2022 (2) TMI 1493 - SCH - Indian Laws

SC Upholds RERA's Authority Over SARFAESI, Validates Regulation 9; RERA Can Address Bank Complaints u/s 81.

UNION BANK OF INDIA Versus RAJASTHAN REAL ESTATE REGULATORY AUTHORITY & ORS. ETC. ETC.

The SC dismissed the Special Leave Petitions filed by the petitioner Bank, affirming the HC's conclusions. The Court held that Regulation 9 of the 2017 ... Validity 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] - It was held by High Court that '(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.' HELD THAT:- The view taken by the High Court upheld. However, it is clarified that the decision shall be applicable in a case where proceedings before the RERA authority are initiated by the homer buyers to protect their rights. With this, the Special Leave Petitions are dismissed. The Supreme Court, comprising Hon'ble Justices M. R. Shah and B. V. Nagarathna, reviewed the case involving the petitioner Bank and respondents, including home buyers. The Court agreed with the High Court's conclusions outlined in paragraph 36, which are summarized as follows:1. Regulation 9 of the 2017 Regulations: It is not ultra vires or invalid under the Act.2. Delegation of Powers: The delegation to a single member of RERA to decide complaints is supported by Section 81 of the Act and does not solely rely on Regulation 9.3. Conflict Between RERA and SARFAESI Act: In case of conflict, RERA provisions prevail, as established in the Bikram Chatterji case.4. Application of RERA: RERA does not apply to transactions between borrowers and banks where the property was mortgaged before the Act's introduction, unless the transaction is fraudulent or collusive.5. RERA's Jurisdiction: RERA can entertain complaints by aggrieved persons against banks as secured creditors if banks invoke Section 13(4) of the SARFAESI Act.The Court clarified that point (v) applies when home buyers initiate proceedings before the RERA authority to protect their rights. Consequently, the Special Leave Petitions were dismissed, and any pending applications were disposed of.