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The West Bengal Real Estate Appellate Tribunal has ruled against Yes Bank's attempt to seize apartments from nine homebuyers in the Ideal Exotica project, New Alipore, due to the developer's loan default. The buyers, who had already taken possession of the flats, sought protection under the West Bengal Real Estate Regulatory Authority (WBRERA). The tribunal upheld WBRERA's decision, establishing that the provisions of RERA take precedence over the SARFAESI Act, thereby preventing the bank from taking possession or auctioning the properties. This verdict is seen as a crucial precedent safeguarding homebuyers' rights against financial institutions' recovery measures.
The West Bengal Real Estate Appellate Tribunal has halted Yes Bank from seizing apartments belonging to nine homebuyers in a New Alipore residential project due to the developer's loan default. This ruling is being regarded as a landmark decision, reinforcing homebuyers' rights in disputes involving banks and real estate recovery proceedings. Advertisement
The apartments in question, part of the Ideal Exotica project, were priced between INR 1.95 crore and INR 3.14 crore. The buyers had already taken possession of their properties when Yes Bank attempted to reclaim them.
The tribunal upheld an earlier ruling by the West Bengal Real Estate Regulatory Authority (WBRERA), which had ruled in favour of the buyers. Yes Bank had contested this decision, seeking possession of the flats under the Debts Recovery Tribunal's jurisdiction, citing the SARFAESI Act. The SARFAESI Act allows financial institutions to recover loans by auctioning assets pledged as collateral.
The dispute arose when Yes Bank attempted to reclaim the properties as part of its efforts to recover a loan of INR 320 crore, extended to the project's developer, Ideal Real Estates, between 2021 and 2023. The bank had obtained an order from the Debts Recovery Tribunal, Kolkata, and subsequently published a notice stating its intent to seize and auction the flats through an appointed receiver.
In response, the homeowners, who had already completed the property mutation process as per Kolkata Municipal Corporation regulations, approached WBRERA for relief. The tribunal ruled that the provisions of the Real Estate (Regulation and Development) Act (RERA), along with the Transfer of Property Act and the Insolvency and Bankruptcy Code, take precedence over the SARFAESI Act in such disputes. Consequently, the bank was prohibited from taking possession or auctioning the flats to recover the outstanding loan.
The tribunal's decision serves as a crucial safeguard for homebuyers, reinforcing the principle that financial institutions cannot seize legally owned properties of buyers due to a developer's financial obligations. By establishing that RERA overrides the SARFAESI Act in such cases, the ruling strengthens consumer protection in the real estate sector. The verdict brings much-needed clarity to property ownership security, preventing undue hardships for genuine buyers caught in financial disputes between banks and developers.
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