KOLKATA: West Bengal Real Estate Appellate Tribunal has stopped a bank from taking over apartments from nine customers over a loan default by the developer. The decision is seen as a landmark judgment, setting a precedent for protecting home-buyers’ interests against banking institutions’ recovery proceedings in real estate projects, reports Subhro Niyogi.
The apartments are in a New Alipore project, with each worth Rs 1.95 crore to Rs 3.14 crore. They were already in the buyers’ possession when the bank threatened to take possession.
The tribunal upheld a ruling by West Bengal Real Estate Regulatory Authority (WBRERA), which had ruled in favour of home-buyers. This ruling was challenged by Yes Bank. The tribunal’s decision prevents the bank from taking possession of or auctioning the flats to recover loans.
The case involved nine complainants, who purchased flats in Ideal Exotica project in New Alipore from Ideal Real Estates between 2021 and 2023.
The controversy arose when Yes Bank, which had extended a loan of Rs 320 crore to the developer, tried to take possession of these flats through Debts Recovery Tribunal under SARFAESI Act, which allows banks and financial institutions to recover loans by auctioning borrowers’ assets.
The flat owners, who had already completed mutations under Kolkata MC norms, had approached WBRERA seeking protection of their rights when Yes Bank obtained an order from Debts Recovery Tribunal, Kolkata. The bank published a notice of taking possession of the nine flats by appointing a receiver so that it could sell them by auction to recover the loan advanced to the promoter.
The tribunal cited provisions of RERA, Transfer of Property Act, and Insolvency and Bankruptcy Code, to rule that RERA provisions override SARFAESI Act.
