BHUBANESWAR: The Odisha Real Estate Appellate Tribunal (OREAT) has dismissed appeals from a public sector bank that sought to auction a real estate project in the city, where buyers have made significant investments.
The bank’s appeal challenged a prior ruling from the Odisha Real Estate Regulatory Authority (ORERA) after the project promoters defaulted on loan repayments. The tribunal concluded that by initiating auction proceedings under the SARFAESI Act, 2002, the bank “stepped into the shoes of the promoter” and is required to assist in completing the halted housing project.
This dispute originated from two separate complaints lodged by allottees of a housing project in Sampur, located on the outskirts of the city. The complainants alleged delays in construction and failure to deliver flats, despite having made significant payments over a decade ago.
The cases indicated that the promoter had mortgaged the project land to the bank in 2014 for a loan of Rs 4.6 crore, which later became a non-performing asset. This prompted the bank to take possession under the SARFAESI Act and issue auction notices in 2020.
The tribunal rejected the bank’s argument that SARFAESI takes precedence over RERA, stating, “The appellant bank, after invoking Section 13(4) of the SARFAESI Act, is clearly an assignee of the promoter and has taken on its responsibilities. The RERA Act, which supersedes the SARFAESI Act, applies even if the security interest was established before the Act came into force, as the mortgage stems from ‘collusion’.”
In concluding the appeal, the tribunal instructed ORERA to consider completing the project through either an external developer or an association of allottees, in collaboration with the bank. Additionally, the tribunal prohibited the bank from auctioning the flats designated for buyers.
Affected buyers expressed relief at the ruling. “We have been waiting for over 10 years, paying rent and EMIs. This judgment gives us hope that our homes will finally be delivered. Banks cannot disregard our rights. We invested our life savings, and this ruling restores our faith in the system,” stated Prakash Mohanty, one of the complainants.
