Judicial Analysis Court Copy Headnote Facts Arguments Court observation

HIGH COURT BENCH AT JAIPUR
Akil Kureshi, CJ, Uma Shanker Vyas, J
Union Bank Of India – Appellant
Versus
Rajasthan Real Estate Regulatory Authority – Respondent
D.B. Civil Writ Petition No. 13688/2021|D.B. Civil Writ Petition No. 13758/2021|D.B. Civil Writ Petition No. 13768/2021|D.B. Civil Writ Petition No. 13774/2021|D.B. Civil Writ Petition No. 13775/2021|D.B. Civil Writ Petition No. 13801/2021|D.B. Civil Writ Petition No. 13817/2021|D.B. Civil Writ Petition No. 13823/2021|D.B. Civil Writ Petition No. 13825/2021|D.B. Civil Writ Petition No. 13857/2021|D.B. Civil Writ Petition No. 13864/2021|D.B. Civil Writ Petition No. 6987/2021|D.B. Civil Writ Petition No. 11372/2019|D.B. Civil Writ Petition No. 15503/2019|D.B. Civil Writ Petition No. 19192/2019|D.B. Civil Writ Petition No. 19194/2019|D.B. Civil Writ Petition No. 19195/2019|D.B. Civil Writ Petition No. 19197/2019|D.B. Civil Writ Petition No. 19198/2019|D.B. Civil Writ Petition No. 19933/2019|D.B. Civil Writ Petition No. 20008/2019|D.B. Civil Writ Petition No. 20336/2019|D.B. Civil Writ Petition No. 21525/2019|D.B. Civil Writ Petition No. 21574/2019|D.B. Civil Writ Petition No. 242/2020|D.B. Civil Writ Petition No. 950/2020|D.B. Civil Writ Petition No. 953/2020|D.B. Civil Writ Petition No. 1816/2020|D.B. Civil Writ Petition No. 1831/2020|D.B. Civil Writ Petition No. 8891/2020|D.B. Civil Writ Petition No. 9154/2020|D.B. Civil Writ Petition No. 15000/2020|D.B. Civil Writ Petition No. 15013/2020|D.B. Civil Writ Petition No. 577/2021|D.B. Civil Writ Petition No. 1456/2021|D.B. Civil Writ Petition No. 4801/2021|D.B. Civil Writ Petition No. 5136/2021|D.B. Civil Writ Petition No. 5137/2021|D.B. Civil Writ Petition No. 5138/2021|D.B. Civil Writ Petition No. 5139/2021|D.B. Civil Writ Petition No. 5140/2021|D.B. Civil Writ Petition No. 5141/2021|D.B. Civil Writ Petition No. 5142/2021|D.B. Civil Writ Petition No. 5143/2021|D.B. Civil Writ Petition No. 5144/2021|D.B. Civil Writ Petition No. 5145/2021|D.B. Civil Writ Petition No. 6899/2021|D.B. Civil Writ Petition No. 7174/2021|D.B. Civil Writ Petition No. 7180/2021|D.B. Civil Writ Petition No. 7322/2021|D.B. Civil Writ Petition No. 7335/2021|D.B. Civil Writ Petition No. 7336/2021|D.B. Civil Writ Petition No. 7793/2021|D.B. Civil Writ Petition No. 7861/2021|D.B. Civil Writ Petition No. 8214/2021|D.B. Civil Writ Petition No. 8215/2021|D.B. Civil Writ Petition No. 8219/2021|D.B. Civil Writ Petition No. 8220/2021|D.B. Civil Writ Petition No. 8221/2021|D.B. Civil Writ Petition No. 8224/2021|D.B. Civil Writ Petition No. 9369/2021|D.B. Civil Writ Petition No. 9375/2021|D.B. Civil Writ Petition No. 10231/2021|D.B. Civil Writ Petition No. 11069/2021|D.B. Civil Writ Petition No. 14591/2021|D.B. Civil Writ Petition No. 12562/2021|D.B. Civil Writ Petition No. 13555/2021|D.B. Civil Writ Petition No. 13600/2021|D.B. Civil Writ Petition No. 12738/2021|D.B. Civil Writ Petition No. 12127/2021

Advocates:
For the Appellants/Petitioners: Rajendra Prasad, Devendra Sharma, Harshal Tholia, Rubal Tholia, Ankit Rahtore, Abhi Goyal, Nikhil Yadav, Priyanshi Katta, Namrata Malik, Priyanshu Malik, Siddharth Ranka, Kritika, Anant Kasliwal, Samkit Jain, Mitesh Rathore, Shruti Rai, Ankit Sareen, Prakul Khurana, Jitendra Mishra, Jai Sharma, Ashutosh Bhatia, Ankit Jain, Pradeep Kumar Choudhary, Waseem Ahmed Qureshi, Saloni Dagur, Hardik Mishra, Dinesh Bishnoi
For the Respondents: M.S. Singhvi, Siddhant Jain, M.M. Ranjan, Naresh Kumar Sejvani, Himanshu, Rohan Agarwal, R.K. Agarwal, Adhiraj Modi, Sunita Pareek, Anil Mehta, Archana, Yashodhar Pandey, Mehul Harkawat, Reashm Bhargava, Siddhant Paliwal, Mohit Khandelwal, Shubham Khandelwal, Dikshant Jain, Pallavi Mehta, Rudraksh Shrarma, Abhilasha Sharma, Rishi Raj Maheshwari, Nachiketa Pareek, Himanshu Jain, Lokesh Jangid, Bharat Vyas, Yogesh Pujari, Ravindra Singh Shekhawat, Goverdhan Singh, Pranjul Chopra, Novotna Rajawat, Ajit Maloo, Abhimanyu Yaduvanshi, Pratyush Sharma, Amit Chhangani, R.K. Kasana, Maneesh Sharma, Lakshay Pareek

The regulatory authority may delegate adjudicatory powers to single members. While the Act is not retrospective, the authority gains jurisdiction over secured creditors once they act under the securitisation law to take possession of assets, as this constitutes a statutory assignment of the borrower's rights.

Headnote:(A) Real Estate (Regulation and Development) Act, 2016 - Sections 2(d), 2(zk), 3, 11(4)(h), 31, 34, 38, 79, 81, 85, 89 - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(4) and 35 - Delegation of powers - Adjudication of complaints - Jurisdiction of regulatory authority over banks - Validity of regulations regarding single-member benches - Conflict between special statutes.

(B) Administrative Law - Delegation of Power - Competent authority is empowered to delegate functions to individual members via general or special orders under statutory provisions - Such delegation remains valid even if not explicitly provided for in specific regulations, provided it aligns with the parent Act. (Paras 19, 21)

(C) Statutory Interpretation - Overriding effect - In event of conflict between two special statutes containing non-obstante clauses, subsequent legislation generally prevails - RERA Act constitutes a beneficial framework intended to protect interests of home buyers. (Paras 23, 24)

(D) Property Law - Security Interest - Regulatory authority has jurisdiction to entertain complaints against creditors if they initiate statutory measures of possession or management under the Act governing securitisation - Such actions trigger a deemed assignment of rights of the borrower to the secured creditor. (Paras 35, 36)

Facts of the case:
Numerous petitions were filed questioning the validity of regulations authorizing single-member benches for adjudication. Additionally, disputes arose regarding the jurisdiction of the real estate regulatory authority to issue directions against banks acting as secured creditors who initiated coercive recovery proceedings against projects where agreements for sale were executed with allottees.

Findings of Court:
The court held that the regulatory authority possesses the inherent power to delegate adjudicatory functions to single members. It further ruled that while the regulatory authority cannot apply the Act retrospectively to secured interests created before the enactment of the law, it gains jurisdiction once a bank triggers specific coercive measures, effectively stepping into the shoes of the developer.

Issues: The main issues were the legality of delegating adjudicatory powers to single members, the interplay between competing special statutes concerning overriding effects, and the extent of authority over secured creditors.

Ratio Decidendi: Delegation of power is permissible under the parent Act to ensure administrative efficiency. Regarding the conflict of laws, the subsequent Act provides specific, beneficial protections for home buyers that must prevail. Creditors become subject to the authority's jurisdiction only upon taking active steps that equate to an assignment of the borrower’s rights in the project.

Result: Petitions disposed of; directions issued for parties to approach appropriate forums and maintain statutory compliance.

Table of Content
1. consolidation of petitions regarding the validity of regulation 9 of rera, 2017. (Para 1 , 1 , 2 , 3)
2. petitioner's arguments vs. respondent's arguments on jurisdiction and legislation. (Para 4 , 5 , 6)
3. regulation 9 and power of delegation via section 81 rera. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21)
4. overriding effect of rera vs sarfaesi and non-retrospective applicability. (Para 22 , 23 , 24 , 25 , 26 , 27 , 28)
5. jurisdiction over banks as assignees under sarfaesi act, 2002. (Para 29 , 30 , 31 , 32 , 33 , 34 , 35)
6. summary of findings and final disposal directions. (Para 36 , 37 , 38 , 39)

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

Click Here to Read the rest of this document

Cases Referred (2)