RERA Act does not apply to pre-existing transactions unless fraudulent, and RERA has jurisdiction over complaints against secured creditors under SARFAESI Act.

JUDGMENT :

AKIL KURESHI, J.

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 is the focal point, we have combined all these petitions for common consideration. Some of the petitions are filed by the promoters of housing projects against whom the allottees of residential units have approached RERA and in whose favour RERA has passed certain directions. Some of the petitions have been filed by the Banks who are the secured creditors of the promoters and who wish to take coercive measures under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be referred as ‘SARFAESI Act’) to recover their unpaid dues.

2. For convenience we may refer to facts stated in Civil Writ Petition No. 13688/2021. This petition is filed by the Union Bank of India. The petitioner has challenged the validity of Regulation 9 stating that the same is ultra-vires the provisions of the Rajasthan Real Estate (Regulation and Development) Act, 2016 (hereinafter to be referred as ‘RERA Act’). By way of consequential relief the petitioner has challenged a resolution dated 25.09.2020 adopted by RERA resolving that all matters shall be heard by single benches. The petitioner has also challenged an order dated 20.09.2021 passed by a single member of RERA giving certain directions with respect to semi constructed residential complex over which the petitioner bank claims security interest. The case of the bank is that it is not amenable to jurisdiction of RERA since RERA can issue directions only against a promoter, allottee or a real estate agent. The bank being none of these entities, RERA cannot entertain any proceedings against the bank.

3. Perusal of the impugned order passed by RERA would show that the proceedings were instituted on complaints filed by the allottees of residential units in a complex which was being developed by the promoters. The scheme comprised of 38 flats. The project was launched in the year 2014. Agreements were executed with the allottees in the same year. Substantial amounts were also paid by the allottees towards the purchase price. The developer failed to complete the project and hand over the possession.

It appears that allottees had taken loan from ICICI Bank against the allotment of flats on the strength of tripartite agreement. Resultantly the security interest in favour of ICICI Bank was created. The same was also registered with the Central Registry of Securitization Asset 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