The main legal point established in the judgment is that in cases of loan agreements for property development, recovery should first be sought from the property developer and land owner, with the petitioners being liable only in the event of a shortfall.

JUDGMENT

Najmi Waziri, J. (Oral)

The hearing has been conducted through hybrid mode (physical and virtual hearing).

1. The petitioner is aggrieved by proceedings emanating from orders passed by the DRT-I, Delhi in O.A. No. 814/2016 on 28.02.2020 which directs, inter alia, as under :

"11. In the light of the above discussions, the OA deserves to be allowed against the defendant Nos. 1 to 4, whose liability is joint and several.

ORDER

(i) I allow this OA and direct the defendants Nos. 1 to 4, jointly and severally, to pay the sum of Rs.45,97,523/- (Rupees Forty Five Lakhs, Ninety Seven Thousand, Five Hundred and Twenty Three only) along with costs & pendente lite and future interest @ 9.55% per annum from 05.10.2016 till its realization in full. The recovery shall first be made from defendant Nos. 3 & 4.

(ii) Defendant Nos. 3 & 4 are directed to pay the aforesaid amount within 30 days, failing which the aforesaid amount shall be recovered from the sale of the mortgaged property situated at Flat No. 1002, 10th Floor, Block-A, Nikhil Park, Royale, Mauza Chamrauli, Taj Ganj Ward, Agra - 282001 owned by Defendant Nos. 1 & 2. Short fall if any, shall be recovered from the defendants Nos. 1 & 2 as per the provision of the Recovery of Debts. Due to Banks and Financial Institutions Act, 1993.

(iii) The cost of litigation be also borne by the defendant.

(iv) The applicant bank is also directed to file the revised statement of account before the Ld. Recovery Officer of this Tribunal.

(iii) The Recovery certificate be issued forthwith and be sent to the Recovery Officer.

(iv) Parties are directed to appear before the Recovery Offlcer-II, DRT-I, Delhi on 15.04.2020."

(v) Copies of the final order be sent to all concerned free of costs...."

2. Mr. Rajeeve Mehra, the learned amicus curiae, submits that this is yet another case where an unsuspecting purchaser entered into a loan agreement for financing an apartment and paid up the initial instalments. The payments were construction linked, yet the loan amount was paid by the Bank in one lump-sum to the property developer, thereby not ensuring that the property was being developed as was agreed between the parties and that the monies were being utilised for the purpose which they were lent. The Bank's action was contrary to the advisory/directions issued by the Reserve Bank of India vide Circular dated 03.09.2013. The order of the DRT directs that the recovery shall first be made from defendant nos. 3 and 4 i.e. the property developer, as well as the land owner on whose land the apartment blocks were being built.

3. It is only in the event of a shortfall that monies would be recovered from the present petitioners. In so far as the proceedings apropos the property developer and the land owner are yet to be completed, any proceedings against the allottees i.e. the petitioners would be pre-mature. Therefore, at this stage, the petitioners would not be required to file any affidavit before Recovery Officer, with liberty to file a response/reply after the process as detailed in para 11 (ii), (iii) and (iv) have been exhausted.

4. It will be open to the parties to pursue their remedies as may be available in law at the appropriate stage.

5. The petition is disposed-off in terms of the above.