GURUGRAM: If a developer fails to repay loans, resulting in the project being taken over by the lender – bank or any other financial institution – the lender will act as promoter and be responsible for protecting the rights of allottees, the Haryana Rera has ordered.
The lender, the order adds, cannot sell the land or the project to recover money without taking permission from the H-Rera and the consent of two-third of homebuyers.

The order was passed by KK Khandelwal, chairman of the Gurugram bench of H-Rera, in a case contested between Deepak Chowdhary and PNB Housing Finance Ltd. It strongly emphasised that rights of allottees are not subservient to those of a bank or financial institution, and therefore, if a lender failed to ensure the funds were used for the purpose they were given, it could not be allowed to supersede the rights of allottees (homebuyers).

Quoting a Supreme Court judgment (Bikram Chatterjee vs Union of India), Khandelwal said in his judgment, “As has been held in the aforementioned Supreme Court judgment, if there has been diversion of funds, banks cannot be allowed to sell the flats and deprive the allottees of their lifetime savings.’’

The case H-Rera was hearing involved Supertech, which had taken a loan of Rs 275 crore to complete its housing project, Supertech Hue, in 2017, by mortgaging title deeds and receivables from homebuyers in the project.

However, Supertech failed to repay the loans. The company’s CMD RK Arora said since the lender, PNB Housing Finance, would take most of the receivables from homebuyers as its instalments towards loan repayment, they were left with hardly any money to continue with construction work. With construction slowing down, homebuyers also stopped paying their instalments. According to the RERA Act, 70% of receivables must be earmarked for construction.

PNB Housing Finance declared Supertech a defaulter and put the project up for e-auction in July in line with terms and conditions of the loan. An allottee, Deepak Chaudhary, then approached H-Rera. The regulator stayed the e-auction as the lender had not taken its prior approval and consent from two-third of the 950 homebuyers who have invested Rs 328.19 crore in the project.

To protect the interest of the allottees, Khandelwal’s order said PNB Housing Finance must make all necessary disclosures on liabilities of the project so that the promoter that takes over is fully aware of them. The new promoter will have to take over the liabilities. Supertech, the order said, would continue to be responsible to pay ‘outgoings’ and penal charges that were due at the time of the transfer.

Khandelwal said around 15,000 allottees in Gurugram are facing a situation where banks have taken over projects as developers failed to repay loans taken against land or real estate projects. He also said it was a peculiar trend in the real estate sector that promoters mortgage their project as well as receivables from sold/unsold inventory to banks in order to attain bank loans to fund construction costs. “But when these promoters fail to repay the loans taken, the banks directly auction residential or commercial properties that have been pledged with them to recover loans from borrowers by invoking the SARFAESI Act, 2002,” he said.

Such auctions, he said, invoke anguish and distress among allottees as there is no acknowledgement of the huge investments made by them into buying their homes. “The future of such allottees is in complete darkness and obscurity. Such aggrieved allottees are bound to languish for their own hard-earned money,” he said.

Khandelwal clarified that H-Rera is in no way against auction of real estate projects by a lending institution to secure the repayment of the loan amount, but they would have to follow the mandated process of seeking approvals.

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