Striking a balance between a finance company’s claims and home buyer’s rights over a stalled project whose promoter is in jail, the Maharashtra Real Estate Appellate Tribunal (MREAT) has modified a MahaRERA order, recognising the rights of Xander Finance as a mortgagee while upholding the home buyer’s claims on the plot and refusing to stay the recovery warrant issued by MahaRERA to the Collector.
Xander Finance Pvt Ltd, a nonbanking finance company, had challenged a MahaRERA order dated May 4, 2018 creating the charge of a group of 27 home buyers led by Trivesh Pooniwala on the plot of Bhagtani Serenity project and demanded that the recovery warrant for execution of that order issued on October 9, 2018 be set aside.
The ruling pertains to the projects of Diipesh Bhagtani, promoter of JVPD Properties, who is presently in jail for allegedly cheating over 2,000 home buyers. When home buyers approached MahaRERA, the Authority gave orders for refunds with interest, but also created the charge of that amount on the property.
Pooniwala and others also sought execution of their order, and a recovery warrant was issued to the Suburban Collector. Normally, the warrant is sent to the local tehsildar who auctions the property to recover the money. But, in this case, the plot is in possession of Xander Finance under SARFAESI Act.
Advocate Jyoti Sinha, appearing for Xander, argued that such creation of charge is not legal and justifiable. She argued that neither RERA Act nor the Maharashtra Rules formulated to implement RERA empower MahaRERA to create a charge over the property for recovery of the amount. She also argued that the order of creation of charge was passed without considering whether other orders were passed by higher forums in respect of the property.
Advocate Tanuj Lodha of Lodha and Lodha Advocates, appearing for home buyers, argued that, considering the situation where promoter was in prison and the lender had taken possession of the project property, Maharera following principles of natural justice, acted in the interest of home buyers by creating charge of allottees on the project property, to the extent of the order for refund along with interest. This prevented the lender or the promoter from transacting on the project property to the detriment of homebuyers. He argued that there was no illegality in the Maharera order and Charge of Allottees cannot be set aside nor can the recovery warrant be stayed.
After hearing both parties, MREAT Judicial Member Sumant Kolhe observed that RERA Act provisions does not specifically contemplate creation of charge on properties, but such an order falls under the scope of powers of MahaRERA to safeguard the right of allottees to recover the amount from the promoter.
He also observed that Section 26 E of SARFAESI Act gives priority to due debts to be paid to Secured Creditors like Xander Finance.
Ruling that it was necessary to strike a balance between the claim of home buyers and the claim of loan of Xander Finance, Kolhe said the part of the MahaRERA May 5, 2018 order creating charge is partly just, proper and legal, and it needs modification to the extent that it is subject to the right of Xander Finance as a mortgagee.