Tuesday, September 26, 2023

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Home owners interest above Banks-Supreme Court

The Supreme Court has put the interest of the Home Buyers over that of Banks in its latest judgement.

This is especially applicable if a real estate company fails to repay the bank loan and handover the possession.

According to the Supreme Court, in the event of a conflict between the recovery process under the Real Estate (Regulation and Development) Act (RERA) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities (SARFAESI) Act, RERA will be effective.

The government had amended the Insolvency and Bankruptcy Code (IBC) to make home buyers a part of the creditors’ committee to decide the future of the company, but did not give them priority in the payment of dues.

A bench of Justices MR Shah and BV Nagarathna gave this ruling while dismissing the appeal of Union Bank of India against the decision of Rajasthan High Court. The High Court had said in the order that if the banks have taken possession as secured creditors after the default of the promoter, then a complaint can be made against them with the Real Estate Regulatory Authority (RERA).

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