HARERA: Can’t auction project before adjusting allottees’ dues

Pronouncing a landmark judgment, Haryana Real Estate Regulatory Authority (HARERA), Gurugram, has mandated that no bank or financing agency would auction or sell a loan-defaulting project to recover damages before adjustment of allottees’ dues. Chairman, HARERA Gurugram Dr KK Khandelwal said that there has been a big increase in complaints in the state where a peculiar trend has been noticed. Promoters mortgage their project land and structure thereupon as well as all receivables from the sold/unsold inventory to lending organisations/ financial institutions/ banks/creditors in order to attain bank loans to fund the construction costs for developing the projects.

But when these promoters fail to repay the loans taken, the financial institutions /banks/ creditors directly auction residential or commercial properties that have been pledged with them to recover loans from borrowers by invoking the SARFAESI Act, 2002.

“Such auctions invoke great anguish and distress to the allottees of the project as there is no acknowledgement of the huge investments made by the allottees into buying their dream home. The future of such allottees is in complete darkness and obscurity. Such aggrieved allottees are bound to languish for their own hard-earned money. The latest judgement in interest of the allottees of the project “Supertech Hues” is the first of its kind in the nation,” said Khandelwal.

According to the HARERA judgment, promoter M/s Supertech Limited, who is neither the licensee nor a collaborator, approached PNB Housing Finance Limited for a construction loan for the project “Supertech Hues”. It was duly advanced to M/s Supertech Limited, with M/s Sarv Realtors Pvt Ltd as the confirming party, by way of equitable mortgage of the project land measuring 33.33 acres by deposit of the title deeds along with receivables from the mortgaged properties.

It failed to repay the loans taken and hence became a defaulter. The said project was put for e-auction by the creditor company. So, the allottees moved HARERA.

“This is happening across the country. The rights of the allottees are not subservient to those of the bank and therefore in case of failure of the banks to ensure that the funds were applied for the purpose they were granted, banks cannot be allowed to supersede the rights of the allottees.

“The financial institutions/lending banks/creditors are duty bound to ensure that the loan payments are released to the promoters after due verification of the fact that the payment so released is actually utilised towards the construction of the project. The lending institutions/ individuals shall be held equally responsible if the amount, so released, is not put into construction purpose and is allowed to be diverted,” added Khandelwal.

Source : Tribune India