rajasthan Real Estate Regulatory Authority Regulations, 2017 (hereinafter to be referred as ' the Regulations of 2017'). Peripheral issues raised and consequential directions sought by the petitioners in different petitions vary. However since the validity of Regulation 9 of the Regulation of 2017 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set Reconstruction and Security Interest of India (for short 'CERSAI'). Despite this, according to the allottees developers had taken the loan of Rs.15 crores from Andhra Bank which is now merged into Union Bank of India, the present petitioner, by creating a mortgage in favour of the bank. This was done on or around 04.06.2016. According to the allottees this was done without verification of existing charge on the properties in question. The allottees therefore alleged before RERA that such loan was sanctioned wholly fraudulently and with malafide intentions. In the meantime since the developer failed to repay the dues to the bank, the bank treated the account as NPA and tried to recover its unpaid dues by resorting to provisions of SARFAESI Act. Some of the allottees approached the DRT and thereafter DRAT to prevent the bank from auctioning the properties and thereafter approached RERA for taking suitable action against all concerned including the bank. Before RERA the bank raised several contentions including that RERA has no jurisdiction to entertain any complaint against the bank and that in view of the proceedings which are pending before the DRT and DRAT, the complaints sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FAESI Act they relied on the decision of Supreme Court in case of Bikram Chatterji (supra). 7. We may first deal with the validity of Regulation 9 of the Regulation of 2019. To establish Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be or the sale of real estate project in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear from the decisions of RERA and matters connected therewith, RERA Act was enacted. Section 3 of RERA requires prior registration of real estate project with RERA. Application for registration would be made under Section 4 and would be granted under Section 5 subject to fulfillment of conditions. Under Section 7 the authority has the power to revoke the registration under certain circumstances. Section 9 envisages registration of real estate agents. 8. Chapter III of the Act pertains to functions and duties of promoters. Chapter IV pertains to rights and duties of the allottees. Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer or the Appellate Tribunal is empowered by or under the Act to determine. Section 81 provides that the authority may, by general or special order in writing, delegate to any member, officer of the authority or any other person, subject to conditions such of the powers and functions under the act as it may deem necessary except for the power to make regulations under section 85. 12. Section 84 pertains to power of appropriate Government to make rules. Sub-section (1) of Section 84 empowers the appropriate Government by issuing notification to frame rules for carrying out the provisions of the Act. Section 85 pertains to power to make regulations. Sub-section (1) of Section 85 provides that the authority shall within a period of three months from its establishment by notification make regulations consistent with the Act or the rules made thereunder to carry out the purposes of the Act. 13. Section 89 gives overriding effect to the Act by providing that provisions of the Act shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 14. In exercise of powers conferred under Section 85 the authority has fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2020. 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. Reliance was placed on the decision in case of M/S K.D.P. Buildwell (supra). We must however record that challenge to Regulation 24 of UP Real Estate Regulatory Authority (General) Regulations, 2019 which pertained to power to delegate the matters to single members was kept open since in that case no such powers were exercised. In this decision the Court had referred to a Division Bench judgment of Punjab and Haryana High Court dated 16.10.2020 in case of Janta Land Promoters Private Ltd. Vs. Union of India and Ors., reported in 4 RCR (Civil) 845 to which we would make a detailed reference shortly. The Allahabad High Court however did not accept the view adopted by the Punjab and Haryana High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nta Land Promoters Private Ltd. (supra) as well as its own decision in case of M/s K.D.P. Build Well Pvt. Ltd. (supra). The Division Bench followed the decision of another Bench of its own High Court. These aspects were significant because the decision of the Allahabad High Court in case of M/s Newtech Promoters and Developers Pvt. Ltd. (supra) which followed and reiterated the view expressed in M/s K.D.P. Build Well Pvt. Ltd. (supra) has been approved by the Supreme Court in M/s Newtech Promoters and Developers Pvt. Ltd. (supra). Reliance of the Counsel for the petitioners on the decision of Punjab and Haryana High Court in case of Janta Land Promoters Private Ltd. (supra) therefore would lose much of its significance. 20. In our view the controversy at hand is substantially governed by the decision of Supreme Court in case of M/s Newtech Promoters and Developers Pvt. Ltd. (supra). We are conscious that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the Electricity (Supply) Act, 1948 and Electricity Regulatory Commissions Act, 1998, both of which contained similar overriding provisions. In this context it was held and observed as under:- "56. First of all the non obstante clause in Schedule VI to the 1948 Act refers only to the provisions of the Indian Electricity Act, 1910. Schedule VI which is found in the Act of 1948, the legislature could not have contemplated a subsequent enactment containing a non obstante clause coming into force, nor does it say that this non obstante clause applies to or is in preference to all other enactments including future enactments. Therefore this ground itself is sufficient to reject the argument of the learned counsel for the respondent as to the prevailing effect of the non obstante clause in Schedule VI to the 1948 Act. That apart, a reading of the 1998 Act vis-a-vis the 1948 Act with reference to Schedule VI, or with special reference to Section 57 and 57A of the 1948 Act. It is seen that Sections 22 and 29 of the 1998 Act are special laws and the 1948 Act is only a general law in regard to determination of tariff. Consequently, because of the accepted principle in law that a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the lenders and does not in any manner take away rights under any of the existing statutes such as T.P. Act, Debt Recovery Tribunal Act, SARFAESI Act. It is apparent from a perusal of RERA, which is a special Act, that certain rights have been created in favour of the buyers. The provisions of RERA have to prevail. When we come to the question of protection of rights of buyers even if RERA had not been enacted, under aforesaid laws in the facts of the case, a different view could not have been taken. However, there is no dispute that the bankers would have the right to recover their dues from whom and in what manner is the question which we have already answered. The provisions of RERA are beneficial to the home buyers and are intended to insulate them from fraudulent action, ensures completion of the building and it is the duty of the court to protect and ensure the home buyers' interest and at the same time to hold them responsible for the duties enjoined upon them under the said statute. We are not absolving the home buyers from the discharge of their liability if any. At the same time, they have the right of enforcement of their right for compensation due to undue delay i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the allottee. 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. 26. Before concluding this issue we need to deal with two decisions heavily relied upon by the respondents and the conclusions noted above will have to be hedged with certain rider. In case of Bikram Chatterji (supra), the Supreme Court did apply RERA provisions to the transactions which were executed prior to introduction of the Act. This was however on the basis that there was large scale fraud committed by the promoters in connivance with the financial institutions. This would be clear upon reading of the whole judgment and more particularly paragraph 136 in which in the context of Section 11(4)(h) of RERA Act it was observed that right and interest of the allottee are safeguarded by virtue of the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent. The term "promoter" is defined in Section 2(zk) as under:- "(zk) "promoter" means,- (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees. By couching this clause in "means and includes" language the definition of a term "promoter" is extended by including within its fold not only a person who constructs or causes construction of independent building but also his assignees. 30. The term "assignee" has not been defined anywhere in the Act. We would therefore have to interpret the term as it is ordinarily understood in the legal parlance in the context of the provisions of RERA Act. The Advance Law Lexicon by P. Ramanatha Aiyar expands the term "assignee" as to grant, to convey, to make an assignment; to transfer or make over to another the right one has in any object as in an estate. It further provides that an assignment by act of parties may be an assignment either of rights or of liabilities under a contract or as it is sometimes expressed an assignment of benefit or the burden of the contract. The rights and liabilities of either party to a contract may in certain circumstances be assigned by operation of law, for example when a party dies or becomes bankrupt. 31. With this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt: Provided further that where the management of whole, of the business or part of the business is severable, the security creditor shall take over the management of such business of the borrower which is relatable to the security or the debt; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt." 33. In terms of SARFAESI Act and particularly Section 13, once a borrower is unable to repay the debt and the asset is classified as non-performing asset, it is open for the secured creditor to enforce the rights without intervention of the Court. After issuance of notice under Section 13(2) and disposing of the objections of the borrower in terms of Section 13 (3A), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved person. 36. Our conclusions can thus be summarised as under:- (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 (supra) 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. 37. With these conclusions we would leave the parties to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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